UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)



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

For the quarterly period ended ~~September~~June 30, ~~2017~~2020



¨☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number: 000-03134

Park-Ohio Holdings ~~Corp.~~Corp.

(Exact name of registrant as specified in its charter)



Ohio			34-1867219
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

6065 Parkland Boulevard,	Cleveland,	Ohio	44124
(Address of principal executive offices)			(Zip Code)

~~(440)~~ (440) 947-2000

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $1.00 Per Share	PKOH	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. þ☑ Yes ¨☐ No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). þ☑ Yes ¨☐ No

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	¨☐	Accelerated filer	þ☑
Non-accelerated filer	¨ ~~(Do not check if a smaller reporting company)~~☐	Smaller reporting company	¨☐
		Emerging growth company	¨
			☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accountings standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨☐ Yes þ☑ No

~~Table of Contents~~

Number of shares outstanding of registrant’s Common Stock, par value $1.00 per share, as of ~~October~~July 31, ~~2017: 12,530,576~~2020: 12,601,666 shares.

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Park-Ohio Holdings Corp. and Subsidiaries

Index



		Page
	Part I. Financial Information

Item 1.	Financial Statements	3
	Condensed consolidated balance sheets — ~~September~~June 30, ~~2017~~2020 (unaudited) and December 31, ~~2016~~2019	3
	Condensed consolidated statements of income (loss) (unaudited) — Three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019	4
	Condensed consolidated statements of comprehensive income (loss) (unaudited) — Three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019	5
	Condensed consolidated statements of ~~cash flows~~shareholders' equity (unaudited) — ~~Nine~~Three and six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019	6
	Condensed consolidated statements of cash flows (unaudited) — Six months ended June 30, 2020 and 2019	8
	Notes to unaudited condensed consolidated financial statements — ~~September~~June 30, ~~2017~~2020	79
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1618
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	2729
Item 4.	Controls and Procedures	2729

	Part II. Other Information

Item 1.	Legal Proceedings	2830
Item 1A.	Risk Factors	2931
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2932
Item 6.	Exhibits	2932
Signatures		3133

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Part I. Financial Information



Item 1.	Financial Statements

Park-Ohio Holdings Corp. and Subsidiaries

Condensed Consolidated Balance Sheets


	(Unaudited)				(Unaudited)
	September 30, 2017		December 31, 2016		June 30, 2020		December 31, 2019
	(In millions)				(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	80.7	$	64.3	$	51.9	$	56.0
Accounts receivable, net	231.4		194.4		196.0		261.3
Inventories, net	268.3		240.6		315.7		327.2
Other current assets	71.2		53.4
Prepaid and other current assets					87.4		81.2
Total current assets	651.6		552.7		651.0		725.7
Property, plant and equipment, net	171.2		167.1		228.8		237.6
Operating lease right-of-use assets					63.2		64.3
Goodwill	92.0		86.6		107.2		108.4
Intangible assets, net	97.5		96.6		86.8		90.6
Other long-term assets	79.3		71.3		84.4		83.8
Total assets	$	1,091.6	$	974.3	$	1,221.4	$	1,310.4
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable	$	169.4	$	133.6	$	128.0	$	175.0
Current portion of long-term debt and short-term debt	18.1		30.8		12.6		16.8
Current portion of operating lease liabilities					12.2		11.9
Accrued expenses and other	88.1		77.5		90.5		101.3
Total current liabilities	275.6		241.9		243.3		305.0
Long-term liabilities, less current portion:
Debt	492.3		439.0
Deferred income taxes	27.7		27.7
Long-term debt					553.8		545.2
Long-term operating lease liabilities					52.1		53.6
Other long-term liabilities	21.3		29.7		56.0		57.0
Total long-term liabilities	541.3		496.4		661.9		655.8
Park-Ohio Holdings Corp. and Subsidiaries shareholders' equity	264.3		226.0		302.5		335.6
Noncontrolling interests	10.4		10.0		13.7		14.0
Total equity	274.7		236.0		316.2		349.6
Total liabilities and shareholders' equity	$	1,091.6	$	974.3	$	1,221.4	$	1,310.4

Refer to the accompanying notes to these unaudited condensed consolidated financial statements.

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Park-Ohio Holdings Corp. and Subsidiaries

Condensed Consolidated Statements of Income (Loss) (Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In millions, except per share data)
Net sales $ 352.2
$ 312.7
$ 1,046.9
$ 970.1
Cost of sales 295.0
258.4
873.9
813.7
Gross profit 57.2
54.3
173.0
156.4
Selling, general and administrative expenses 36.5
33.4
109.3
99.9
Litigation settlement gain —
—
(3.3 ) —
Asset impairment charge —
—
—
4.0
Operating income 20.7
20.9
67.0
52.5
Interest expense 7.8
7.2
23.1
21.3
Loss on extinguishment of debt —
—
11.0
—
Income before income taxes 12.9
13.7
32.9
31.2
Income tax expense (benefit) 2.7
(0.1 ) 9.4
5.7
Net income 10.2
13.8
23.5
25.5
Net income attributable to noncontrolling interests (0.2 ) (0.3 ) (0.7 ) (0.3 )
Net income attributable to Park-Ohio Holdings Corp. common shareholders $ 10.0
$ 13.5
$ 22.8
$ 25.2

Earnings per common share attributable to Park-Ohio Holdings Corp. common shareholders:
Basic $ 0.82
$ 1.12
$ 1.87
$ 2.08
Diluted $ 0.80
$ 1.10
$ 1.83
$ 2.06
Weighted-average shares used to compute earnings per share:
Basic 12.2
12.1
12.2
12.1
Diluted 12.4
12.3
12.4
12.3

Dividends per common share $ 0.125
$ 0.125
$ 0.375
$ 0.375



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(In millions, except per share data)
Net sales	$	228.3		$	415.3		$	594.6		$	835.4
Cost of sales	214.1			349.1			526.5			703.9
Gross profit	14.2			66.2			68.1			131.5
Selling, general and administrative expenses	35.1			46.9			76.0			89.7
Operating (loss) income	(20.9		)	19.3			(7.9		)	41.8
Other components of pension income and other postretirement benefits expense, net	1.8			1.5			3.6			2.8
Interest expense, net	(7.5		)	(8.7		)	(15.5		)	(16.9		)
(Loss) income before income taxes	(26.6		)	12.1			(19.8		)	27.7
Income tax benefit (expense)	9.6			(4.2		)	4.1			(8.1		)
Net (loss) income	(17.0		)	7.9			(15.7		)	19.6
Net loss (income) attributable to noncontrolling interests	0.4			(0.3		)	0.3			(0.8		)
Net (loss) income attributable to Park-Ohio Holdings Corp. common shareholders	$	(16.6	)	$	7.6		$	(15.4	)	$	18.8

(Loss) income per common share attributable to Park-Ohio Holdings Corp. common shareholders:
Basic	$	(1.38	)	$	0.62		$	(1.27	)	$	1.54
Diluted	$	(1.38	)	$	0.61		$	(1.27	)	$	1.51
Weighted-average shares used to compute (loss) income per share:
Basic	12.1			12.2			12.2			12.2
Diluted	12.1			12.4			12.2			12.4

Refer to the accompanying notes to these unaudited condensed consolidated financial statements.

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Park-Ohio Holdings Corp. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In millions)
Net income $ 10.2
$ 13.8
$ 23.5
$ 25.5
Other comprehensive income (loss):
Foreign currency translation adjustment 7.5
(1.3 ) 18.9
(5.3 )
Pension and other postretirement benefit adjustments, net of tax 0.2
0.3
0.6
0.7
Total other comprehensive income (loss) 7.7
(1.0 ) 19.5
(4.6 )
Total comprehensive income, net of tax 17.9
12.8
43.0
20.9
Comprehensive income attributable to noncontrolling interests (0.2 ) (0.3 ) (0.7 ) (0.3 )
Comprehensive income attributable to Park-Ohio Holdings Corp. common shareholders $ 17.7
$ 12.5
$ 42.3
$ 20.6



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(In millions)
Net (loss) income	$	(17.0	)	$	7.9		$	(15.7	)	$	19.6
Other comprehensive (loss) income, net of tax:
Currency translation	2.9			(2.5		)	(13.7		)	(1.8		)
Pension and other postretirement benefits	0.4			0.4			0.9			5.7
Total other comprehensive (loss) income	3.3			(2.1		)	(12.8		)	3.9
Total comprehensive (loss) income, net of tax	(13.7		)	5.8			(28.5		)	23.5
Comprehensive loss (income) attributable to noncontrolling interests	0.4			(0.3		)	0.3			(0.8		)
Comprehensive (loss) income attributable to Park-Ohio Holdings Corp. common shareholders	$	(13.3	)	$	5.5		$	(28.2	)	$	22.7

Refer to the accompanying notes to these unaudited condensed consolidated financial statements.

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Park-Ohio Holdings Corp. and Subsidiaries

Condensed Consolidated Statements of Shareholders' Equity (Unaudited)



	Common Stock
	Shares	Amount		Additional Paid-In Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive (Loss) Income			Noncontrolling Interest			Total
	(In whole shares)	(In millions)
Balance at January 1, 2020	15,706,398	$	15.7	$	129.8		$	298.2		$	(71.1	)	$	(37.0	)	$	14.0		$	349.6
Other comprehensive income (loss)	—	—		—			1.2			—			(16.1		)	0.1			(14.8		)
Stock-based compensation expense	—	—		1.4			—			—			—			—			1.4
Stock-based compensation activity	1,000	—		—			—			—			—			—			—
Dividends	—	—		—			(1.6		)	—			—			—			(1.6		)
Purchases of treasury stock (180,827 shares)	—	—		—			—			(2.9		)	—			—			(2.9		)
Payments of withholding taxes on share awards	—	—		—			—			(0.1		)	—			—			(0.1		)
Balance at March 31, 2020	15,707,398	$	15.7	$	131.2		$	297.8		$	(74.1	)	$	(53.1	)	$	14.1		$	331.6
Other comprehensive (loss) income	—	—		—			(16.6		)	—			3.3			(0.4		)	(13.7		)
Stock-based compensation expense	—	—		1.3			—			—			—			—			1.3
Stock-based compensation activity	283,993	0.3		(0.3		)	—			—			—			—			—
Purchases of treasury stock (149,376 shares)	—	—		—			—			(2.4		)	—			—			(2.4		)
Payments of withholding taxes on share awards	—	—		—			—			(0.6		)	—			—			(0.6		)
Balance at June 30, 2020	15,991,391	$	16.0	$	132.2		$	281.2		$	(77.1	)	$	(49.8	)	$	13.7		$	316.2

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	Common Stock
	Shares		Amount			Additional Paid-In Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive (Loss) Income			Noncontrolling Interest			Total
	(In whole shares)		(In millions)
Balance at January 1, 2019	15,555,275		$	15.6		$	125.7		$	265.9		$	(67.3	)	$	(40.9	)	$	13.6		$	312.6
Other comprehensive income	—		—			—			11.2			—			6.0			0.5			17.7
Stock-based compensation expense	—		—			1.9			—			—			—			—			1.9
Stock-based compensation activity	38,000		—			—			—			—			—			—			—
Dividends	—		—			—			(1.6		)	—			—			(0.3		)	(1.9		)
Payments of withholding taxes on share awards	—		—			—			—			(1.0		)	—			—			(1.0		)
Balance at March 31, 2019	15,593,275		15.6			127.6			275.5			(68.3		)	(34.9		)	13.8			329.3
Other comprehensive income	—		—			—			7.6			—			(2.1		)	0.3			5.8
Stock-based compensation expense	—		—			(0.2		)	—			—			—			—			(0.2		)
Stock-based compensation activity	(75,550	)	(0.1		)	0.1			—			—			—			—			—
Dividends	—		—			—			(1.6		)	—			—			(0.4		)	(2.0		)
Purchases of treasury stock (27,069)	—		—			—			—			(0.9		)	—			—			(0.9		)
Payments of withholding taxes on share awards	—		—			—			—			(1.8		)	—			—			(1.8		)
Balance at June 30, 2019	15,517,725		$	15.5		$	127.5		$	281.5		$	(71.0	)	$	(37.0	)	$	13.7		$	330.2



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Dividends per common share	$	—	$	0.125	$	0.125	$	0.250

Refer to the accompanying notes to these unaudited condensed consolidated financial statements.

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Park-Ohio Holdings Corp. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended September 30,						Six Months Ended June 30,
	2017			2016			2020			2019
	(In millions)						(In millions)
OPERATING ACTIVITIES
Net income	$	23.5		$	25.5
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Net (loss) income							$	(15.7	)	$	19.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	23.6			22.2			17.8			17.7
Loss on extinguishment of debt	11.0			—
Litigation settlement gain	(3.3		)	—
Asset impairment charge	—			4.0
Share-based compensation expense	6.3			8.1
Stock-based compensation expense							2.7			1.7
Changes in operating assets and liabilities:
Accounts receivable	(29.9		)	(1.6		)	62.1			(20.9		)
Inventories	(15.7		)	(3.5		)	7.9			(10.7		)
Other current assets	(14.9		)	(5.4		)
Prepaid and other current assets							(6.5		)	5.4
Accounts payable and accrued expenses	34.4			1.4			(57.2		)	(6.5		)
Litigation settlement payment	(4.0		)	—
Other	(3.8		)	(9.9		)	(1.6		)	(3.5		)
Net cash provided by operating activities	27.2			40.8			9.5			2.8
INVESTING ACTIVITIES
Purchases of property, plant and equipment	(18.9		)	(20.3		)	(9.4		)	(20.7		)
Business acquisition	(10.5		)	—
Proceeds from sale of an asset							1.4			—
Business acquisitions, net of cash acquired							—			(7.6		)
Net cash used by investing activities	(29.4		)	(20.3		)	(8.0		)	(28.3		)
FINANCING ACTIVITIES
Payments on revolving credit facility, net	(32.5		)	(17.4		)
Payments on term loans and other debt	(27.7		)	(3.4		)
Proceeds from term loans and other debt	—			7.3
Proceeds from (payments on) capital lease facilities, net	0.1			(2.5		)
Issuance of 6.625% Senior Notes due 2027	350.0			—
Debt financing costs	(7.5		)	—
Repurchase of 8.125% Senior Notes due 2021	(250.0		)	—
Premium on early extinguishment of debt	(8.0		)	—
Proceeds from revolving credit facility, net							8.7			27.7
Payments on other debt							(6.7		)	(2.8		)
Proceeds from other debt							1.9			0.7
Payments on finance lease facilities, net							(0.6		)	(3.2		)
Dividends	(5.0		)	(4.7		)	(1.6		)	(3.9		)
Purchase of treasury shares	(3.6		)	—			(5.3		)	(0.9		)
Payments of withholding taxes on share awards	(2.3		)	(1.7		)	(0.7		)	(2.8		)
Payment of acquisition earn-out	—			(2.0		)
Net cash provided (used) by financing activities	13.5			(24.4		)
Net cash (used) provided by financing activities							(4.3		)	14.8
Effect of exchange rate changes on cash	5.1			(0.4		)	(1.3		)	0.3
Increase (decrease) in cash and cash equivalents	16.4			(4.3		)
Decrease in cash and cash equivalents							(4.1		)	(10.4		)
Cash and cash equivalents at beginning of period	64.3			62.0			56.0			55.7
Cash and cash equivalents at end of period	$	80.7		$	57.7		$	51.9		$	45.3
Interest paid							$	14.8		$	15.8
Income taxes paid	$	1.6		$	7.0		$	1.2		$	5.3
Interest paid	$	16.5		$	14.7

Refer to the accompanying notes to these unaudited condensed consolidated financial statements.

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Park-Ohio Holdings Corp. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

~~September~~June 30, ~~2017~~2020

NOTE 1 — Basis of Presentation

The condensed consolidated financial statements include the accounts of Park-Ohio Holdings Corp. and its subsidiaries (collectively, ~~“we”,~~“we,” “our” or the “Company”). All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles ~~generally accepted~~ in the United States (“U.S. GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three- and ~~nine-month~~six- month periods ended ~~September~~June 30, ~~2017~~2020 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~2020. The balance sheet at December 31, ~~2016~~2019 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure 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.

NOTE 2 — New Accounting Pronouncements

Accounting Pronouncements Adopted

In ~~March~~June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.Instruments,” which replaced the current incurred loss impairment model with a methodology that reflected

expected credit losses. Under the new methodology, entities will measure expected credit losses on financial instruments held at amortized cost, including trade receivables, based on historical experience, current conditions and reasonable forecasts. The ~~ASU simplifies several aspects~~Company adopted this standard as of January 1, 2020. The adoption of the ~~accounting~~standard had an immaterial impact on the Company. For the three- and six-month periods ended June 30, 2020, the provision and write-offs were not material, and the allowance approximated $5.2 million as of June 30, 2020.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (ASC 740) - Simplifying the Accounting for ~~employee share-based payment transactions including~~Income Taxes,” which simplifies the accounting for income taxes ~~forfeitures~~by removing certain exceptions to the general principles in ASC 740. The amendments also improve consistent application of and ~~statutory tax withholding requirements, as well as classification~~simplify U.S. GAAP for other areas of ~~related amounts within the statement of cash flows.~~ASC 740 by clarifying and amending existing guidance. The Company adopted this ~~ASU effective January~~standard as of April 1, ~~2017.~~

~~ASU 2016-09 requires prospective recognition~~2020. The adoption of ~~excess tax benefits and deficiencies resulting from share-based compensation awards vesting and exercises be recognized as a discrete income tax adjustment in~~ the income statement. Previously, these amounts were recognized in Additional paid-in capital. In the nine months ended September 30, 2017, the Company recognized income tax expense of $0.1 million for excess tax deficiencies upon vesting of awards. In addition, ASU 2016-09 requires excess tax benefits and shortfalls to be prospectively excluded from the assumed future proceeds in the calculation of diluted shares, resulting in an insignificant increase in diluted weighted average shares outstanding for the nine months ended September 30, 2017 andstandard had an immaterial impact on ~~earnings per share. ASU 2016-09 also requires that excess~~the Company's tax benefits from share-based compensation awards be reported as operating activities in the Condensed Consolidated Statements of Cash Flows. Previously, this activity was included in financing activities on the Condensed Consolidated Statements of Cash Flows. The Company has elected to apply this change on a prospective basis. This change has an immaterial impact on our Condensed Consolidated Statements of Cash Flows. Also, we elected to continue to estimate forfeitures rather than account for them as they occur.provision.

Recent Accounting Pronouncements Not Yet Adopted

In ~~January 2017,~~March 2020, the FASB issued ASU ~~2017-04, "Intangibles - Goodwill~~2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which was issued in response to concerns about structural risks of interbank offered rates, and, ~~Other (Topic 350): Simplifying~~particularly, the ~~Test for Goodwill Impairment."~~risk of cessation of the London Interbank Offered Rate. The ~~amendments in~~guidance is effective upon issuance and may be adopted on any date on or after March 12, 2020. However, the ~~ASU simplify how an entity~~relief is ~~required~~temporary and generally cannot be applied to ~~test goodwill for impairment by~~contract modifications that occur after December 31, 2022 or hedging relationships entered into or evaluated after that date. The Company is currently evaluating the expected impact of this standard.

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Park-Ohio Holdings Corp. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

~~September~~June 30, ~~2017~~2020

eliminating Step 2 from the goodwill impairment test. The ASU is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company early adopted this guidance for any impairment test performed after January 1, 2017.

~~Recent Accounting Pronouncements Not Yet Adopted~~

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which was the result of a joint project by the FASB and International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. generally accepted accounting principles and International Financial Reporting Standards. The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The ASU will require either retrospective application to each prior reporting period presented or modified retrospective application with the cumulative effect of initially applying the standard recognized at the date of adoption. The Company is in the process of analyzing the impact of ASU 2014-09, and the related ASUs, across all its businesses. This includes performing contract reviews and reviewing current accounting policies and practices to identify potential differences that would result from applying the requirements under the new standard. The Company expects to adopt the new standard using the modified retrospective approach, under which the cumulative effect of initially applying the new guidance is recognized as an adjustment to the opening balance of retained earnings upon adoption effective January 1, 2018. We are still evaluating the impact and an estimation of the impact cannot be made at this time. In addition, the standard requires new substantial disclosures and we continue to evaluate these requirements.

In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The amendments in the ASU address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The FASB also is addressing measurement of credit losses on financial assets in a separate project. The ASU is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is not permitted. The new guidance will be applied prospectively. The Company is currently evaluating the impact of adopting this guidance.

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842).” The ASU establishes a comprehensive new lease accounting model. The new standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications; and (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease term of more than twelve months. The ASU is effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. The new standard requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does not require transition accounting for leases that expire prior to the date of initial application. The Company is currently evaluating the impact of adopting this guidance.

In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” The ASU requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The Company is planning to adopt this standard in the first quarter of 2018. The Company is currently evaluating the impact of adopting this guidance.

No other recently issued ASUs are expected to have a material impact on our results of operations, financial condition or liquidity.

NOTE 3 - Revenue

We disaggregate our revenue by product line and geographic region of our customer, as we believe these best depict how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by economic factors. See details in the tables below.



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(In millions)
PRODUCT LINE
Supply Technologies	$	86.0	$	141.0	$	207.9	$	285.8
Engineered specialty fasteners and other products	8.4		20.5		27.3		41.0
Supply Technologies Segment	94.4		161.5		235.2		326.8

Fuel, rubber and plastic products	39.8		91.1		124.5		180.7
Aluminum products	15.1		45.2		58.6		93.9
Assembly Components Segment	54.9		136.3		183.1		274.6

Industrial equipment	53.4		80.7		119.5		161.3
Forged and machined products	25.6		36.8		56.8		72.7
Engineered Products Segment	79.0		117.5		176.3		234.0

Total revenues	$	228.3	$	415.3	$	594.6	$	835.4

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Park-Ohio Holdings Corp. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2020



	Supply Technologies Segment		Assembly Components Segment		Engineered Products Segment		Total Revenues
	(In millions)
Three Months Ended June 30, 2020
GEOGRAPHIC REGION
United States	$	61.3	$	36.1	$	45.5	$	142.9
Europe	14.0		2.2		10.6		26.8
Asia	11.7		6.4		17.7		35.8
Mexico	5.0		3.6		1.3		9.9
Canada	1.6		6.5		2.7		10.8
Other	0.8		0.1		1.2		2.1
Total	$	94.4	$	54.9	$	79.0	$	228.3

Three Months Ended June 30, 2019
GEOGRAPHIC REGION
United States	$	110.6	$	97.0	$	67.9	$	275.5
Europe	24.2		3.8		20.4		48.4
Asia	9.5		4.0		15.8		29.3
Mexico	13.4		10.6		3.4		27.4
Canada	3.3		20.5		6.6		30.4
Other	0.5		0.4		3.4		4.3
Total	$	161.5	$	136.3	$	117.5	$	415.3

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Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2020



	Supply Technologies Segment		Assembly Components Segment		Engineered Products Segment		Total Revenues
	(In millions)
Six Months Ended June 30, 2020
GEOGRAPHIC REGION
United States	$	151.3	$	126.8	$	98.7	$	376.8
Europe	37.7		6.4		26.3		70.4
Asia	21.2		10.7		33.5		65.4
Mexico	19.5		13.8		3.5		36.8
Canada	4.5		24.9		9.1		38.5
Other	1.0		0.5		5.2		6.7
Total	$	235.2	$	183.1	$	176.3	$	594.6

Six Months Ended June 30, 2019
GEOGRAPHIC REGION
United States	$	221.0	$	198.7	$	136.0	$	555.7
Europe	50.7		8.1		40.8		99.6
Asia	20.8		9.2		30.7		60.7
Mexico	27.1		19.6		6.4		53.1
Canada	6.5		38.2		14.2		58.9
Other	0.7		0.8		5.9		7.4
Total	$	326.8	$	274.6	$	234.0	$	835.4

For over time arrangements, contract liabilities primarily relate to advances or deposits received from the Company’s customers before revenue is recognized. These amounts, which totaled $35.9 million and $35.7 million at June 30, 2020 and December 31, 2019, respectively, are recorded in Accrued expenses and other in the Condensed Consolidated Balance Sheets.

For over time arrangements, contract assets primarily relate to revenue recognized in advance of billings to customers under long-term contracts accounted for under percentage of completion. These amounts, which totaled $65.4 million and $61.7 million at June 30, 2020 and December 31, 2019, respectively, are recorded in Prepaid and other current assets in the Condensed Consolidated Balance Sheets.

NOTE 4 — Segments

Our operating segments are defined as components of the enterprise for which separate financial information is available and evaluated on a regular basis by our chief operating decision maker to allocate resources and assess performance.

For purposes of measuring business segment performance, the Company utilizes segment operating income, which is defined as revenues less expenses identifiable to the product lines within each segment. The Company does not allocate items that are non-operating; unusual in nature; or are corporate costs, which include but are not limited to executive and share-based

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~~Park-Ohio Holdings Corp. and Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~September 30, 2017~~

compensation and corporate office costs. Segment operating income reconciles to consolidated income before income taxes by deducting corporate ~~costs,~~costs; certain non-cash ~~items~~and/or non-operating items; Other components of pension income and other postretirement benefits expense, net; and interest ~~expense.~~

expense, net.

Results by business segment were as follows:

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Park-Ohio Holdings Corp. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2020

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In millions)
Net sales:
Supply Technologies $ 140.2
$ 122.0
$ 415.8
$ 384.8
Assembly Components 127.9
133.4
393.2
399.4
Engineered Products 84.1
57.3
237.9
185.9
$ 352.2
$ 312.7
$ 1,046.9
$ 970.1
Segment operating income:
Supply Technologies $ 10.9
$ 9.7
$ 34.6
$ 30.8
Assembly Components 11.4
13.9
37.0
38.3
Engineered Products 6.0
4.0
13.5
8.6
Total segment operating income 28.3
27.6
85.1
77.7

Corporate costs (7.6 ) (6.7 ) (21.4 ) (21.2 )
Litigation settlement gain —
—
3.3
—
Asset impairment charge —
—
—
(4.0 )
Operating income 20.7
20.9
67.0
52.5
Interest expense (7.8 ) (7.2 ) (23.1 ) (21.3 )
Loss on extinguishment of debt —
—
(11.0 ) —
Income before income taxes $ 12.9
$ 13.7
$ 32.9
$ 31.2



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(In millions)
Net sales:
Supply Technologies	$	94.4		$	161.5		$	235.2		$	326.8
Assembly Components	54.9			136.3			183.1			274.6
Engineered Products	79.0			117.5			176.3			234.0
	$	228.3		$	415.3		$	594.6		$	835.4
Segment operating (loss) income:
Supply Technologies	$	0.3		$	11.3		$	9.5		$	24.4
Assembly Components	(14.6		)	8.3			(8.3		)	16.6
Engineered Products	(0.8		)	11.5			3.0			19.6
Total segment operating (loss) income	(15.1		)	31.1			4.2			60.6
Corporate costs	(5.8		)	(7.5		)	(12.1		)	(14.5		)
One-time net expense related to former President^(a)	—			(4.3		)	—			(4.3		)
Operating (loss) income	(20.9		)	19.3			(7.9		)	41.8
Other components of pension income and other postretirement benefits expense, net	1.8			1.5			3.6			2.8
Interest expense, net	(7.5		)	(8.7		)	(15.5		)	(16.9		)
(Loss) income before income taxes	$	(26.6	)	$	12.1		$	(19.8	)	$	27.7

(a) - In June 2019, Edward F. Crawford, our President, retired and resigned to become the U.S. Ambassador to Ireland. In connection with his resignation, the Company incurred one-time net expense of $4.3 million, consisting of a $6.0 million payment and reversal of $1.7 million of previously-recorded expense related to restricted stock forfeitures.

NOTE 45 — ~~Acquisitions~~Plant Closure and Consolidation

In ~~April 2017,~~the first six months of 2020, the Company ~~through its wholly-owned subsidiary Apollo Aerospace Components, completed the acquisition of Aero-Missile Components Inc. (“AMC”) for $10.5~~recorded charges totaling $2.3 million in ~~cash. AMC is a supply chain management business providing high-quality specialty fasteners~~its Assembly Components segment in connection with commencement of actions to close and consolidate its extrusion operations in Tennessee and its fuel operations in Shanghai, China, and to complete other ~~components to the defense and aerospace markets.~~cost-reduction actions in this segment. The ~~results of AMC~~charges, which are included in cost of sales in the ~~Supply Technologies segment from the date~~Condensed Consolidated Statements of ~~acquisition. As~~Income (Loss), are comprised of ~~September 30, 2017, the~~severance and related employee costs of $1.2 million, asset impairment of $0.5 million, and other facility costs of $0.6 million. The Company ~~recorded goodwill of $2.1 million~~expects to incur additional costs related to ~~this transaction.~~these initiatives of approximately $1.7 million in the remainder of 2020.

~~In December 2016,~~

NOTE 6 — Acquisition

On May 31, 2019, the Company acquired ~~all the outstanding capital stock of GH Electrotermia S.A.~~EFCO, Inc. d/b/a Erie Press Systems (“~~GH”~~EP”)~~, headquartered in Valencia, Spain,~~ for ~~$23.4~~$8.1 million in cash, ~~(net~~ of ~~$6.3~~which $7.6 million ~~cash acquired), plus the assumption of $13.9~~was paid at closing and $0.5 million in debt. During the third quarter 2017, the Company revised its initial estimated fair values for certain property, plant and equipment, intangibles and other assets and liabilities.The impact of the revisions madewas paid in the third quarter ~~2017 is immaterial to the consolidated balance sheet and results~~ of ~~operations~~2019. The purchase price allocation for ~~the three and nine months ended September 30, 2017. The Company expects to finalize its valuation~~EP was finalized as of ~~real property and income taxes in the fourth quarter of 2017.~~December 31, 2019. The purchase agreement stipulates potential contingent consideration of up to ~~$2.1~~an additional $1.0 million based on ~~achievement of certain EBITDA targets for 2016~~two-year cumulative earnings before interest and ~~2017. The EBITDA target for 2016 was not achieved.~~taxes. The estimated fair value of the contingent consideration, valued using level 3 inputs, was approximately ~~$0.4~~$1.0 million as of ~~September~~June 30, ~~2017.~~2020.

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Notes to Unaudited Condensed Consolidated Financial Statements

~~September~~June 30, ~~2017~~2020

NOTE 57 — Inventories

~~The components of inventory~~Inventories, net consist of the following:



	June 30, 2020		December 31, 2019
	(In millions)
Raw materials and supplies	$	93.7	$	92.6
Work in process	51.6		51.3
Finished goods	168.4		181.3
LIFO reserve	2.0		2.0
Inventories, net	$	315.7	$	327.2

September 30, 2017 December 31, 2016
(In millions)
Finished goods $ 150.3
$ 131.4
Work in process 47.1
43.4
Raw materials and supplies 70.9
65.8
Inventories, net $ 268.3
$ 240.6

NOTE 68 — Accrued Warranty Costs

The Company estimates warranty claims ~~on products sold~~ that may be incurred based on current and historical ~~data.~~data of products sold. Actual warranty expense could differ from the estimates made by the Company based on product performance. The following table presents changes in the Company’s product warranty liability for the ~~nine~~three months and six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016:~~2019:



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(In millions)
Beginning balance	$	6.8		$	6.7		$	6.4		$	6.2
Claims paid	(0.4		)	(0.8		)	(0.6		)	(1.6		)
Warranty expense	0.1			1.2			0.7			2.5
Ending balance	$	6.5		$	7.1		$	6.5		$	7.1

2017 2016
(In millions)
January 1 $ 7.1
$ 6.1
Claims paid (3.0 ) (1.7 )
Warranty expense, net 3.6
1.1
September 30 $ 7.7
$ 5.5

NOTE 79 — Income Taxes

The Company’s tax provision for interim periods is determined using an estimate of its annual effective ~~income tax~~ rate, adjusted for discrete items, if any, in each period. ~~Each quarter,~~

On March 27, 2020, the President of the United States signed the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, a substantial tax-and-spending package intended to provide additional economic stimulus to address the impact of the COVID-19 pandemic. Significant impacts of the CARES Act include the ability to carry back a net operating loss for five years and an increase of the Internal Revenue Code Section 163(j) interest expense disallowance limitations from 30% to 50% of adjusted taxable income, which will allow the Company ~~updates its estimated annual effective~~to deduct additional interest expense for the 2019 and 2020 tax years. The Company is assessing the potential impact of global relief packages and the CARES Act, including the effect upon the Company’s 2019 income tax return to be filed later in 2020, as well as the 2020 tax provision. Management continues to evaluate various impacts of the CARES Act.

Income tax benefit for the three months ended June 30, 2020 was $9.6 million, representing an effective rate ~~and if the estimated~~of 36.1%, compared to income tax expense of $4.2 million, or 34.3%, for the three months ended June 30, 2019. The rate ~~changes,~~in the 2020 period is higher than the U.S. statutory rate of 21% due primarily to a ~~cumulative adjustment~~U.S. net operating loss carryback to a prior year under the CARES Act. The rate in the 2019 period is ~~made. The~~higher than the U.S. statutory rate due to the impact of the $6.0 million one-time, non-deductible payment related to the resignation of the Company's former President.

Income tax benefit for the six months ended June 30, 2020 was $4.1 million, representing an effective rate of 20.7%, compared to income tax ~~rates~~expense of $8.1 million, or 29.2%, for the ~~first nine~~six months ~~of 2017 and 2016 were 28.6% and 18.3%, respectively.~~ended June 30, 2019. The ~~rates for both periods reflect~~rate in the ~~reversal of various income tax accruals, totaling $1.4~~2019 period includes the $6.0 million in 2017 and $4.0 million in 2016, relating to previous uncertain tax positions for which the statutes of limitations expired. The Company recognizes accrued interest and penalties related to uncertain tax positions in income tax expense.one-time, non-deductible payment mentioned above.

~~NOTE 8 — Financing Arrangements~~

~~Long-term debt consists of the following:~~

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Notes to Unaudited Condensed Consolidated Financial Statements

~~September~~June 30, ~~2017~~2020

NOTE 10 — Financing Arrangements

Debt consists of the following:



				Carrying Value at
	Maturity Date	Interest Rate at June 30, 2020		June 30, 2020			December 31, 2019
				(In millions)
Senior Notes	April 15, 2027	6.625	%	$	350.0		$	350.0
Revolving credit facility	November 26, 2024	1.37	%	181.3			173.2
Industrial Equipment Group European Facilities	December 21, 2021	3.25	%	—			4.6
Finance Leases	Various	Various		16.7			17.2
Other	Various	Various		24.3			23.5
Total debt				572.3			568.5
Less current portion of long-term debt and short-term debt				(12.6		)	(16.8		)
Less unamortized debt issuance costs				(5.9		)	(6.5		)
Total long-term debt, net				$	553.8		$	545.2

Carrying Value at
Maturity Date
Interest Rate at
September 30, 2017
September 30, 2017 December 31, 2016
(In millions)
Senior Notes due 2027 April 15, 2027 6.625 % $ 350.0
$ —
Senior Notes due 2021 April 1, 2021 8.125 % —
250.0
Revolving credit facility April 17, 2022 3.08 % 100.3
132.8
Term Loan —
23.4
Industrial Equipment Group European Facilities December 21, 2021 3.25 % 28.0
26.4
Capital Leases Various Various
18.9
18.8
Other Various Various
22.1
23.6
Gross debt 519.3
475.0
Less current portion of long-term debt (14.2 ) (25.8 )
Less short-term debt (3.9 ) (5.0 )
Less unamortized debt issuance costs (8.9 ) (5.2 )
Total long-term debt, net $ 492.3
$ 439.0

~~On April 17, 2017,~~In 2018, Park-Ohio Industries, Inc. (“Park-Ohio”), the operating subsidiary of Park-Ohio Holdings Corp., entered into Amendment No. 1 to Seventh Amended and Restated Credit Agreement (the “Credit Agreement”) with a group of banks to increase the availability under the revolving credit facility from $350.0 million to $375.0 million, the Canadian revolving subcommitment from $35.0 million to $40.0 million and the European revolving subcommitment from $25.0 million to $30.0 million. Furthermore, Park-Ohio has the option, pursuant to the Credit Agreement, to increase the availability under the revolving credit facility by an aggregate incremental amount up to $100.0 million. In 2019, Park-Ohio entered into Amendment No. 4 to the Credit Agreement, extending the maturity of the Credit Agreement to November 26, 2024.

We had outstanding bank guarantees and letters of credit of approximately $30.6 million at June 30, 2020 and $33.8 million at December 31, 2019 under the Credit Agreement.

In 2017, Park-Ohio completed the issuance, in a private placement, of $350.0 million aggregate principal amount of 6.625% Senior Notes due 2027 (the ~~“Notes”~~“Notes��). ~~Interest on the Notes is payable semi-annually in arrears on April 15 and October 15 of each year, commencing on October 15, 2017, and the Notes mature on April 15, 2027.~~ The Notes are unsecured senior obligations of Park-Ohio and are guaranteed on an unsecured senior basis by the 100% owned material domestic subsidiaries of Park-Ohio. Proceeds from the Notes issuance were used to repay in full the previously-outstanding 8.125% Senior Notes due 2021 in the aggregate principal amount of $250.0 million, the term loan and a portion of the borrowings outstanding under the revolving credit facility.

On April 17, 2017, Park-Ohio also entered into a seventh amended and restated credit agreement (the “Amended Credit Agreement”) with a group of banks to increase the revolving credit facility to $350.0 million and extend the maturity date of borrowings under the facility to April 17, 2022. Furthermore, Park-Ohio has the option, pursuant to the Amended Credit Agreement, to increase the availability under the revolving credit facility by an aggregate incremental amount up to $100.0 million.

In connection with the April 2017 repurchase of Senior Notes due 2021 and amendment of our credit agreement, we recorded an $11.0 million loss on extinguishment of debt, representing premiums paid on early extinguishment of $8.0 million, the write-off of unamortized prior debt issuance costs of $2.5 million, and related fees and expenses of $0.5 million.

~~On December 21,~~ 2016, the Company, through its subsidiary, IEGE Industrial Equipment Holding Company Limited, entered into a financing agreement with Banco Bilbao Vizcaya Argentaria, S.A. The financing agreement provides the Company a loan up to $28.0 million as of ~~September~~June 30, ~~2017,~~2020, as well as a revolving credit facility for up to ~~$11.8~~$11.2 million to fund working capital and general corporate needs. ~~The full $28.0 million~~NaN amounts were outstanding under the loan ~~is outstanding as of September 30, 2017. No amounts have been drawn on~~agreement or the revolving credit facility as of ~~September~~June 30, ~~2017.~~2020.

~~On August 13,~~In 2015, the Company entered into a ~~Capital Lease Agreement~~finance lease agreement (the “Lease Agreement”). The Lease Agreement provides the Company up to $50.0 million for ~~capital~~finance leases. ~~Capital~~Finance lease obligations of ~~$18.9~~$16.7 million were borrowed under the Lease Agreement to acquire machinery and equipment as of ~~September~~June 30, ~~2017.~~2020.

~~On October 21,~~In 2015, the Company, through its Southwest Steel Processing LLC subsidiary, entered into a financing agreement with the Arkansas Development Finance Authority. The financing agreement provides the Company the ability to borrow up to $11.0 million for expansion of its manufacturing facility in Arkansas. The financing agreement matures in September 2025. The

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Notes to Unaudited Condensed Consolidated Financial Statements

~~September~~June 30, ~~2017~~2020

~~September 2025. The~~ Company had ~~$5.6~~$7.8 million of borrowings outstanding under this agreement as of ~~September~~June 30, ~~2017,~~2020, which is included in Other above.

The following table represents fair value information of the Notes, classified as Level 1 using estimated quoted market prices.



	June 30, 2020		December 31, 2019
	(In millions)
Carrying amount	$	350.0	$	350.0
Fair value	$	288.9	$	358.3

September 30, 2017
(In millions)
Carrying amount $ 350.0
Fair value $ 378.9

NOTE 911 — Stock-Based Compensation

~~A summary of stock option activity for the nine months ended September 30, 2017 is as follows:~~

2017
Number of Shares Weighted Average
Exercise Price
(In whole shares)
Outstanding - beginning of year 38,000
19.30
Granted —
—
Exercised (24,907 ) 21.22
Canceled or expired —
—
Outstanding - end of period 13,093
15.61
Options exercisable 13,093
15.61

A summary of restricted share activity for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 is as follows:



	2020
	Time-Based				Performance-Based
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
	(In whole shares)				(In whole shares)
Outstanding - beginning of year	471,634		$	32.06	50,000	$	32.55
Granted^(a)	296,093		17.73		—	—
Vested	(131,038	)	37.48		—	—
Canceled or expired	(5,000	)	37.55		—	—
Outstanding - end of period	631,689		$	24.11	50,000	$	32.55

2017
Time-Based Performance-Based
Number of Shares Weighted Average
Grant Date
Fair Value Number of Shares Weighted Average
Grant Date
Fair Value
(In whole shares) (In whole shares)
Outstanding - beginning of year 216,916
$ 36.94
165,000
$ 34.78
Granted 104,670
38.41
165,000
38.10
Vested (89,404 ) 44.39
(55,000 ) 34.78
Performance-based to time-based ^(a)
110,000
34.78
(110,000 ) 34.78
Canceled or expired (2,000 ) 37.87
—
—
Outstanding - end of period 340,182
$ 34.73
165,000
$ 38.10

(a) ~~During~~- Included in the ~~first quarter~~granted amount are 6,100 restricted share units.

Stock-based compensation is included in Selling, general and administrative expenses in the consolidated statements of 2017, 55,000 of the performance-based restricted shares granted in 2016 fully vested based on the achievement of the performance criteria. In accordance with the grant agreements, the remaining 110,000 shares became time-based, vesting over the remaining two years of the requisite service period.

(loss) income. Total stock-based compensation expense ~~included in selling, general~~(benefit) for the three months ended June 30, 2020 and ~~administrative expenses during the first nine months of 2017 and 2016~~2019 was ~~$6.3~~$1.3 million and ~~$8.1~~$(0.2) million, respectively. Total stock-based compensation expense for the six months ended June 30, 2020 and 2019 was $2.7 million and $1.7 million, respectively. As of ~~September~~June 30, ~~2017,~~2020, there was ~~$11.4~~$11.0 million of

~~Table of Contents~~

~~Park-Ohio Holdings Corp. and Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~September 30, 2017~~

unrecognized compensation cost related to non-vested stock-based compensation, which cost is expected to be recognized over a weighted-average period of ~~1.8~~2.4 years.

NOTE 1012 — Commitments ~~Contingencies~~ and ~~Litigation Settlement~~Contingencies

The Company is subject to various pending and threatened legal proceedings arising in the ordinary course of business. The Company records a liability for loss contingencies in the consolidated financial statements when a loss is known or considered probable and the amount can be reasonably estimated. Our provisions are based on historical experience, current information and legal advice, and they may be adjusted in the future based on new developments. Estimating probable losses requires the analysis of multiple forecasted factors that often depend on judgments and potential actions by third parties. Although it is not possible to predict with certainty the ultimate outcome or cost of these matters, the Company believes they will not have a material adverse effect on our consolidated financial statements.

IPSCO Tubulars Inc. d/b/a TMK IPSCO sued Ajax Tocco Magnethermic Corporation (“ATM”), a subsidiary of Park-Ohio Holdings Corporation, in the United States District Court for the Eastern District of Arkansas claiming that equipment supplied by ATM for heat treating certain steel pipe at IPSCO's Blytheville, Arkansas facility did not perform as required by the contract. The complaint alleged causes of action for breach of contract, gross negligence and constructive fraud. IPSCO sought approximately $10.0 million in damages plus an unspecified amount of punitive damages. In September 2013, the district court issued a judgment in favor of IPSCO in the amount of $5.2 million, which the Company recognized and accrued for at that time. In March 2016, the district court issued an order granting, in part, IPSCO's motion for fees and costs and awarding $2.2 million to IPSCO, which the Company accrued for as of December 31, 2015. ATM filed a third appeal of that decision. On March 28, 2017, the Company and IPSCO agreed to a settlement and release of all claims for the payment by the Company of $4.0 million to IPSCO, which was made in March 2017. As of the settlement date, the Company had $7.3 million accrued for this matter. The Company reversed the excess liability and recognized $3.3 million in income in the first quarter of 2017.

Our subsidiaries are involved in a number of contractual and warranty-related disputes. We believe that appropriate liabilities for these contingencies have been recorded; however, actual results may differ materially from our estimates.

In August 2013, the Company received a subpoena from the staff of the Securities and Exchange Commission (“SEC”) in connection with the staff’s investigation of a third party. At that time, the Company also learned that the U.S. Department of Justice (“DOJ”) is conducting a criminal investigation of the third party. In connection with its initial responseaddition to the ~~staff’s subpoena, the Company disclosed to the staff of the SEC that,~~routine lawsuits and asserted claims noted above, we are also a co-defendant in ~~November 2007, the third party participated in a payment~~approximately 118 cases asserting claims on behalf of ~~the Company~~approximately 220 plaintiffs alleging personal injury as a result of exposure to a foreign tax official that implicates the Foreign Corrupt Practices Act. The Board of Directors of the Company formed a special committee to review the Company’s transactions with the third party and to make any recommendations to the Board of Directors with respect thereto. The Company intends to cooperate fully with the SEC and the DOJ in connection with their investigations of the third party and with the SEC in light of the Company’s disclosure. The Company is unable to predict the outcome or impact of the special committee’s investigation or the length, scope or results of the SEC’s review or the impact on its results of operations.asbestos. In every

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Park-Ohio Holdings Corp. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

~~September~~June 30, ~~2017~~2020

asbestos case in which we are named as a party, the complaints are filed against multiple named defendants. Historically, we have been dismissed from asbestos cases. We intend to vigorously defend these cases and believe we will continue to be successful in being dismissed from such cases.

While it is not possible to predict the ultimate outcome of asbestos-related lawsuits, claims and proceedings due to the unpredictable nature of personal injury litigation, and although our results of operations and cash flows for a particular period could be adversely affected by asbestos-related lawsuits, claims and proceedings, management believes that the ultimate resolution of these matters will not have a material adverse effect on our financial condition, liquidity or results of operations.

NOTE 1113 — Pension and Postretirement Benefits

The components of net periodic benefit (income) costs recognized ~~during interim periods~~for the three months and six months ended June 30, 2020 and 2019 were as follows:



	Pension Benefits												Postretirement Benefits
	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,				Six Months Ended June 30,
	2020			2019			2020			2019			2020		2019		2020		2019
	(In millions)
Service costs	$	1.1		$	0.9		$	2.2		$	1.8		$	—	$	—	$	—	$	—
Interest costs	0.6			0.6			1.1			1.3			0.1		—		0.1		0.1
Expected return on plan assets	(2.9		)	(2.7		)	(5.8		)	(5.4		)	—		—		—		—
Recognized net actuarial loss	0.5			0.5			1.0			1.1			—		0.1		0.1		0.1
Net periodic benefit (income) expense	$	(0.7	)	$	(0.7	)	$	(1.5	)	$	(1.2	)	$	0.1	$	0.1	$	0.2	$	0.2

Pension Benefits Postretirement Benefits
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016 2017 2016 2017 2016
(In millions)
Service costs $ 0.6
$ 0.6
$ 1.9
$ 1.8
$ —
$ —
$ —
$ —
Interest costs 0.4
0.5
1.3
1.4
0.1
0.1
0.2
0.3
Expected return on plan assets (2.4 ) (2.3 ) (7.2 ) (7.1 ) —
—
—
—
Recognized net actuarial loss 0.3
0.3
0.9
0.9
—
—
0.1
0.2
Net periodic benefit (income) costs $ (1.1 ) $ (0.9 ) $ (3.1 ) $ (3.0 ) $ 0.1
$ 0.1
$ 0.3
$ 0.5
Weighted average:
Discount rate 3.91 % 4.13 % 3.63 % 3.80 %
Expected return on plan assets 8.25 % 8.25 %

NOTE 1214 — Accumulated Other Comprehensive ~~Loss~~(Loss) Income

The components of and changes in accumulated other comprehensive loss for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 were as follows:

Cumulative Translation Adjustment Pension and Postretirement Benefits Total
(In millions)
January 1, 2017 $ (30.8 ) $ (11.9 ) $ (42.7 )
Foreign currency translation adjustments^(a)
18.9
—
18.9
Pension and OPEB activity, net of tax adjustments ^(b)
—
0.6
0.6
September 30, 2017 $ (11.9 ) $ (11.3 ) $ (23.2 )

January 1, 2016 $ (16.9 ) $ (13.1 ) $ (30.0 )
Foreign currency translation adjustments ^(a)
(5.3 ) —
(5.3 )
Pension and OPEB activity, net of tax adjustments ^(b)
—
0.7
0.7
September 30, 2016 $ (22.2 ) $ (12.4 ) $ (34.6 )



	Cumulative Translation Adjustment			Pension and Postretirement Benefits			Total			Cumulative Translation Adjustment			Pension and Postretirement Benefits			Total
	(In millions)
	Three Months Ended June 30, 2020									Three Months Ended June 30, 2019
Beginning balance	$	(39.0	)	$	(14.1	)	$	(53.1	)	$	(20.6	)	$	(14.3	)	$	(34.9	)
Currency translation ^(a)	2.9			—			2.9			(2.5		)	—			(2.5		)
Pension and OPEB activity, net of tax	—			0.4			0.4			—			0.4			0.4
Ending balance	$	(36.1	)	$	(13.7	)	$	(49.8	)	$	(23.1	)	$	(13.9	)	$	(37.0	)

	Six Months Ended June 30, 2020									Six Months Ended June 30, 2019
Beginning balance	$	(22.4	)	$	(14.6	)	$	(37.0	)	$	(21.3	)	$	(19.6	)	$	(40.9	)
Currency translation ^(a)	(13.7		)	—			(13.7		)	(1.8		)	—			(1.8		)
Pension and OPEB activity, net of tax	—			0.9			0.9			—			5.7			5.7
Ending balance	$	(36.1	)	$	(13.7	)	$	(49.8	)	$	(23.1	)	$	(13.9	)	$	(37.0	)


(a)	No income taxes ~~are~~were provided on ~~foreign~~ currency translation ~~adjustments~~ as foreign earnings are considered permanently ~~re-invested.~~reinvested.


~~(b)~~	~~The tax adjustments are reclassified out of accumulated other comprehensive income and included in income tax expense.~~

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Park-Ohio Holdings Corp. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2020

NOTE 1315 — Weighted-Average Number of Shares Used in Computing Earnings Per Share

The following table sets forth the weighted-average number of shares used in the computation of earnings per share:



	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
	(In millions)
Weighted-average basic shares outstanding	12.1	12.2	12.2	12.2
Plus: Dilutive impact of employee stock awards	—	0.2	—	0.2
Weighted-average diluted shares outstanding	12.1	12.4	12.2	12.4

~~Table of Contents~~

~~Park-Ohio Holdings Corp. and Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~September 30, 2017~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In millions)
Weighted average basic shares outstanding 12.2
12.1
12.2
12.1
Plus: Dilutive impact of employee stock awards 0.2
0.2
0.2
0.2
Weighted average diluted shares outstanding 12.4
12.3
12.4
12.3

~~Outstanding~~Certain restricted stock ~~options with exercise prices greater than the average price of the common shares~~awards are anti-dilutive and ~~are~~therefore excluded infrom the computation of diluted earnings per share. ~~There~~Anti-dilutive shares were ~~no anti-dilutive shares~~0.3 million and 0.0 million for the ~~nine~~three months ended ~~September~~June 30, ~~2017~~2020 and ~~2016.~~2019, respectively. Anti-dilutive shares were 0.3 million and 0.0 million for the six months ended June 30, 2020 and 2019, respectively.

~~NOTE 14 - Asset Impairment~~

In the first quarter of 2016, due to the accelerated end of production in certain programs with an automotive customer, the Company evaluated its long-lived assets in accordance with ASU 360, "Property, Plant and Equipment." As the carrying value of the assets exceeded the expected undiscounted cash flows, the Company estimated the fair value of these assets to determine whether impairment existed. The fair value of the assets was estimated, using Level 2 inputs, based on the expected sale proceeds of similar machinery and equipment as determined using third party quotes and appraisals. As a result of its analysis, the Company recorded an asset impairment charge of $4.0 million.

~~NOTE 15— Subsequent Events~~

On November 1, 2017, the Company's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be paid on November 28, 2017 to shareholders of record as of the close of business on November 14, 2017 and will result in a cash outlay of approximately $1.6 million.

In October 2017, the Company completed the acquisition of Heads & All Threads Ltd. (“HAT”). Headquartered in Birmingham, United Kingdom, HAT is a leading European supplier of supply chain management services with operations in the United Kingdom, Czech Republic, Poland, and India. HAT, which has annual revenues of approximately $35.0 million, specializes in developing vendor-managed inventory programs of fasteners, machined parts and other class C components to many end markets, including construction, automotive and various electronics manufacturing services markets. HAT is a direct complement to and will be reporting in our Supply Technologies segment from the date of acquisition.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our condensed consolidated financial statements include the accounts of Park-Ohio Holdings Corp. and its subsidiaries (collectively, “we,” “our,” or the “Company”). All significant intercompany transactions have been eliminated in consolidation.

EXECUTIVE OVERVIEW

We are ~~an industrial Total Supply Management™~~a diversified international company providing world-class customers with a supply chain management outsourcing service, capital equipment used on their production lines, and ~~diversified manufacturing business, operating in~~manufactured components used to assemble their products. We operate through three reportable segments: Supply Technologies, Assembly Components and Engineered Products.

Supply Technologies provides our customers with Total Supply Management™, a proactive solutions approach that manages the efficiencies of every aspect of supplying production parts and materials to our customers’ manufacturing floor, from strategic planning to program implementation. Total Supply Management™ includes such services as engineering and design support, part usage and cost analysis, supplier selection, quality assurance, bar coding, product packaging and tracking, just-in-time and point-of-use delivery, electronic billing services and ongoing technical support. Our Supply Technologies business services customers in the following principal industries: heavy-duty truck; ~~automotive, truck and vehicle parts; power~~ sports and recreational equipment; ~~bus~~aerospace and ~~coaches;~~defense; semiconductor equipment; electrical distribution and controls; consumer electronics; bus and coaches; automotive, agricultural and construction equipment; ~~consumer electronics;~~ HVAC; lawn and garden; ~~semiconductor equipment; aerospace~~plumbing; and ~~defense; and plumbing.~~medical.

Assembly Components manufactures ~~parts and assemblies and provides value-added design, engineering and assembly services that are incorporated into our customer’s end~~ products ~~and~~ oriented ~~toward improving~~towards fuel efficiency and ~~reducing weight in~~reduced emission standards. Assembly Components designs, develops and manufactures aluminum products and highly efficient, high pressure direct fuel injection fuel rails and pipes; fuel filler pipes that route fuel from the ~~customer's end products.~~gas cap to the gas tank; flexible multi-layer plastic and rubber assemblies used to transport fuel from the vehicle's gas tank and then, at extreme high pressure, to the engine's fuel injector nozzles. Our product offerings include gasoline direct injection systems and fuel filler assemblies, and industrial hose and injected molded rubber and plastic components. Additional products include cast and machined aluminum engine, transmission, brake, suspension and other components, such as pump housings, clutch retainers/pistons, control arms, knuckles, master cylinders, pinion housings, brake calipers, oil pans and flywheel spacers. Our products are primarily used in the following industries: automotive, including ~~SUV/minivan/light-truck; agricultural; construction;~~automotive and light-vehicle; agricultural equipment; construction equipment; heavy-duty truck; and marine original equipment manufacturers (“OEMs”), on a sole-source basis.

Engineered Products operates a diverse group of niche manufacturing businesses that design and manufacture a broad range of highly-engineered products, including induction heating and melting systems, pipe threading ~~systems, industrial oven~~ systems and forged and machined products. Engineered Products also produces and provides services and spare parts for the equipment it manufactures. The principal customers of Engineered Products are OEMs, sub-assemblers and end users in the following industries: ferrous

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and non-ferrous metals; silicon; coatings; forging; foundry; heavy-duty truck; construction equipment; automotive; oil and gas; locomotive and rail manufacturing; and aerospace and ~~defense industries.~~defense.

Sales and segment operating income for these three segments are provided in Note 34 to the condensed consolidated financial statements, included elsewhere herein.

~~Subsequent Events~~COVID-19 Pandemic

In March 2020, the World Health Organization categorized the novel coronavirus (“COVID-19”) as a pandemic, and it continues to spread throughout the United States and other countries across the world. To limit the spread of COVID-19, governments have taken various actions, including the issuance of stay-at-home orders and social distancing guidelines, causing some businesses to suspend operations and a reduction in demand for many products from direct or ultimate customers. Accordingly, businesses have adjusted, reduced or suspended operating activities. This has negatively impacted several of the markets we serve, including the North American automotive market, which shut down production in mid-March 2020. In late May, North American automotive production began a slow re-start, and at that time, our facilities in that market re-opened. While a number of our plants in our other segments continued to operate as essential businesses, many suspended or cut back on operating levels and shifts in response to lower customer demand as a result of the pandemic.

~~Table~~As a result of ~~Contents~~

curtailed operations, we have taken actions in many of our operations to reduce the work force mostly through furloughs, although reductions in some positions are expected to be permanent. As of June 30, 2020, we have brought back approximately 75% of our furloughed workforce as demand has started to increase. We will continue to review if and when additional such actions may be appropriate throughout the Company. We also temporarily suspended our quarterly cash dividend to further enhance our liquidity.

~~On November 1, 2017,~~While we expect the ~~Company's Board~~effects of ~~Directors declared a quarterly dividend~~the pandemic and the related responses to negatively impact our results of ~~$0.125 per common share. The dividend will be paid~~operations, cash flows and financial position, the uncertainty over the duration and severity of the economic and operational impacts of COVID-19 means we cannot reasonably estimate the related financial impact at this time.

Although there is significant uncertainty related to the anticipated impact of the recent COVID-19 outbreak on ~~November 28, 2017 to shareholders~~our future results, we believe our diversified portfolio of ~~record~~global businesses, our liquidity position of $196.9 million as of June 30, 2020, and the ~~close of~~recent steps we have taken to reduce costs, leave us well-positioned to manage our business ~~on November 14, 2017 and will result in a cash outlay of approximately $1.6 million.~~through this crisis as it continues to unfold.

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RESULTS OF OPERATIONS

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

Three Months Ended September 30,
2017 2016 $ Change % Change
(Dollars in millions, except per share data)
Net sales $ 352.2
$ 312.7
$ 39.5
12.6 %
Cost of sales 295.0
258.4
36.6
14.2 %
Gross profit 57.2
54.3
2.9
5.3 %
Gross margin 16.2 % 17.4 %
SG&A expenses 36.5
33.4
3.1
9.3 %
SG&A as a percentage of net sales 10.4 % 10.7 %
Operating income 20.7
20.9
(0.2 ) (1.0 )%
Interest expense 7.8
7.2
0.6
8.3 %
Income before income taxes 12.9
13.7
(0.8 ) (5.8 )%
Income tax expense (benefit) 2.7
(0.1 ) 2.8
*
Net income 10.2
13.8
(3.6 ) (26.1 )%
Net income attributable to noncontrolling interest (0.2 ) (0.3 ) 0.1
(33.3 )%
Net income attributable to Park-Ohio Holdings Corp. common shareholders $ 10.0
$ 13.5
$ (3.5 ) (25.9 )%

Earnings per common share attributable to Park-Ohio Holdings Corp. common shareholders:
Basic $ 0.82
$ 1.12
$ (0.30 ) (26.8 )%
Diluted $ 0.80
$ 1.10
$ (0.30 ) (27.3 )%



	Three Months Ended June 30,
	2020			2019			$ Change			% Change
	(Dollars in millions, except per share data)
Net sales	$	228.3		$	415.3		$	(187.0	)	(45.0	)%
Cost of sales	214.1			349.1			(135.0		)	(38.7	)%
Gross profit	14.2			66.2			(52.0		)	(78.5	)%
Gross margin	6.2		%	15.9		%
Selling, general and administrative (“SG&A”) expenses	35.1			46.9			(11.8		)	(25.2	)%
SG&A expenses as a percentage of net sales	15.4		%	11.3		%
Operating (loss) income	(20.9		)	19.3			(40.2		)	*
Other components of pension income and other postretirement benefits expense, net	1.8			1.5			0.3			20.0	%
Interest expense, net	(7.5		)	(8.7		)	1.2			(13.8	)%
(Loss) income before income taxes	(26.6		)	12.1			(38.7		)	*
Income tax benefit (expense)	9.6			(4.2		)	13.8			*
Net (loss) income	(17.0		)	7.9			(24.9		)	*
Net loss (income) attributable to noncontrolling interest	0.4			(0.3		)	0.7			*
Net (loss) income attributable to Park-Ohio Holdings Corp. common shareholders	$	(16.6	)	$	7.6		$	(24.2	)	*

(Loss) income per common share attributable to Park-Ohio Holdings Corp. common shareholders:
Basic	$	(1.38	)	$	0.62		$	(2.00	)	*
Diluted	$	(1.38	)	$	0.61		$	(1.99	)	*

* Calculation not meaningful

Net Sales

Net sales ~~increased 12.6%,~~decreased 45.0% to ~~$352.2~~$228.3 million in the ~~third~~second quarter of ~~2017,~~2020 compared to ~~$312.7~~$415.3 million in the same period in ~~2016,~~2019. This decrease was primarily due to lower demand from several end markets primarily ~~to higher end market demand for~~driven by the COVID-19 pandemic. Several customer plant closures and changes in production schedules affected our ~~products~~businesses, primarily in ~~our Supply Technologies and Engineered Products segments, and sales from GH Electrotermia S.A. (“GH”), which was acquired in December 2016. In~~ our Assembly Components ~~segment, lower sales volumes in our rubber and plastic product lines were partially offset by higher sales volumes in our filler pipe and fuel rail product lines.~~segment.

The factors explaining the changes in segment net sales for the three months ended ~~September~~June 30, ~~2017~~2020 compared to the corresponding ~~2016~~2019 period are contained within the “Segment Results” section below.

Cost of Sales & Gross Profit

Cost of sales ~~increased~~decreased 38.7% to ~~$295.0~~$214.1 million in the ~~third~~second quarter of ~~2017,~~2020 compared to ~~$258.4~~$349.1 million in the same period in ~~2016.~~2019. The ~~increase~~decrease incost of sales was primarily due to the ~~increase~~decrease in net sales for the ~~2017~~2020 period compared to the ~~third quarter of 2016.~~corresponding period in 2019.

Gross margin was ~~16.2%~~6.2% in the ~~third~~second quarter of ~~2017~~2020 compared to ~~17.4%~~15.9% in the same period in ~~2016.~~2019. The decrease was ~~largely~~due primarily to lower profit flow-through from the lower sales volumes and unfavorable product mix, partially offset by the benefit of cost-reduction actions taken in response to current market conditions. The second quarter of 2020 includes charges of $2.9 million related to plant closure and consolidation, severance and other actions to reduce costs during this period. The second quarter of 2019 includes charges of $1.7 million related to plant closure and consolidation.

SG&A Expenses

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SG&A expenses decreased to $35.1 million, or 15.4% of net sales, in the second quarter of 2020 compared to $46.9 million, or 11.3% of net sales, in the same period in 2019. The amount in 2019 includes a $4.3 million charge related to departure of the Company’s former President. SG&A expenses were down 25.2% compared to the same period a year ago, driven by the benefit from cost reduction actions implemented across the company in response to the COVID-19 pandemic and the 2019 charge mentioned above. The increase in SG&A as of percentage of net sales was due to ~~start-up costs related~~a fixed portion of SG&A expenses over a lower revenue base.

Other Components of Pension Income and Other Postretirement Benefits Expense (“OPEB”), Net

Other components of pension income and OPEBexpense, net was $1.8 million in the three months ended June 30, 2020 compared to ~~our new facilities~~$1.5 million in ~~China; lower absorption~~the corresponding period in 2019. This increase in the 2020 period relates to higher returns on plan assets in the 2020 period compared to the same period a year ago.

Interest Expense, net

Interest expense, net was $7.5 million in the second quarter of 2020 compared to $8.7 million in the 2019 period. The decrease was due to lower ~~sales in our extruded rubber~~average interest rates and ~~plastics business in Assembly Components; and unfavorable mix of product sales as well as incremental costs to prepare~~lower average outstanding borrowings during the 2020 period.

Income Tax Benefit/Expense

Income tax benefit for the ~~build-out~~three months ended June 30, 2020 was $9.6 million, representing an effective rate of ~~significant new orders~~36.1%, compared to income tax expense of $4.2 million, or 34.3%, for the three months ended June 30, 2019. The rate in ~~Engineered Products. These factors more~~the 2020 period is higher than ~~offset~~ the U.S. statutory rate of 21% due primarily to a U.S. net operating loss carryback to a prior year under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The rate in the 2019 period is higher ~~profit flow-through from higher sales in our Supply Technologies business.~~than the U.S. statutory rate due to the impact of the $6.0 million one-time, non-deductible payment related to the resignation of the Company’s former President.

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~~Selling, General &Administrative ("SG&A") Expenses~~RESULTS OF OPERATIONS

~~SG&A expenses increased~~Six Months Ended June 30, 2020 Compared with Six Months Ended June 30, 2019



	Six Months Ended June 30,
	2020			2019			$ Change			% Change
	(Dollars in millions, except per share data)
Net sales	$	594.6		$	835.4		$	(240.8	)	(28.8	)%
Cost of sales	526.5			703.9			(177.4		)	(25.2	)%
Gross profit	68.1			131.5			(63.4		)	(48.2	)%
Gross margin	11.5		%	15.7		%
SG&A expenses	76.0			89.7			(13.7		)	(15.3	)%
SG&A expenses as a percentage of net sales	12.8		%	10.7		%
Operating (loss) income	(7.9		)	41.8			(49.7		)	*
Other components of pension income and OPEB expense, net	3.6			2.8			0.8			28.6	%
Interest expense, net	(15.5		)	(16.9		)	1.4			(8.3	)%
(Loss) income before income taxes	(19.8		)	27.7			(47.5		)	*
Income tax benefit (expense)	4.1			(8.1		)	12.2			*
Net (loss) income	(15.7		)	19.6			(35.3		)	*
Net loss (income) attributable to noncontrolling interests	0.3			(0.8		)	1.1			*
Net (loss) income attributable to Park-Ohio Holdings Corp. common shareholders	$	(15.4	)	$	18.8		$	(34.2	)	*

(Loss) income per common share attributable to Park-Ohio Holdings Corp. common shareholders:
Basic	$	(1.27	)	$	1.54		$	(2.81	)	*
Diluted	$	(1.27	)	$	1.51		$	(2.78	)	*

*Calculation not meaningful

Net Sales

Net sales decreased 28.8% to ~~$36.5~~$594.6 million in the ~~third quarter~~first six months of ~~2017~~2020 compared to ~~$33.4~~$835.4 million in the same period in ~~2016. The increase is~~2019. This decrease was primarily due to ~~SG&A expenses associated with GH. SG&A expenses as a percent of sales was 10.4%~~lower demand from several end markets primarily driven by the COVID-19 pandemic. Several customer plant closures and changes in ~~the third quarter of 2017 compared to 10.7%~~production schedules affected our businesses, primarily in ~~the third quarter of 2016. The percentage decrease was due primarily to fixed SG&A expenses over a higher sales base.~~

~~Interest Expense~~

Interest expense was higher in the 2017 quarter due primarily to higher outstanding borrowings in the third quarter of 2017 compared to the third quarter a year ago. Interest expense on the outstanding senior notes was higher in the third quarter due to the higher principal amount, which more than offset the lower interest rate due to the April 2017 refinancing. In addition, the third quarter of 2017 included interest expense on the GH-related debt, which the Company incurred in December 2016.

~~Income Tax Expense (Benefit)~~

The effective income tax rates were 20.9% in the 2017 period and (0.7)% in the 2016 period. The rates in both periods reflect the reversal of various income tax accruals totaling approximately $1.4 million in 2017 and $4.0 million in 2016 relating to previous uncertain tax positions for which the statues of limitations expired. The rates in both periods were also favorably impacted by earnings in foreign jurisdictions in which the income tax rates are lower than the U.S. statutory income tax rate.

~~Net Income~~

~~Net income decreased to $10.2 million in the third quarter of 2017, compared to $13.8 million in the third quarter of 2016, due primarily to the larger 2016 tax accrual reversal noted above.~~

~~Table of Contents~~

~~RESULTS OF OPERATIONS~~

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

Nine Months Ended September 30,
2017 2016 $ Change % Change
(Dollars in millions, except per share data)
Net sales $ 1,046.9
$ 970.1
$ 76.8
7.9 %
Cost of sales 873.9
813.7
60.2
7.4 %
Gross profit 173.0
156.4
16.6
10.6 %
Gross margin 16.5 % 16.1 %
SG&A expenses 109.3
99.9
9.4
9.4 %
SG&A as a percentage of net sales 10.4 % 10.3 %
Litigation settlement gain (3.3 ) —
(3.3 ) *
Asset impairment charge —
4.0
(4.0 ) *
Operating income 67.0
52.5
14.5
27.6 %
Interest expense 23.1
21.3
1.8
8.5 %
Loss on extinguishment of debt 11.0
—
11.0
*
Income before income taxes 32.9
31.2
1.7
5.4 %
Income tax expense 9.4
5.7
3.7
64.9 %
Net income 23.5
25.5
(2.0 ) (7.8 )%
Net income attributable to noncontrolling interests (0.7 ) (0.3 ) (0.4 ) *
Net income attributable to Park-Ohio Holdings Corp. common shareholders $ 22.8
$ 25.2
$ (2.4 ) (9.5 )%

Earnings per common share attributable to Park-Ohio Holdings Corp. common shareholders:
Basic $ 1.87
$ 2.08
$ (0.21 ) (10.1 )%
Diluted $ 1.83
$ 2.06
$ (0.23 ) (11.2 )%

* Calculation not meaningful

~~Net Sales~~

~~Net sales increased 7.9%, to $1,046.9 million in the first~~ ~~nine~~ ~~months of~~ ~~2017~~, compared to $970.1 million in the same period in 2016, mainly due to higher end market demand for our products in our Supply Technologies and Engineered Products segments, and sales from GH, which was acquired in December 2016. In our Assembly Components ~~segment, lower sales volumes in our rubber and plastic and aluminum product lines were partially offset by higher sales volumes in our filler pipe and fuel rail product lines.~~segment.

The factors explaining the changes in segment net sales for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 compared to the corresponding ~~2016~~2019 period are contained in the “Segment Results” section below.

Cost of Sales & Gross Profit

Cost of sales ~~increased~~decreased 25.2% to ~~$873.9~~$526.5 million in the first ~~nine~~six months of ~~2017~~,2020 compared to ~~$813.7~~$703.9 million in the same period in ~~2016~~.2019. The ~~increase~~decrease incost of sales was primarily due to the ~~increase~~decrease in net sales described above.

Gross margin was 11.5% in the first six months of 2020 compared to 15.7% in the corresponding period in 2019. The decrease was due primarily to lower profit flow-through from the lower sales volumes and unfavorable product mix, partially offset by the benefit of cost-reduction actions taken in response to current market conditions. The 2020 period includes charges

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of $3.1 million related to plant closure and consolidation, severance and other actions to reduce costs during this period. The 2019 period includes charges of $3.0 million related to plant closure and consolidation.

SG&A Expenses

SG&A expenses were $76.0 million, or 12.8% of net sales, in the ~~2017~~first six months of 2020, compared to $89.7 million, or 10.7% of net sales, in the same period in 2019. The amount in 2019 includes a $4.3 million charge related to departure of the Company’s former President. SG&A expenses were down 15.3% compared to the same period a year ago, driven by the benefit from cost reduction actions implemented across the company and the impact of the 2019 charge mentioned above. The increase in SG&A as of percentage of net sales was due to a fixed portion of SG&A expenses over a lower revenue base.

Other Components of Pension Income and OPEB, Net

Other components of pension income and OPEBexpense, net was $3.6 million in the first six months of 2020 compared to $2.8 million in the corresponding period in 2019. This increase was driven by higher returns on plan assets in the 2020 period compared to the same period a year ago.

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Interest Expense, net

~~Gross margin~~Interest expense, net was ~~16.5% in the first~~ ~~nine~~ ~~months of~~ ~~2017~~ ~~compared to 16.1% in the same period in~~ ~~2016. The increase in gross margin was largely due to the higher profit flow-through from higher overall sales in the 2017 period.~~

~~SG&A Expenses~~

~~SG&A expenses increased to $109.3~~$15.5 million in the first ~~nine~~six months of ~~2017,~~2020 compared to ~~$99.9~~$16.9 million in ~~the same period in 2016. SG&A expenses as a percent of sales increased to 10.4% in the first nine months of 2017 compared to 10.3% in the first nine months of 2016. These increases were primarily~~2019. The decrease was due to ~~the SG&A associated with GH.~~

~~Litigation Settlement Gain~~

During the first nine months of 2017, the Company paid $4.0 million to settle the IPSCO litigation. In connection with the settlement, the Company recognized $3.3 million of income related to the reversal of its excess litigation liability.

~~Asset Impairment Charge~~

An asset impairment charge of $4.0 million was recognized in the first nine months of 2016 due to the accelerated end of production in certain programs with an automotive customer in our aluminum products business.

~~Interest Expense~~

~~Interest expense was higher in the first nine months of 2017 due primarily to higher~~lower average interest rates and lower average outstanding borrowings induring the first nine months of 2017 compared to the first nine months a year ago. Interest expense on the outstanding senior notes was higher due to the higher principal amount, which more than offset the lower interest rate due to the April 2017 refinancing. In addition, the first nine months of 2017 included interest expense on the GH-related debt, which the Company incurred in December 2016. With respect to the revolving credit facility and term loan, higher interest rates in 2016 offset the benefit of lower outstanding borrowings as a result of debt repayments in connection with the debt refinancing in April 2017.2020 period.

~~Loss on Extinguishment of Debt~~

During the first nine months of 2017, we incurred $11.0 million of expenses related to our debt refinancing activities. Such expenses included tender premiums, bank and other fees and accelerated amortization of certain debt issuance costs related to our former borrowings that were previously capitalized.

Income Tax Benefit/Expense

~~The~~Income tax benefit for the six months ended June 30, 2020 was $4.1 million, representing an effective rate of 20.7%, compared to income tax expense of $8.1 million, or 29.2%, for the six months ended June 30, 2019. The rate ~~was 28.6%~~ in the ~~nine months ended September 30, 2017 compared to 18.3% in~~2019 period includes the ~~corresponding period of 2016. The rates in both periods reflect the reversal of various income tax accruals totaling approximately $1.4~~$6.0 million in 2017 and $4.0 million in 2016 relating to previous uncertain tax positions for which the statues of limitations expired. The rates in both periods were also favorably impacted by earnings in foreign jurisdictions in which the income tax rates are lower than the U.S. statutory income tax rate.

~~Net Income~~

~~Net income decreased to $23.5 million in the first nine months of 2017, compared to $25.5 million in the first nine months of 2016, due primarily to the larger 2016 tax accrual reversal noted~~one-time, non-deductible payment mentioned above.

SEGMENT RESULTS

For purposes of business segment performance measurement, the Company utilizes segment operating income, which is defined as revenues less expenses identifiable to the product lines within each segment. The Company does not allocate items that are non-operating or unusual in nature or are corporate costs, which include but are not limited to executive and ~~share-~~

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~~based~~share-based compensation and corporate office costs. ~~Segment operating income reconciles to consolidated income before income taxes by deducting corporate costs, certain non-cash items and interest expense.~~

Supply Technologies Segment


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2020			2019			2020			2019
	(Dollars in millions)												(Dollars in millions)
Net sales	$	140.2		$	122.0		$	415.8		$	384.8		$	94.4		$	161.5		$	235.2		$	326.8
Segment operating income	$	10.9		$	9.7		$	34.6		$	30.8		$	0.3		$	11.3		$	9.5		$	24.4
Segment operating income margin	7.8		%	8.0		%	8.3		%	8.0		%	0.3		%	7.0		%	4.0		%	7.5		%

Three months ended ~~September~~June 30:

Net sales ~~increased~~decreased 41.5% in the three months ended ~~September~~June 30, ~~2017~~2020 compared to the ~~2016~~2019 period due primarily to ~~higher~~lower customer demand in certain end markets, including the Company’s automotive market, primarily affecting our fastener manufacturing business; the Company's truck and truck-related market, which was ~~up 24%~~down 71% year-over-year; the Company’s power sports market, which was down 39% year-over-year; the Company’s aerospace and defense market, which was down 49% year-over-year; the Company’s industrial and agricultural equipment market, which was down 35% year-over-year; and

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the Company’s consumer products market, which was down 29% year-over-year. These decreases were partially offset by higher customer demand in the Company’s semiconductor market, which was up ~~43%~~49% year-over-year; and the ~~power sports and recreational equipment~~Company’s medical market, which was up ~~10% year-over-year; and~~110% year-over-year. Sales were negatively impacted by the ~~aerospace market, which was up 33% year-over-year. In addition, sales were higher~~COVID-19 pandemic in ~~our fastener manufacturing business in~~certain end markets, primarily automotive, during the ~~2017~~2020 period ~~due to increasing customer demand of our proprietary products.~~.

Segment operating income ~~increased~~decreased by $1.2 million due to the favorable impact of higher sales in the 2017 period compared to a year ago. Segment operating income margin decreased slightly to 7.8% compared to 8.0% in the corresponding period of 2016, due to timing of sales mix.

~~Nine months ended September 30:~~

Net sales increased in the first nine months of 2017 compared to the 2016 period due primarily to higher customer demand in the power sports and recreational equipment market, which was up 14% year-over-year; the semiconductor market, which was up 52% year-over-year; and the aerospace market, which was up 29% year-over-year. In addition, sales were higher in our fastener manufacturing business in the 2017 period due to increasing customer demand of our proprietary products.

~~Segment operating income increased by $3.8~~$11.0 million and segment operating income margin ~~increased to 8.3% compared to 8.0%~~was down 670 basis points in the ~~corresponding~~2020 period ~~of 2016. These increases were driven by the sales volume increases noted above.~~

~~Assembly Components Segment~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Dollars in millions)
Net sales $ 127.9
$ 133.4
$ 393.2
$ 399.4
Segment operating income $ 11.4
$ 13.9
$ 37.0
$ 38.3
Segment operating income margin 8.9 % 10.4 % 9.4 % 9.6 %

~~Three months ended September 30:~~

Net sales were lower in the 2017 period compared to the 2016 period due primarily to lower sales volumes in our extruded rubber and plastic product lines, which more than offset higher sales volumes in our fuel filler pipe and fuel rail product lines.

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The lower sales in our extruded rubber and plastics product lines was due to the end of life in certain programs. The higher sales volumes in our fuel products businesses were driven by new product launches and higher foreign sales.

Segment operating income in the 2017 period decreased by $2.5 million, driven by the lower sales levels noted above. The segment operating income margin for the quarter was also down due to start-up costs related to our new facilities in China; and lower absorption due to lower sales in our extruded rubber and plastics business in the third quarter of 2017 compared to the same period a year ago. These net decreases were driven by lower profit flow-through from lower sales levels and unfavorable sales mix, offset by the benefits of cost-reduction actions implemented in response to current market conditions.

~~Nine~~Six months ended ~~September~~June 30:

Net sales ~~were lower~~decreased 28.0% in the ~~2017 period~~six months ended June 30, 2020 compared to the ~~2016~~2019 period due primarily to lower ~~sales volumes~~customer demand in certain end markets, including the Company’s automotive market, primarily affecting our ~~extruded rubber~~fastener manufacturing business; the Company's truck and ~~plastic~~truck-related market, which was down 52% year-over-year; the Company's power sports market, which was down 24% year-over-year; the Company's aerospace and ~~aluminum product lines,~~defense market, which ~~more than~~was down 39% year-over-year; and the Company’s consumer products market, which was down 25% year-over-year. These decreases were partially offset by higher ~~sales volumes~~customer demand in ~~our fuel filler pipe~~the Company’s semiconductor market, which was up 48% year-over-year; and ~~fuel rail product lines. The lower sales~~the Company’s medical market, which was up 60% year-over-year. Sales were negatively impacted by the COVID-19 pandemic in ~~our extruded rubber~~certain end markets, primarily automotive, during the 2020 period.

Segment operating income decreased by $14.9 million and ~~plastic product lines were due~~segment operating income margin was down 350 basis points in the 2020 period compared to the ~~end of life in certain programs. The lower sales in aluminum were due to the end of production in certain programs in 2016. The higher sales volumes in our fuel products businesses~~same period a year ago. These net decreases were driven by lower profit flow-through from lower sales levels and unfavorable sales mix, offset by the benefits of cost-reduction actions implemented in response to current market conditions.

Assembly Components Segment



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(Dollars in millions)
Net sales	$	54.9		$	136.3		$	183.1		$	274.6
Segment operating (loss) income	$	(14.6	)	$	8.3		$	(8.3	)	$	16.6
Segment operating (loss) income margin	(26.6		)%	6.1		%	(4.5		)%	6.0		%

Three months ended June 30:

Net sales decreased 59.7% in the three months ended June 30, 2020 compared to the 2019 period due primarily to customer plant closures and reduced vehicle production, which began in mid-March 2020 and continued until late May, when the market started a slow re-opening and our facilities re-started production, albeit at lower levels than before the pandemic.

Segment operating (loss) income in the 2020 period decreased by $22.9 million, and segment operating (loss) income margin decreased to (26.6)% from 6.1% in the corresponding period of 2019. These decreases were due primarily to the impact of the lower sales volumes noted above, partially offset by the benefits of cost-reduction actions taken in response to current operating conditions as a result of the pandemic. In the 2020 period, this segment incurred charges of $2.2 million related to plant closing and consolidation and other actions to reduce costs. In the 2019 period, this segment incurred charges of $1.7 million related to plant closing and consolidation.

Six months ended June 30:

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Net sales decreased 33.3% in the six months ended June 30, 2020 compared to the 2019 period due primarily to customer plant closures and reduced vehicle production, which began in mid-March 2020 and continued until late May, when the market started a slow re-opening and our facilities re-started production, albeit at lower levels than before the pandemic.

Segment operating (loss) income in the 2020 period decreased by $24.9 million, and segment operating income (loss) margin decreased to (4.5)% from 6.0% in the corresponding period of 2019. These decreases were due primarily to the impact of the lower sales volumes noted above, partially offset by the benefits of cost-reduction actions taken in response to current operating conditions as a result of the pandemic. In the 2020 period, this segment incurred charges of $2.3 million related to plant closing and consolidation and other actions to reduce costs. In the 2019 period, this segment incurred charges of $3.1 million related to plant closing and consolidation.

Engineered Products Segment



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(Dollars in millions)
Net sales	$	79.0		$	117.5		$	176.3		$	234.0
Segment operating (loss) income	$	(0.8	)	$	11.5		$	3.0		$	19.6
Segment operating (loss) income margin	(1.0		)%	9.8		%	1.7		%	8.4		%

Three months ended June 30:

Net sales were 32.8% lower in the 2020 period compared to the 2019 period. The decrease was due to lower customer demand for new capital equipment and lower demand in certain key end markets in our forged and machined products business, including oil and gas and aerospace and defense.

Segment operating (loss) income in the 2020 period decreased by $12.3 million compared to the corresponding 2019 period. This decrease was driven by the lower sales levels, unfavorable sales mix, the negative impacts of the COVID-19 pandemic on certain product ~~launches~~lines, and ~~higher foreign sales.~~manufacturing underabsorption at certain plants. The decreases were partially offset by the benefits of cost-reduction actions that the Company has implemented in response to current market conditions.

Six months ended June 30:

Net sales were 24.7% lower in the 2020 period compared to the 2019 period. The decrease was due to lower customer demand for new capital equipment and lower demand in certain key end markets in our forged and machined products business, including oil and gas and aerospace and defense. These decreases were partially offset by the sales from our Erie Press acquisition in May 2019.

Segment operating income in the ~~first nine months of 2017~~2020 period decreased by ~~$1.3~~$16.6 million and segment operating income margin decreased ~~to 9.4%~~by 670 basis points compared to ~~9.6% in~~ the corresponding ~~period of 2016.~~2019 period. These decreases were driven by the lower sales ~~volumes noted above.~~

~~Engineered Products Segment~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Dollars in millions)
Net sales $ 84.1
$ 57.3
$ 237.9
$ 185.9
Segment operating income $ 6.0
$ 4.0
$ 13.5
$ 8.6
Segment operating income margin 7.1 % 7.0 % 5.7 % 4.6 %

~~Three months ended September 30:~~

~~Net~~levels, unfavorable sales mix, the negative impacts of the COVID-19 pandemic on certain product lines, and manufacturing underabsorption at certain plants. The decreases were 47% higher in the 2017 period compared to the 2016 period due primarily to sales from GH of $13.2 million, which was acquired in December 2016, and increased customer demand for our induction heating and pipe threading products.

Segment operating income in the 2017 period increased by $2.0 million and segment operating income margin improved to 7.1% compared to 7.0% in the corresponding 2016 period. These increases were drivenpartially offset by the ~~higher sales~~benefits of cost-reduction actions that the Company has implemented in ~~the 2017 quarter compared~~response to ~~the same quarter a year ago.~~current market conditions.

~~Nine months ended September 30:~~

Net sales were 28% higher in the 2017 period compared to the 2016 period due primarily to sales from GH of $37.3 million, which was acquired in December 2016, and increased customer demand for our induction heating and pipe threading products.

Segment operating income in the 2017 period increased by $4.9 million, and segment operating income margin improved to 5.7% compared to 4.6% in the corresponding 2016 period. These increases were driven by the higher sales in 2017 compared to a year ago.

Liquidity and Capital Resources

2325

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The following table summarizes the major components of cash flow:


	Nine Months Ended September 30,									Six Months Ended June 30,
	2017			2016			$ Change			2020			2019			$ Change
Net cash (used) provided by:	(In millions)									(In millions)
Operating activities	$	27.2		$	40.8		$	(13.6	)	$	9.5		$	2.8		$	6.7
Investing activities	(29.4		)	(20.3		)	(9.1		)	(8.0		)	(28.3		)	20.3
Financing activities	13.5			(24.4		)	37.9			(4.3		)	14.8			(19.1		)
Effect of exchange rate changes on cash	5.1			(0.4		)	5.5			(1.3		)	0.3			(1.6		)
Increase (decrease) in cash and cash equivalents	$	16.4		$	(4.3	)	$	20.7		$	(4.1	)	$	(10.4	)	$	6.3

Operating Activities

Cash ~~provided~~generated by operating activities ~~decreased~~in the 2020 period was higher than in the prior year period, as the Company reduced working capital levels in response to current market conditions, which more than offset the low profitability in 2020.

Investing Activities

Capital expenditures were $9.4 million in the six months ended June 30, 2020 and were primarily to provide increased capacity for future growth in our Assembly Components segment and to maintain existing operations. In the first six months of 2019, we had $20.7 million of capital expenditures. The lower capital expenditures in the 2020 period reflect our decision to reduce spending in response to current market conditions and to enhance our liquidity. In the first six months of 2020, we had proceeds of $1.4 million from the ~~prior-year period due~~sale of an asset.

Financing Activities

During the six months ended June 30, 2020, we had net borrowing on our revolving credit and other facilities of $3.3 million to ~~higher working~~fund our capital ~~needs driven by higher sales levels in 2017, as well as~~expenditures and our common share repurchases. We also repaid the ~~$4.0~~remaining balance of $4.5 million ~~litigation settlement payment~~on our loan with Banco Bilbao Vizcaya Argentaria, S.A. In the six months ended June 30, 2019, we had net debt repayments of $1.4 million. We paid dividends to shareholders of $1.6 million in the first ~~quarter~~six months of ~~2017. Higher sales levels drove an increase~~2020 and $3.2 million in ~~accounts receivable~~in the first six months of ~~$29.9 million.~~

~~Investing Activities~~

~~Capital expenditures decreased by $1.4 million compared to the prior-year period due to timing of expenditures. In 2017,~~2019, as we ~~completed the acquisition of AMC for $10.5 million. See Note 4 to the condensed consolidated financial statements for details.~~

~~Financing Activities~~

Cash provided by financing activities in 2017 reflected the net proceeds from our issuance of senior notes in April 2017, partially offset by net repayments under our amended and restated revolving credit facility and the payoff of our previously-outstanding term loan. Overall, our net borrowings and cash provided by operating activities were used to fund higher working capital needs, the litigation settlement payment,suspended our quarterly cash dividend payments, share repurchases, and debt refinancing costs. In addition, our cash balances increased by $16 million at September 30 compared to the beginning of 2017. In the 2016 period, net cash used by financing activities reflected debt pay-downs and our quarterly cash dividends, which were both funded by our operating cash flows in the ~~2016 period.~~second quarter of 2020 to preserve liquidity during the pandemic.

We do not have off-balance sheet arrangements, financing or other relationships with unconsolidated entities or other ~~persons.~~persons, other than the letters of credits disclosed in Note 9 to the condensed consolidated financial statements, included elsewhere herein.

Liquidity

Our liquidity needs are primarily for working capital, capital expenditures, dividends and acquisitions. Our primary sources of liquidity have been funds provided by operations, funds available from existing bank credit arrangements and the sale of our debt securities. Our existing financial resources (working capital and available bank borrowing arrangements) and anticipated ~~funds~~cash flow from operations are expected to be adequate to meet anticipated cash requirements for at least the next twelve months, including but not limited to our ability to maintain current operations and fund capital expenditure requirements, service our debt, pay dividends, pursue acquisitions, and repurchase common shares.

As of June 30, 2020, we had total liquidity of $196.9 million, which included $145.0 million of unused borrowing availability and cash and cash equivalents of $51.9 million. We also suspended our quarterly cash dividend to further enhance our liquidity.

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The Company had cash and cash equivalents held by foreign subsidiaries of ~~$72.5~~$39.0 million at ~~September~~June 30, ~~2017~~2020 and ~~$54.4~~$45.4 million at December 31, ~~2016. For each~~2019. We do not expect restrictions on repatriation of ~~our foreign subsidiaries, we make a determination regarding the amount of earnings intended for permanent reinvestment, with the balance, if any, available to be repatriated to the United States. The~~ cash held byoutside the U.S. to have a material effect on our overall liquidity, financial condition or results of operations for the foreseeable future.

The Company has two components to its assertion regarding reinvestment of foreign subsidiaries for permanent reinvestment is generally used to finance the foreign subsidiaries’ operational activities and/or future foreign investments. At September 30, 2017, management believed that sufficient liquidity was available in the United States, and it is our current intention to permanently reinvest undistributed earnings ~~of our foreign subsidiaries~~

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outside of the United States. ~~Although we have no intention to repatriate the approximately $148.1 million of undistributed earnings of our~~First, for all foreign subsidiaries asexcept RB&W Corporation of ~~September 30, 2017, if we were~~Canada (“RB&W”), all earnings are permanently reinvested outside of the United States. Second, for RB&W, dividend distributions may be made, but only to ~~repatriate these~~the extent of current earnings ~~there could potentially be an adverse tax impact.~~in excess of cash required to fund its business operations; all accumulated earnings are permanently reinvested.

Senior Notes

OnIn April ~~17,~~ 2017, wePark-Ohio Industries, Inc. (“Park-Ohio”), the operating subsidiary of Park-Ohio Holdings Corp., completed the sale, in a private placement, of $350.0 million aggregate principal amount of 6.625% Senior Notes due 2027 (the “Notes”). The net proceeds from the issuance of the Notes were used to repay in full our previously outstanding 8.125% Senior Notes due 2021 and our outstanding term loan, and to repay a portion of the borrowings then outstanding under our revolving credit facility.

Credit Agreement

~~On April 17, 2017, the Company~~In June 2018, Park-Ohio entered into Amendment No. 1 to its Seventh Amended and Restated Credit Agreement (the “Credit Agreement”). The amendment to the Credit Agreement, among other things, ~~provides an increased~~provided increases in the availability under the revolving credit facility ~~of up to~~from $350.0 million to $375.0 million, the Canadian revolving subcommitment from $35.0 million to $40.0 million and ~~extends~~ the ~~maturity date of borrowings under the facility~~European revolving subcommitment from $25.0 million to ~~April 17, 2022.~~$30.0 million. Furthermore, the Company has the option, pursuant to the Credit Agreement, to increase the availability under the revolving credit facility by an aggregate incremental amount up to $100.0 million.

~~As of September 30, 2017, we had $100.3 million outstanding and $205.3 million of unused borrowing availability under the revolving credit facility provided by~~ In 2019, Park-Ohio entered into Amendment No. 4 to the Credit Agreement, ~~which includes~~extending the ~~effect~~maturity of ~~Amendment 6~~the Credit Agreement to ~~the Amended Credit Agreement. Also, as of September 30, 2017, we had cash and cash equivalents of $80.7 million.~~November 26, 2024.

~~Capital~~Finance Leases

OnIn August ~~13,~~ 2015, the Company entered into a Capital Lease Agreement (the “Lease Agreement”). The Lease Agreement provides the Company up to $50.0 million for ~~capital~~finance leases. ~~Capital~~Finance lease obligations of ~~$18.9~~$16.7 million were borrowed under the Lease Agreement to acquire machinery and equipment as of ~~September~~June 30, ~~2017.~~2020.

Covenants

The future availability of bank borrowings under the revolving credit facility provided by the Credit Agreement is based on (1) our calculated availability under the Credit Agreement and (2) if such calculated availability decreases below $46.875 million, our ability to meet a debt service ratio covenant. If our calculated availability is less than $46.875 million, our debt service coverage ratio must be greater than 1.0. At June 30, 2020, our calculated availability under the Credit Agreement was $125.7 million; therefore, the debt service ratio covenant ~~which could be materially impacted by negative economic trends.~~ did not apply.

Failure to maintain calculated availability of at least $46.875 million and meet the debt service ratio covenant could materially impact the availability and interest rate of future borrowings.

~~At September 30, 2017, our~~ Our debt service coverage ratio ~~was 2.1,~~could be materially impacted by negative economic trends, including the negative trends caused by the COVID-19 pandemic. To make certain permitted payments as defined under the Credit Agreement, including but not limited to acquisitions and ~~therefore,~~dividends, we ~~were in compliance with the~~must meet defined availability thresholds ranging from $37.5 million to $46.875 million, and a defined debt service coverage ratio ~~covenant in the revolving credit facility provided by the Credit Agreement. The debt service coverage ratio is calculated at the end~~ of each fiscal quarter based on the following ratio: (1) the most recently ended four fiscal quarters of consolidated EBITDA, as defined in the Credit Agreement, minus cash taxes paid, minus unfunded capital expenditures, plus cash tax refunds; to (2) consolidated debt charges, which are consolidated cash interest expense, plus scheduled principal payments on indebtedness, plus scheduled reductions in our term debt as defined in the Credit Agreement. The debt service coverage ratio must be greater than 1.0 and not less than 1.15 for any two consecutive fiscal quarters. 1.15.

We were also in compliance with the other covenants contained in the revolving credit facility as of ~~September~~June 30, ~~2017.~~2020. While we expect to remain in compliance throughout ~~2017,~~2020, declines in sales volumes in ~~2017~~the future, including further declines caused by the COVID-19 pandemic, could adversely impact our ability to remain in compliance with certain of these financial covenants. Additionally, to the extent our customers are adversely affected by declines in the economy in general, including the decline caused by the COVID-19 pandemic, they may be unable to pay their accounts payable to us on a timely basis or at all,

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which could make our accounts receivable ineligible for purposes of the revolving credit facility and could reduce our borrowing base and our ability to borrow under such facility.

Dividends

The Company paid dividends to shareholders of ~~$5.0~~$1.6 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017. In November 2017, our Board of Directors declared~~2020. To preserve liquidity in response to the pandemic, the Company has suspended paying a quarterly dividend ~~of $0.125 per~~to our common ~~share. The dividend will be paid on November 28,~~shareholders.

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2017 to shareholders of record as of the close of business on November 14, 2017 and will result in a cash outlay of approximately $1.6 million. Although we currently intend to pay a quarterly dividend on an ongoing basis, all future dividend declarations will be at the discretion of our Board of Directors and dependent upon then-existing conditions, including our operating results and financial condition, capital requirements, contractual restrictions, business prospects and other factors that our Board of Directors may deem relevant.

Seasonality; Variability of Operating Results

The timing of orders placed by our customers has varied with, among other factors, orders for customers’ finished goods, customer production schedules, competitive conditions and general economic conditions. The variability of the level and timing of orders has, from time to time, resulted in significant periodic and quarterly fluctuations in the operations of our businesses. Such variability is particularly evident in our capital equipment business, included in the Engineered Products segment, which typically ships large systems at a relatively lower pace than our other businesses.

Critical Accounting Policies

Our critical accounting policies are described in ~~Item~~"Item. 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations," and in the notes to our consolidated financial statements for the year ended December 31, ~~2016~~2019, both contained in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019. There were no new critical accounting policies or updates to existing critical accounting policies as a result of new accounting pronouncements in this Quarterly Report on Form 10-Q.

The application of our critical accounting policies may require management to make judgments and estimates about the amounts reflected in the condensed consolidated financial statements. Management uses historical experience and all available information to make these estimates and judgments, and different amounts could be reported using different assumptions and estimates.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains certain statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. The words “believes”, “anticipates”, “plans”, “expects”, “intends”, “estimates” and similar expressions are intended to identify forward-looking statements.

These forward-looking statements, including statements regarding future performance of the Company, that are subject to

known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements, or

industry results, to be materially different from any future results, performance or achievements expressed or implied by such

forward-looking statements. These factors that could cause actual results to differ materially from expectations include, but are

not limited to, the following: the ultimate impact the COVID-19 pandemic has on our business, results of operations, financial position and liquidity; our substantial indebtedness; the uncertainty of the global economic environment; general business conditions and competitive factors, including pricing pressures and product innovation; demand for our products and

services; the impact of labor disturbances affecting our customers; raw material availability and pricing; fluctuations in energy

costs; component part availability and pricing; changes in our relationships with customers and suppliers; the financial

condition of our customers, including the impact of any bankruptcies; our ability to successfully integrate recent and future

acquisitions into existing operations; the amounts and timing, if any, of purchases of our common stock; changes in general ~~domestic~~

economic conditions such as inflation rates, interest rates, tax rates, unemployment rates, higher labor and healthcare costs,

recessions and changing government policies, laws and regulations, including those related to the current global uncertainties

and ~~crises;~~crises, such as tariffs and surcharges; adverse impacts to us, our suppliers and customers from acts of terrorism or

hostilities; public health issues, including the outbreak of COVID-19 and its impact on our facilities and operations and our

customers and suppliers; our ability to meet various covenants, including financial covenants, contained in the agreements

governing our indebtedness; disruptions, uncertainties or volatility in the credit markets that may limit our access to capital;

potential disruption due to a partial or complete reconfiguration of the European Union; increasingly stringent domestic and

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foreign governmental regulations, including those affecting the environment or import and export controls and other trade

barriers; inherent uncertainties involved in assessing our potential liability for environmental remediation-related activities; the

outcome of pending and future litigation and other claims and disputes with customers; ~~the outcome of the review conducted by the special committee of our board of directors;~~ our dependence on the automotive and

heavy-duty truck industries, which are highly cyclical; the dependence of the automotive industry on consumer spending; our

ability to negotiate contracts with labor unions; our dependence on key management; our dependence on information systems;

our ability to continue to pay cash dividends, and the other factors we describe under “Item 1A. Risk Factors” included in the

~~Table of Contents~~

Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. In light of these and other uncertainties, the inclusion of a forward-looking statement herein should not be regarded as a representation by us that our plans and objectives will be achieved.



Item 3.	Quantitative and Qualitative Disclosure About Market Risk

We are exposed to market risk, including changes in interest rates. As of ~~September~~June 30, ~~2017,~~2020, we are subject to interest rate risk on borrowings under the floating rate revolving credit facility provided by our Credit ~~Agreement, which consisted of borrowings of~~ ~~$100.3 million~~ ~~at September 30, 2017.~~Agreement. A 100-basis-point increase in the interest rate would have resulted in an increase in interest expense on these borrowings of approximately $~~0.8~~0.9 million during the ~~nine~~six-month period ended ~~September~~June 30, ~~2017.~~2020.

Our foreign subsidiaries generally conduct business in local currencies. ~~During~~We face translation risks related to the ~~first~~ ~~nine~~ ~~months of~~ ~~2017, we recorded~~ ~~a favorable~~changes in foreign currency exchange rates. Amounts invested in our foreign operations are translated in U.S. dollars at the exchange rates in effect at the balance sheet date. The resulting translation ~~adjustment in accumulated~~adjustments are recorded as a component of Accumulated other comprehensive loss in the ~~condensed consolidated balance sheets related to net assets located outside the United States. This foreign currency translation adjustment of $18.9 million resulted primarily from the~~ ~~weakening~~Shareholders' equity section of the ~~U.S. Dollar against the Euro, the Canadian Dollar~~accompanying Condensed Consolidated Balance Sheets. Sales and ~~the British Pound. Our~~expenses at our foreign operations are ~~also subject~~translated into U.S. dollars at the applicable monthly average exchange rates. Therefore, changes in exchange rates may either positively or negatively affect our net sales and expenses from foreign operations as expressed in U.S. dollars.

Our largest exposures to ~~other customary risks of operating~~commodity prices relate to metal and natural gas prices, which have fluctuated widely in a global environment, such as unstable political situations, the effect of local laws and taxes, tariff increases and regulations and requirements for export licenses, the potential imposition of traderecent years. We do not have any commodity swap agreements, forward purchase or ~~foreign exchange restrictions and transportation delays.~~hedge contracts.



Item 4.	Controls and Procedures

Evaluation of disclosure controls and procedures.

Under the supervision of and with the participation of our management, including our chief executive officer and chief financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on that evaluation, our chief executive officer and chief financial officer have concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective.

Changes in internal control over financial reporting.

~~There have been~~During the quarter ended June 30, 2020, there were no changes in our internal control over financial reporting ~~that occurred during the~~ ~~third~~ ~~quarter of~~ ~~2017~~ that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II. Other Information



Item 1.	Legal Proceedings

We are subject to various pending and threatened lawsuits in which claims for monetary damages are asserted in the ordinary course of business. While any litigation involves an element of uncertainty, in the opinion of management, liabilities, if any, arising from currently pending or threatened litigation are not expected to have a material adverse effect on our financial condition, liquidity or results of operations.

In addition to the routine lawsuits and asserted claims noted above, we were a party to the lawsuits and legal proceedings described below as of ~~September~~June 30, ~~2017:~~2020:

We were a co-defendant in approximately 89118 cases asserting claims on behalf of approximately ~~143~~220 plaintiffs alleging personal injury as a result of exposure to asbestos. These asbestos cases generally relate to production and sale of asbestos-containing products and allege various theories of liability, including negligence, gross negligence and strict liability, and seek compensatory and, in some cases, punitive damages.

In every asbestos case in which we are named as a party, the complaints are filed against multiple named defendants. In substantially all of the asbestos cases, the plaintiffs either claim damages in excess of a specified amount, typically a minimum amount sufficient to establish jurisdiction of the court in which the case was filed (jurisdictional minimums generally range from $25,000 to $75,000), or do not specify the monetary damages sought. To the extent that any specific amount of damages is sought, the amount applies to claims against all named defendants.

There are ~~four~~three asbestos cases, involving 2119 plaintiffs, that plead specified damages against named defendants. In each of the ~~four~~three cases, the plaintiff is seeking compensatory and punitive damages based on a variety of potentially alternative causes of action. In ~~three~~two cases, the plaintiff has alleged three counts at $3.0 million compensatory and punitive damages each; one count at $3$3.0 million compensatory and $1$1.0 million punitive damages; one count at $1.0 million. In the ~~fourth~~third case, the plaintiff has alleged compensatory and punitive damages, each in the amount of $20.0 million, for three separate causes of action, and $5.0 million compensatory damages for the ~~fourth~~fifth cause of action.

Historically, we have been dismissed from asbestos cases on the basis that the plaintiff incorrectly sued one of our subsidiaries or because the plaintiff failed to identify any asbestos-containing product manufactured or sold by us or our subsidiaries. We intend to vigorously defend these asbestos cases, and believe we will continue to be successful in being dismissed from such cases. However, it is not possible to predict the ultimate outcome of asbestos-related lawsuits, claims and proceedings due to the unpredictable nature of personal injury litigation. Despite this uncertainty, and although our results of operations and cash flows for a particular period could be adversely affected by asbestos-related lawsuits, claims and proceedings, management believes that the ultimate resolution of these matters will not have a material adverse effect on our financial condition, liquidity or results of operations. Among the factors management considered in reaching this conclusion were: (a) our historical success in being dismissed from these types of lawsuits on the bases mentioned above; (b) many cases have been improperly filed against one of our subsidiaries; (c) in many cases the plaintiffs have been unable to establish any causal relationship to us or our products or premises; (d) in many cases, the plaintiffs have been unable to demonstrate that they have suffered any identifiable injury or compensable loss at all or that any injuries that they have incurred did in fact result from alleged exposure to asbestos; and (e) the complaints assert claims against multiple defendants and, in most cases, the damages alleged are not attributed to individual defendants. Additionally, we do not believe that the amounts claimed in any of the asbestos cases are meaningful indicators of our potential exposure because the amounts claimed typically bear no relation to the extent of the plaintiff's injury, if any.

Our cost of defending these lawsuits has not been material to date and, based upon available information, our management does not expect its future costs for asbestos-related lawsuits to have a material adverse effect on our results of operations, liquidity or financial position.

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supplied by ATM for heat treating certain steel pipe at IPSCO's Blytheville, Arkansas facility did not perform as required by the contract. The complaint alleged causes of action for breach of contract, gross negligence and constructive fraud. IPSCO sought approximately $10.0 million in damages plus an unspecified amount of punitive damages. In September 2013, the district court issued a judgment in favor of IPSCO in the amount of $5.2 million, which the Company recognized and accrued for at that time. In March 2016, the district court issued an order granting, in part, IPSCO's motion for fees and costs and awarding $2.2 million to IPSCO, which the Company accrued for as of December 31, 2015. ATM filed a third appeal of that decision. On March 28, 2017, the Company and IPSCO agreed to a settlement and release of all claims for the payment by the Company of $4.0 million to IPSCO, which was made in March 2017. As of the settlement date, the Company had $7.3 million accrued for this matter. The Company reversed the excess liability and recognized $3.3 million in income in the first quarter of 2017.

In August 2013, we received a subpoena from the staff of the SEC in connection with the staff’s investigation of a third party. At that time, we also learned that the Department of Justice (“DOJ”) is conducting a criminal investigation of the third party. In connection with its initial response to the staff’s subpoena, we disclosed to the staff of the SEC that, in November 2007, the third party participated in a payment on behalf of us to a foreign tax official that implicates the Foreign Corrupt Practices Act. The Board of Directors formed a special committee to review our transactions with the third party and to make any recommendations to the Board of Directors with respect thereto. The Company intends to cooperate fully with the SEC and the DOJ in connection with their investigations of the third party and with the SEC in light of the Company’s disclosure. The Company is unable to predict the outcome or impact of the special committee’s investigation or the length, scope or results of the SEC’s review or the impact on its results of operations.

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Item 1A.	Risk Factors

~~There have been no material changes in~~In addition to the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~.2019, the Company has also identified the following:

The COVID-19 outbreak has impacted and could in the future materially and adversely affect our business.

The novel strain of the coronavirus identified in China in late 2019 and now affecting the global community has impacted and is expected to continue to impact our operations, and the full nature and extent of the impact is highly uncertain and may be beyond our control. Among other things, uncertainties relating to COVID-19 include the duration of the outbreak, the severity of the virus, and the actions, or perception of actions that may be taken, to contain or treat its impact, by governments and others, including declarations of states of emergency, business closures, manufacturing restrictions and a prolonged period of travel, commercial and/or other similar restrictions and limitations.

As a result of COVID-19 and the measures implemented that are designed to contain its spread, our customers have been and could continue to be negatively impacted as a result of disruption in demand, which has negatively impacted our sales and had a material adverse effect on our business, results of operations and financial condition. Similarly, as a result of COVID-19 and measures implemented that are designed to contain its spread, our suppliers may not have the materials, capacity, or capability to enable the manufacture of our products according to our schedule and specifications. Because of impacts to suppliers' operations, we may need to seek alternate suppliers, which may be more expensive, may not be available or may result in delays in shipments to us and subsequently to our customers, each of which would affect our results of operations.

The COVID-19 pandemic has also disrupted our internal operations, including by heightening the risk that a significant portion of our workforce will suffer illness or otherwise not be permitted or be unable to work and exposing us to cyber and other risks associated with a large number of our employees working remotely. Certain of our facilities have experienced temporary work disruptions as a result of the COVID-19 pandemic, and we cannot predict whether these will continue or our facilities will experience more significant or frequent disruptions in the future. Furthermore, we may need to reduce our workforce as a result of declines in our business caused by the COVID-19 pandemic, and any such reduction would cause us to incur costs. Moreover, there can be no assurance that we would be able to rehire our workforce in the event our business experiences a subsequent recovery.

The impact of the COVID-19 pandemic continues to evolve and its duration and ultimate disruption to our customers and to our supply chain, and related financial impact to us, cannot be estimated at this time. Should such disruption continue for an extended period of time, the impact could have a more severe adverse effect on our business, results of operations and financial condition. Additionally, weaker economic conditions generally could result in impairment in value of our tangible or intangible assets, or our ability to raise additional capital, if needed.

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Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

The table below summarizes the information regarding our repurchases of the Company's common stock during the quarter ended ~~September~~June 30, ~~2017.~~2020.

Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans (1) Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program (1)
July 1 — July 31, 2017 771
(2) $ 38.10
—
624,120
August 1 — August 31, 2017 318
(2) 39.45
—
624,120
September 1 — September 30, 2017 1,028
(2) 40.30
—
624,120
Total 2,117
$ 39.37
—
624,120



Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans (1)	Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program (1)
April 1 — April 30, 2020	25,078	(2)	$	19.13	24,032	795,141
May 1 — May 31, 2020	57,213	(2)	13.52		38,758	756,383
June 1 — June 30, 2020	103,858	(2)	15.73		86,586	669,797
Total	186,149		$	15.51	149,376	669,797


(1)	On March ~~4, 2013,~~11, 2020, we announced a share repurchase program whereby we may repurchase up to 1.0 million shares of our outstanding common stock.


(2)	Consists of an aggregate total of ~~2,117~~36,773 shares of common stock we acquired from recipients of restricted stock awards at the time of vesting of such awards in order to settle recipient withholding tax liabilities.



Item 6.	Exhibits

The following exhibits are included herein:

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31.1	Principal Executive Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Principal Financial Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32	Certification requirement under Section 906 of the Sarbanes-Oxley Act of 2002

101.INS	Inline XBRL Instance Document

101.SCH	Inline XBRL Taxonomy Extension Schema Document

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



PARK-OHIO HOLDINGS CORP.
(Registrant)

By:	/s/ Patrick W. Fogarty
Name:	Patrick W. Fogarty
Title:	Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Date: ~~November 7, 2017~~August 5, 2020

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	September 30, 2017		December 31, 2016
	(In millions)
Finished goods	$	150.3	$	131.4
Work in process	47.1		43.4
Raw materials and supplies	70.9		65.8
Inventories, net	$	268.3	$	240.6



				Carrying Value at
	Maturity Date	Interest Rate at September 30, 2017		September 30, 2017			December 31, 2016
				(In millions)
Senior Notes due 2027	April 15, 2027	6.625	%	$	350.0		$	—
Senior Notes due 2021	April 1, 2021	8.125	%	—			250.0
Revolving credit facility	April 17, 2022	3.08	%	100.3			132.8
Term Loan				—			23.4
Industrial Equipment Group European Facilities	December 21, 2021	3.25	%	28.0			26.4
Capital Leases	Various	Various		18.9			18.8
Other	Various	Various		22.1			23.6
Gross debt				519.3			475.0
Less current portion of long-term debt				(14.2		)	(25.8		)
Less short-term debt				(3.9		)	(5.0		)
Less unamortized debt issuance costs				(8.9		)	(5.2		)
Total long-term debt, net				$	492.3		$	439.0



	2017
	Number of Shares		Weighted Average Exercise Price
	(In whole shares)
Outstanding - beginning of year	38,000		19.30
Granted	—		—
Exercised	(24,907	)	21.22
Canceled or expired	—		—
Outstanding - end of period	13,093		15.61
Options exercisable	13,093		15.61