UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

______________________________________________________

FORM 10-Q

______________________________________________________



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

For the quarterly period ended July 31, ~~2019~~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 0-21964

______________________________________________________

SHILOH INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

______________________________________________________



~~Delaware~~DE			51-0347683
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

880 Steel Drive, Valley City, ~~Ohio~~OH 44280

(Address of principal executive offices—zip code)

(330) 558-2600

(Registrant’s telephone number, including area code)

N/A

(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, $0.01 par value	SHLO	The NASDAQ Global Select Market⁽¹⁾

⁽¹⁾ On September 1, 2020, Shiloh Industries, Inc. (the “Company”) received notice from the Listing Qualifications Staff of the Nasdaq Stock Market LLC (“Nasdaq”) that it had determined to commence proceedings to delist the common stock of the Company at the opening of business on September 10, 2020, and a Form 25-NSE will be filed with the Securities and Exchange Commission on such date. The delisting will be effective 10 days after the Form 25 is filed. It is expected that the Company’s common stock will begin trading on the OTC Pink Market on September 10, 2020.

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 12 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. Yesx☒No¨☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yesx☒No¨☐

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

x☒

Non-accelerated Filer

¨☐

Smaller Reporting Company

x☒

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 accounting 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¨☐Nox☒

Number of shares of Common Stock outstanding as of September ~~3, 2019~~4, 2020 was ~~23,791,200.~~24,216,512.

Table of Contents

INDEX

Table of Contents

PART I— FINANCIAL INFORMATION


~~Item 1.~~	~~Condensed Consolidated Financial Statements~~

Item 1.Condensed Consolidated Financial Statements

SHILOH INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands)


	July 31, 2020		October 31, 2019

	(Unaudited)
ASSETS
Cash and cash equivalents	$	30,262	$	14,320
Accounts receivable, net	142,899		172,468
Related party accounts receivable	605		1,477
Prepaid income taxes	2,569		1,853
Inventories, net	54,283		63,547
Prepaid expenses	5,943		8,980
Other current assets	21,718		13,354
Total current assets	258,279		275,999
Property, plant and equipment, net	203,047		328,026
Goodwill	0		22,395
Intangible assets, net	6,876		13,025
Deferred income taxes	5,258		5,169
Operating lease assets	51,378		0
Other assets	5,232		7,077
Total assets	$	530,070	$	651,691
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current debt	$	324,779	$	1,975
Accounts payable	100,293		155,754
Current portion of operating lease liabilities	7,545		0
Other accrued expenses	49,947		50,093
Accrued income taxes	92		316
Total current liabilities	482,656		208,138
Long-term debt	0		248,695
Long-term benefit liabilities	23,442		24,147
Deferred income taxes	841		798
Noncurrent operating lease liabilities	43,833		0
Other liabilities	1,178		2,399
Total liabilities	551,950		484,177
Commitments and contingencies
Stockholders’ equity (deficit):
Preferred stock, $0.01 per share; 5,000,000 shares authorized; no shares issued and outstanding at July 31, 2020 and October 31, 2019, respectively	0		0
Common stock, par value $0.01 per share; 75,000,000 shares authorized at July 31, 2020 and October 31, 2019; 24,308,119 and 23,790,258 shares issued and outstanding at July 31, 2020 and October 31, 2019, respectively	243		238
Paid-in capital	117,815		116,436
Retained earnings (deficit)	(83,656)		115,866
Accumulated other comprehensive loss, net	(56,282)		(65,026)
Total stockholders’ equity (deficit)	(21,880)		167,514
Total liabilities and stockholders’ equity (deficit)	$	530,070	$	651,691

July 31,
2019
October 31,
2018

(Unaudited)
ASSETS
Cash and cash equivalents $ 11,936
$ 16,843
Accounts receivable, net 180,502
209,733
Related party accounts receivable 466
996
Prepaid income taxes 6,341
1,391
Inventories, net 67,615
71,412
Prepaid expenses 11,854
10,478
Other current assets 10,318
22,124
Total current assets 289,032
332,977
Property, plant and equipment, net 333,840
316,176
Goodwill 27,384
27,376
Intangible assets, net 13,489
14,939
Deferred income taxes 2,811
5,665
Other assets 7,732
12,542
Total assets $ 674,288
$ 709,675
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current debt $ 350
$ 1,327
Accounts payable 170,175
177,400
Other accrued expenses 45,411
63,031
Accrued income taxes 27
1,874
Total current liabilities 215,963
243,632
Long-term debt 248,393
245,351
Long-term benefit liabilities 14,579
15,553
Deferred income taxes 792
2,894
Other liabilities 3,440
2,723
Total liabilities 483,167
510,153
Commitments and contingencies

Stockholders’ equity:
Preferred stock, $0.01 per share; 5,000,000 shares authorized; no shares issued and outstanding at July 31, 2019 and October 31, 2018, respectively —
—
Common stock, par value $0.01 per share; 75,000,000 and 50,000,000 shares authorized at July 31, 2019 and October 31, 2018, respectively; 23,799,035 and 23,417,107 shares issued and outstanding at July 31, 2019 and October 31, 2018, respectively 238
234
Paid-in capital 115,977
114,405
Retained earnings 129,518
135,813
Accumulated other comprehensive loss, net (54,612 ) (50,930 )
Total stockholders’ equity 191,121
199,522
Total liabilities and stockholders’ equity $ 674,288
$ 709,675

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

Table of Contents

SHILOH INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share data)

(Unaudited)


	Three Months Ended July 31,						Nine Months Ended July 31,
	2020		2019		2020		2019
Net revenues	$	155,367	$	263,445	$	556,781	$	795,748
Cost of sales	148,335		239,857		530,986		729,790
Gross profit	7,032		23,588		25,795		65,958
Selling, general & administrative expenses	25,165		18,105		58,059		51,069
Amortization of intangible assets	514		518		1,538		1,558
Asset impairment, net	109,633		0		134,104		0
Restructuring	2,196		3,905		13,397		11,371
Operating income (loss)	(130,476)		1,060		(181,303)		1,960
Interest expense	5,379		4,633		14,362		11,836

Interest income	(5)		(4)		(14)		(10)
Other (income) expense, net	1,875		113		2,221		(959)
Loss before income taxes	(137,725)		(3,682)		(197,872)		(8,907)
Provision (benefit) for income taxes	(591)		(973)		1,650		(2,612)
Net loss	$	(137,134)	$	(2,709)	$	(199,522)	$	(6,295)
Loss per share:
Basic loss per share	$	(5.76)	$	(0.11)	$	(8.40)	$	(0.27)
Basic weighted average number of common shares	23,824		23,557		23,754		23,486
Diluted loss per share	$	(5.76)	$	(0.11)	$	(8.40)	$	(0.27)
Diluted weighted average number of common shares	23,824		23,557		23,754		23,486

Three Months Ended July 31, Nine Months Ended July 31,
2019 2018 2019 2018
Net revenues $ 263,445
$ 294,883
$ 795,748
$ 839,889
Cost of sales 239,857
262,003
729,790
747,616
Gross profit 23,588
32,880
65,958
92,273
Selling, general & administrative expenses 18,105
22,773
51,069
66,159
Amortization of intangible assets 518
607
1,558
1,767
Restructuring 3,905

1,965
11,371
4,962
Operating income 1,060
7,535
1,960
19,385
Interest expense 4,633
3,209
11,836
8,194
Interest income (4 ) (1 ) (10 ) (9 )
Other (income) expense, net 113
289
(959 ) 1,119
Income (loss) before income taxes (3,682 ) 4,038
(8,907 ) 10,081
Benefit for income taxes (973 ) (7,014 ) (2,612 ) (9,854 )
Net income (loss) $ (2,709 ) $ 11,052
$ (6,295 ) $ 19,935
Income (loss) per share:
Basic earnings (loss) per share $ (0.11 ) $ 0.47
$ (0.27 ) $ 0.86
Basic weighted average number of common shares 23,557
23,278
23,486
23,202
Diluted earnings (loss) per share $ (0.11 ) $ 0.47
$ (0.27 ) $ 0.85
Diluted weighted average number of common shares 23,557
23,453
23,486
23,341

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

Table of Contents

SHILOH INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Dollar amounts in thousands)

(Unaudited)


				Three Months Ended July 31,								Nine Months Ended July 31,
				2020		2019			2020			2019
Net loss							$	(137,134)		$	(2,709)		$	(199,522)	$	(6,295)
Other comprehensive income (loss)
	Defined benefit pension plans & other post-retirement benefits
			Amortization of net actuarial loss	376		289			1,128			865



			Income tax (benefit)	(86)		(66)			(258)			(198)
		Total defined benefit pension plans & other post-retirement benefits, net of tax			290		223			870			667
	Marketable securities



			Realized gain	0		0			0			18
		Total marketable securities, net of tax			0		0			0			18
	Derivatives and hedging
			Unrealized loss on interest rate swap agreements	(10)		(301)			(368)			(1,030)

			Income tax benefit (provision)	(62)		58			(60)			195
			Reclassification adjustments for settlement of derivatives included in net income (loss)	283		51			634			181
		Change in fair value of derivative instruments, net of tax			211		(192)			206			(654)
	Foreign currency translation adjustments
			Foreign currency translation gain (loss)	13,671		(1,940)			7,668			(3,713)


		Unrealized gain (loss) on foreign currency translation			13,671		(1,940)			7,668			(3,713)
Comprehensive loss, net							$	(122,962)		$	(4,618)		$	(190,778)	$	(9,977)

Three Months Ended July 31, Nine Months Ended July 31,
2019 2018 2019 2018
Net income (loss) $ (2,709 ) $ 11,052
$ (6,295 ) $ 19,935
Other comprehensive income (loss)
Defined benefit pension plans & other post-retirement benefits
Amortization of net actuarial loss 289
328
865
984
Cumulative effect of adoption of ASU 2018-02 (1) —
(6,138 ) —
(6,138 )
Income tax provision (66 ) (76 ) (198 ) (258 )
Total defined benefit pension plans & other post retirement benefits, net of tax 223
(5,886 ) 667
(5,412 )
Marketable securities
Unrealized loss on marketable securities —
(22 ) —
(151 )
Cumulative effect of adoption of ASU 2018-02 (1) —
(7 ) —
(7 )
Income tax benefit —
4
—
38
Realized income —
122
18
122
Total marketable securities, net of tax —
97
18
2
Derivatives and hedging
Unrealized (loss) gain on interest rate swap agreements (301 ) 171
(1,030 ) 1,331
Cumulative effect of adoption of ASU 2018-02 (1) —
(213 ) —
(213 )
Income tax benefit (provision) 58
(76 ) 195
(533 )
Reclassification adjustments for settlement of derivatives included in net income (loss) 51
153
181
648
Change in fair value of derivative instruments, net of tax (192 ) 35
(654 ) 1,233
Foreign currency translation adjustments
Foreign currency translation loss (1,940 ) (2,834 ) (3,713 ) (2,953 )
Unrealized loss on foreign currency translation (1,940 ) (2,834 ) (3,713 ) (2,953 )
Comprehensive income (loss), net $ (4,618 ) $ 2,464
$ (9,977 ) $ 12,805

^{(1) The adoption of ASU 2018-02 required reclassification from accumulated other comprehensive loss to retained earnings for stranded tax effects in accumulated other comprehensive loss results from the Tax Cuts and Jobs Act of 2017.}

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

Table of Contents

SHILOH INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)

(Unaudited)


	Nine months ended July 31,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(199,522)	$	(6,295)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	36,395		35,010
Asset impairment	134,104		0
Restructuring	404		1,610
Amortization of deferred financing costs	1,572		1,033
Deferred income taxes	2,044		232
Stock-based compensation expense	1,386		1,576
Loss (gain) on sale of assets	986		(3,562)
Loss on marketable securities	—		29
Changes in operating assets and liabilities:
Accounts receivable, net	31,054		30,213
Inventories, net	9,488		3,900
Prepaids and other assets	(1,695)		(1,564)
Payables and other liabilities	(55,496)		(30,965)
Prepaid and accrued income taxes	(937)		(6,863)
Net cash (used in) provided by operating activities	(40,217)		24,354
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(23,501)		(48,643)


Derivative settlements	0		5,869
Proceeds from sale of assets	3,274		12,339

Net cash used in investing activities	(20,227)		(30,435)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of capital leases	(96)		(495)
Proceeds from long-term borrowings	152,900		223,400
Repayments of long-term borrowings	(78,700)		(220,000)
Payment of deferred financing costs	(98)		(1,948)


Net cash provided by financing activities	74,006		957
Effect of foreign currency exchange rate fluctuations on cash	2,380		217
Net increase (decrease) in cash and cash equivalents	15,942		(4,907)
Cash and cash equivalents at beginning of period	14,320		16,843
Cash and cash equivalents at end of period	$	30,262	$	11,936

Nine Months Ended July 31,
2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (6,295 ) $ 19,935
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 35,010
33,775
Restructuring 1,610
672
Amortization of deferred financing costs 1,033
935
Deferred income taxes 232
(2,251 )
Stock-based compensation expense 1,576
1,557
(Gain) loss on sale of assets (3,562 ) 2,300
Loss on marketable securities 29
154
Changes in operating assets and liabilities:
Accounts receivable, net 30,213
18,599
Inventories, net 3,900
(2,656 )
Prepaids and other assets (1,564 ) (4,884 )
Payables and other liabilities (30,965 ) (6,989 )
Prepaid and accrued income taxes (6,863 ) (10,266 )
Net cash provided by operating activities 24,354
50,881
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (48,643 ) (38,668 )
Proceeds from sale of marketable securities 14
—
Acquisitions, net of cash required —
(62,481 )
Derivative settlements 5,855
—
Proceeds from sale of assets 12,339
2,696
Net cash used in investing activities (30,435 ) (98,453 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of capital leases (495 ) (667 )
Proceeds from long-term borrowings 223,400
218,300
Repayments of long-term borrowings (220,000 ) (161,793 )
Payment of deferred financing costs (1,948 ) (105 )
Proceeds from exercise of stock options —
41
Net cash provided by financing activities 957
55,776
Effect of foreign currency exchange rate fluctuations on cash 217
336
Net increase (decrease) in cash and cash equivalents (4,907 ) 8,540
Cash and cash equivalents at beginning of period 16,843
8,736
Cash and cash equivalents at end of period $ 11,936
$ 17,276

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

Table of Contents

SHILOH INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Dollar amounts in thousands)

(Unaudited)


	Common Stock (.01 Par Value)		Paid-in-Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Loss		Total Stockholders' Equity (Deficit)
April 30, 2019	$	238	$	115,391	$	132,227	$	(52,703)	$	195,153
Net loss	0		0		(2,709)		0		(2,709)
Other comprehensive income (loss), net of tax	0		0		0		(1,909)		(1,909)


Stock-based compensation cost	0		586		0		0		586
July 31, 2019	$	238	$	115,977	$	129,518	$	(54,612)	$	191,121

April 30, 2020	$	243	$	117,551	$	53,478	$	(70,454)	$	100,818
Net loss	0		0		(137,134)		0		(137,134)
Other comprehensive income (loss), net of tax	0		0		0		14,172		14,172

Stock-based compensation cost	0		264		0		0		264
July 31, 2020	$	243	$	117,815	$	(83,656)	$	(56,282)	$	(21,880)

Common Stock (.01 Par Value) Paid-in-Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity
April 30, 2018 $ 234
$ 113,424
$ 126,859
$ (40,779 ) $ 199,738
Net income —
—
11,052
—
11,052
Other comprehensive income (loss), net of tax —
—
—
(2,230 ) (2,230 )
Reclassification of stranded tax effects (1)
—
—
6,358
(6,358 ) —
Restricted stock and exercise of stock options —
7
—
—
7
Stock-based compensation cost —
515
—
—
515
July 31, 2018 $ 234
$ 113,946
$ 144,269
$ (49,367 ) $ 209,082

April 30, 2019 $ 238
$ 115,391
$ 132,227
$ (52,703 ) $ 195,153
Net loss —
—
(2,709 ) —
(2,709 )
Other comprehensive income (loss), net of tax —
—
—
(1,909 ) (1,909 )
Stock-based compensation cost —
586
—
—
586
July 31, 2019 $ 238
$ 115,977
$ 129,518
$ (54,612 ) $ 191,121


	Common Stock (.01 Par Value)		Paid-in-Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Loss		Total Stockholders' Equity (Deficit)
October 31, 2018	$	234	$	114,405	$	135,813	$	(50,930)	$	199,522
Net loss	0		0		(6,295)		0		(6,295)
Other comprehensive income (loss), net of tax	0		0		0		(3,682)		(3,682)

Restricted stock and exercise of stock options	4		(4)		0		0		0
Stock-based compensation cost	0		1,576		0		0		1,576
July 31, 2019	$	238	$	115,977	$	129,518	$	(54,612)	$	191,121

October 31, 2019	$	238	$	116,436	$	115,866	$	(65,026)	$	167,514
Net loss	0		0		(199,522)		0		(199,522)
Other comprehensive income (loss), net of tax	0		0		0		8,744		8,744
Restricted stock and exercise of stock options	5		(7)		0		0		(2)
Stock-based compensation cost	0		1,386		0		0		1,386
July 31, 2020	$	243	$	117,815	$	(83,656)	$	(56,282)	$	(21,880)

Common Stock (.01 Par Value) Paid-in-Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity
October 31, 2017 $ 231
$ 112,351
$ 117,976
$ (42,237 ) $ 188,321
Net income —
—
19,935
—
19,935
Other comprehensive income, net of tax —
—
—
(772 ) (772 )
Reclassification of stranded tax effects (1)
—
—
6,358
(6,358 ) —
Restricted stock and exercise of stock options 3
38
—
—
41
Stock-based compensation cost —
1,557
—
—
1,557
July 31, 2018 $ 234
$ 113,946
$ 144,269
$ (49,367 ) $ 209,082

October 31, 2018 $ 234
$ 114,405
$ 135,813
$ (50,930 ) $ 199,522
Net loss —
—
(6,295 ) —
(6,295 )
Other comprehensive income (loss), net of tax —
—
—
(3,682 ) (3,682 )
Restricted stock and exercise of stock options 4
(4 ) —
—
—
Stock-based compensation cost —
1,576
—
—
1,576
July 31, 2019 $ 238
$ 115,977
$ 129,518
$ (54,612 ) $ 191,121

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

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts and number of shares in thousands except per share data)

Note 1—Basis of Presentation, Impact of COVID-19 and Going Concern

The condensed consolidated financial statements have been prepared for Shiloh Industries, Inc. and its subsidiaries (collectively referred to as the "Company," "Shiloh Industries," "us," "our" or "we"), without audit, and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). The information furnished in the condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of such financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("GAAP") have been condensed or omitted pursuant to the rules and regulations of the SEC. Although we believe that the disclosures are adequate to make the information presented not misleading, these condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2018.~~

2019. Revenues and operating results for the three and nine months ended July 31, ~~2019~~2020 are not necessarily indicative of the results to be expected for the full year.

Impact of Covid-19

In December 2019, a novel strain of coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China, which has spread throughout the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of COVID-19 a “Public Health Emergency of International Concern,” and on March 11, 2020, it characterized the outbreak as a “pandemic.” The Company’s manufacturing operations were initially impacted at the beginning of our second quarter by COVID-19 in Asia and the last half of the quarter in Europe and North America. The impact of COVID-19 developments and uncertainty with respect to the economic effects of the pandemic has introduced significant volatility in the financial markets and is having a widespread adverse effect on the automotive industry, including reductions in consumer demand and OEM automotive production. As a result, COVID-19 has impacted the Company's business globally. Many OEMs suspended manufacturing operations, particularly in North America, Europe and Asia, on a temporary basis due to market conditions and matters associated with COVID-19.

Our operations in China were closed for all of February and part of March 2020. In July 2020, we are operating at levels near full capacity in China. Our operations in North America and Europe, for the most part, closed down during March and April 2020. Beginning near the end of May and the beginning of June, our operations in Europe and North America, respectively, began fulfilling and shipping orders to our customers. Due to the safety protocols established, we have been able to restart production, although we have experienced normal start-up operational issues in some of our plants related to being shut down for an extended period of time.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which presumes that we will be able to realize our assets and discharge our liabilities in the normal course of business as they come due. As of July 31, 2020, the Company has significant indebtedness due within the next twelve months and cash flow from operations has not been sufficient to meet the Company’s liquidity demands. As a result, as described in Note 21, on August 30, 2020 (the “Petition Date”), the Company and its U.S. subsidiaries (collectively with the Company, the “Debtors”) each filed a voluntary petition for relief (the “Bankruptcy Petitions,” and the cases commenced thereby, the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). These matters raise substantial doubt about the Company’s ability to continue as a going concern. Financial information in this Quarterly Report on Form 10-Q does not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if we were unable to realize our assets and settle our liabilities as a going concern in the normal course of operations. Such adjustments could be material.

Our future plans, including those in connection with the Chapter 11 filings, are not yet finalized, fully executed or approved by the Bankruptcy Court, and therefore cannot be deemed probable of mitigating this substantial doubt within 12 months of the date of issuance of these financial statements.

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Note 2—Recent Accounting Standards

Recently Issued Accounting Standards:



~~Standard~~	~~Description~~	~~Effective Date~~	~~Effect on our financial statements and other significant matters~~
~~ASU 2016-13~~ ~~Measurement of Credit Losses on Financial Instruments~~	The amendments change the impairment model for financial assets measured at amortized cost and available for sale equity securities. This new model will apply to instruments such as loans, held-to-maturity debt securities, loan commitments (including lines of credit), financial guarantees accounted for under ASC 460, net investments in leases, reinsurance and trade receivables. This model will result in an earlier recognition of allowances for losses through the establishment of an allowance account. The estimate of expected credit losses should consider historical and current information, and the reasonable and supportable forecasts of future events and circumstances, as well as estimates of prepayments.	~~November 1, 2020 with early adoption permitted.~~	~~We are in the process of evaluating the impact of adoption of this standard on our financial statements and disclosures.~~
~~ASU 2018-15~~ ~~Goodwill and Other-Internal-Use Software~~	The amendments apply to the accounting for implementation, setup and other upfront costs (collectively referred to as implementation costs) for entities that are a customer in a hosting arrangement and align the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The amendments also require customers to expense capitalized implementation costs over the term of the hosting arrangement and in the same line on the income statement as the fees associated with the hosting service and payments for the capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting service.	~~November 1, 2020 with early adoption permitted.~~	~~We are in the process of evaluating the impact of adoption of this standard on our financial statements and disclosures.~~

ASU 2020-04 Reference Rate Reform (Topic 848) - On March 12, 2020, the Financial Accounting Standards Board (FASB) issued this guidance that provides optional expedients and exceptions that are intended to ease the burden of updating contracts to contain a new reference rate due to the discontinuation of the London Inter-Bank Offered Rate (LIBOR). This guidance is available immediately and may be implemented in any period prior to the guidance expiration on December 31, 2022. We are currently assessing which of our various contracts will require an update for a new reference rate, and will determine the timing for our implementation of this guidance at the completion of that analysis.

ASU 2019-12 Income Taxes: Simplifying the Accounting for Income Taxes - This Accounting Standards Update removes specific exceptions to the general principles in Topic 740 in Generally Accepted Accounting Principles (GAAP). It eliminates the need for an organization to analyze whether the following apply in a given period: (1) Exception to the incremental approach for intraperiod tax allocation, (2) Exception accounting for basis differences when there are ownership changes in foreign investments, (3) Exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment and (4) Exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. Also, this amendment updates the following: (1) Making minor Codification improvements for income taxes related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method, (2) Requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date and (3) Requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction. We expect to adopt this guidance on November 1, 2021 and we are currently assessing the impact that this standard will have on our consolidated financial statements.

ASU 2018-14Compensation-Retirements Benefits-Defined Benefit Plans - This ASU amendment adds the following to disclosure requirements: (1) The weighted-average interest crediting rates used in the entity’s cash balance pension plans and other similar plans, (2) A narrative description of the reasons for significant gains and losses affecting the benefit obligation for the period, (3) An explanation of any other significant changes in the benefit obligation or plan assets that are not otherwise apparent in the other disclosures required by Accounting Standards Codification ("ASC") Topic 715, Compensation-Retirement Benefits. Also, this amendment clarifies the guidance in ASC 715-20-50-3 on defined benefit plans to require disclosure of (1) the projected benefit obligation (PBO) and fair value of plan assets for pension plans with PBOs in excess of plan assets (the same disclosure with reference to the accumulated postretirement benefit obligation rather than the PBO is required for other postretirement benefit plans) and (2) the accumulated benefit obligation (ABO) and fair value of plan assets for pension plans with ABOs in excess of plan assets. We expect to adopt this guidance on November 1, 2021 and we are currently assessing the impact that this standard will have on our consolidated financial statements.

ASU 2016-13 Measurement of Credit Losses on Financial Instruments - The amendments change the impairment model for financial assets measured at amortized cost and available for sale equity securities. This new model will apply to instruments such as loans, held-to-maturity debt securities, loan commitments (including lines of credit), financial guarantees accounted for under ASC 460, net investments in leases, reinsurance and trade receivables. This model will result in an earlier recognition of allowances for losses through the establishment of an allowance account. The estimate of expected credit losses should consider historical and current information, and the reasonable and supportable forecasts of future events and circumstances, as well as estimates of prepayments. We expect to adopt this guidance on November 1, 2020 and we are currently assessing the impact that this standard will have on our consolidated financial statements and disclosures.

ASU 2018-15 Internal-Use Software - The amendments apply to the accounting for implementation, setup and other upfront costs (collectively referred to as implementation costs) for entities that are a customer in a hosting arrangement and align the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The amendments also require customers to expense capitalized implementation costs over the term of the hosting arrangement and in the same line on the income statement as the fees associated with the hosting service and payments for the capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting service. We expect to adopt this guidance on November 1,

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

2020 and we are currently assessing the impact that this standard will have on our consolidated financial statements and disclosures.



~~Standard~~	~~Description~~	~~Effective Date~~	~~Effect on our financial statements and other significant matters~~
~~ASU 2016-02~~ ~~Leases~~	This amendment requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet and aligns many of the underlying principles of the new lessor model with those in Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers. The standard requires a modified retrospective transition for capital and 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 adoption. In January 2018, the FASB issued an amendment to ASC Topic 842 which permits companies to elect an optional transition practical expedient to not evaluate existing land easements under the new standard if the land easements were not previously accounted for under existing lease guidance. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842 which clarifies certain areas within ASU 2016-02. ASU 2018-11 Targeted Improvements to Topic 842, Leases. This amendment provides entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.	~~November 1, 2019 with early adoption permitted.~~	We are in the process of evaluating the impact of adoption of this standard on our financial statements and disclosures. Our continued efforts include assessing the available practical expedients, calculating the lease asset and liability balances associated with individual contractual arrangements and assessing disclosure requirements. In addition, we continue to monitor FASB amendments to ASC Topic 842. While we continue to evaluate the effect of the standard, we anticipate that the adoption will result in a material increase in assets and liabilities on our consolidated balance sheet and will not have a material impact on our consolidated income statement or statement of cash flows.

Recently Adopted Accounting Standards:



~~Standard~~	~~Description~~	~~Adoption Date~~	~~Effect on our financial statements and other significant matters~~
~~ASU 2017-09~~ ~~Compensation - Stock Compensation (Topic 718)~~	This amendment clarifies when a change to the terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance requires modification accounting if the fair value, vesting condition or the classification of the award is not the same immediately before and after a change to the terms and conditions of the award. The amendment should be adopted on a prospective basis.	~~November 1, 2018~~	~~The adoption of this framework did not have a material impact on Shiloh's financial position, results of operations or financial statement disclosures. Shiloh's awards are rarely modified after grant.~~

~~SHILOH INDUSTRIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~



~~Standard~~	~~Description~~	~~Adoption Date~~	~~Effect on our financial statements and other significant matters~~
~~ASU 2014-09~~ ~~Revenue from Contracts with Customers~~	~~The amendments require companies to recognize revenue when there is a transfer of promised goods or services to customers~~ASU 2016-02 Leases - This amendment requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet and aligns many of the underlying principles of the new lessor model with those in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. The amendments should be applied on either a full or modified retrospective basis, which clarifies existing accounting literature relating to how and when a company recognizes revenue. The Financial Accounting Standards Board ("FASB"), through the issuance of Accounting Standards Updated ("ASU") No. 2015-14, "Revenue from Contracts with Customers," approved a one year delay of the effective date and permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards. During fiscal 2016, the FASB issued ASUs 2016-10, 2016-11 and 2016-12. Finally, ASU 2016-20 makes minor corrections or minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities.	~~November 1, 2018~~	~~Refer to Note 3.~~
~~ASU 2016-01~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~	This amendment addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. Most prominent among the amendments is the requirement for changes in the fair value of the Company's equity investments, with certain exceptions, to be recognized through net income rather than other comprehensive income ("OCI"). The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet in year of adoption.	~~November 1, 2018~~	~~The adoption of this framework did not have a material impact on Shiloh's financial position, results of operations or financial statement disclosures.~~

~~SHILOH INDUSTRIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~



~~Standard~~	~~Description~~	~~Adoption Date~~	~~Effect on our financial statements and other significant matters~~
~~ASU 2018-09~~ ~~Codification Improvements~~	These amendments provide clarifications and corrections to certain ASC subtopics including the following: Income Statement - Reporting Comprehensive Income – Overall (Topic 220-10), Debt - Modifications and Extinguishments (Topic 470-50), Distinguishing Liabilities from Equity – Overall (Topic 480-10), Compensation - Stock Compensation - Income Taxes (Topic 718-740), Business Combinations - Income Taxes (Topic 805-740), Derivatives and Hedging – Overall (Topic 815-10) and Fair Value Measurement – Overall (Topic 820-10).	~~The majority of the amendments will be effective November 1, 2019 while others were effective upon the issuance of the ASU.~~	~~Adoption of the clarifications and corrections in this ASU did not have a material impact on Shiloh's financial position, results of operations or financial statement disclosures.~~

~~Note 3~~—~~Revenue~~

~~On November 1, 2018, we adopted ASU 2014-09,~~ ASC Topic 606, "Revenue from Contracts with ~~Customers~~"Customers. The standard requires a modified retrospective or current period transition approach for capital and 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 adoption. In January 2018, the FASB issued an amendment to ASC Topic 842 which permits companies to elect an optional transition practical expedient to not evaluate existing land easements under the new standard if the land easements were not previously accounted for under existing lease guidance. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842 which clarifies certain areas within ASU 2016-02. ASU 2018-11 Targeted Improvements to Topic 842, Leases. This amendment provides entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date. The Company adopted this guidance on November 1, 2019.

The Company has applied ASU 2016-02 and all related amendments ("ASC 842") using the ~~modified retrospective transition method with no impact~~current period adjustment method. The Company did not record any adjustments to ~~previously reported periods and no adjustment to~~the opening balance of retained earnings as of November 1, ~~2018~~2019. Therefore, the comparative information has not been adjusted and continues to be presented under prior lease guidance. In addition, the Company elected the following package of practical expedients on a consistent basis permitting entities not to reassess: (1) whether any expired or existing contract are/or contain a lease; (2) lease classification for any expired or existing leases; (3) whether initial direct costs for any expired or existing leases qualify for capitalization under the new amended guidance. As a result, as ~~there was no~~of November 1, 2019, we recorded right-of-use ("ROU") assets of $50,540 for operating leases and $2,000 for financing leases. This standard did not have a material impact on the Company's condensed consolidated statement of operations or statement of cash flows.

The Company determines if an arrangement is a lease at inception. Operating leases are included in ROU assets and the Company's short-term and long-term operating lease liability on our Condensed Consolidated Balance Sheets. Finance leases are included in other assets, other current liabilities, and other non-current liabilities on our Condensed Consolidated Balance Sheets.

ROU assets represent our right to ~~previously reported revenue~~use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the term of the lease. The Company includes options to extend or terminate the lease when it is reasonably certain that we will exercise that option. As most of the Company's leases do not provide an implicitly stated rate within the contract, we use our incremental borrowing rate based on third party information available at the commencement date in determining the present value of lease payments. Lease expenses ~~associated~~for lease payments on operating leases are recognized on a straight-line basis over the lease term. Additionally, the Company does not record a ROU asset or lease liability for leases with an expected lease term of 12 months or less.

The Company has lease arrangements with lease and non-lease components, which are accounted for separately across the ~~adoption~~Company's portfolio of leases. The non-lease components consist of maintenance, insurance, taxes and other expenses, and are immaterial.

The Company has exercised the land easement expedient and will continue to treat land leases under legacy GAAP provisions of ASC ~~606.~~840, Leases. If a modification or extension happens to a land lease, the Company will then treat the lease under the ASC 842 requirements. Current land leases are being recorded in other assets on the Company's Condensed Consolidated Balance Sheets.

Note 3—Revenue

The ~~new guidance requires new disclosures regarding the nature, timing~~Company manufactures and ~~uncertainty of revenue and cash flows arising from contracts with customers.~~

The new standard recognizes revenue when a customer obtains control rather than when substantially all the risks and rewards of a good or service are transferred. The new guidance supersedes most existing revenue recognition guidance, including industry-specific guidance.

~~We manufacture and sell~~sells products, primarily to original equipment manufacturers ("OEMs") and to OEMs through Tier 1 suppliers. We enter into contracts with customers that create enforceable rights and obligations for the sale of

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

those products. While certain production is provided under awarded multi-year programs, these programs do not contain any commitment to volume by the customer. Individual customer volume releases, blanket purchase orders, supply agreements, terms and conditions represent the contract with the customer. Volume releases are limited to near-term customer requirements generally with delivery periods within a few weeks. We do not have contract assets or liabilities as defined under ASC ~~606.~~606, "Revenue from Contracts with Customers".

Each unit produced represents a separate performance obligation. Customer contracts do not provide an enforceable right to payment for performance completed throughout the production process. As such, product revenue is recognized at the point in time when shipment occurs and control has been transferred to the customer.

~~We participate~~ The Company participates in certain customers’ materials repurchase programs, under which we purchase materials directly from a customer’s designated supplier, for use in manufacturing products for that customer. We take delivery and title to such materials and bear the risk of loss and obsolescence. We invoice customers based upon negotiated selling prices, which inherently include a component for materials under such repurchase programs. We have risks and rewards of a principal, and as such, for transactions in which we participate in customers' materials resale programs, revenue is recognized on a gross basis for the entire amount, including the component for purchases under that customers' material resale programs.

We provide customers with standard warranties customary in the industry that products will operate as intended or designed, which are not separate performance obligations under ASC 606. We do not provide customers with the right to a refund but provide for product replacement. Returns or refunds for nonconforming products are not separate performance obligations applicable to ~~Shiloh's~~the Company's contract arrangements with customers.

~~SHILOH INDUSTRIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

We continue to include shipping and handling fees billed to customers in revenue, while including costs of shipping and handling in costs of sales as a fulfillment cost.

Taxes collected from customers are excluded from revenues and credited directly to obligations to the appropriate government agencies.

Payment terms with customers are established based on industry and regional practices and do not exceed 180 days.

Disaggregation of Net Revenues

The following table summarizes revenue for the three and nine months ended July 31, 2020 and 2019:


	Net Revenues													Net Revenues
	Three Months Ended July 31,						Nine Months Ended July 31,							Three Months Ended July 31,						Nine Months Ended July 31,
Region:	2019			2018			2019			2018			Region:	2020		2019		2020		2019
North America	$	203,920		$	223,074		$	606,872		$	648,705		North America	$	114,133	$	203,920	$	412,336	$	606,872
Europe & Asia	65,214			77,438			205,760			206,108
Europe													Europe	34,696		61,685		131,672		194,883
Asia													Asia	13,188		3,529		30,595		10,877
Eliminations	(5,689		)	(5,629		)	(16,884		)	(14,924		)	Eliminations	(6,650)		(5,689)		(17,822)		(16,884)
Total Company	$	263,445		$	294,883		$	795,748		$	839,889		Total Company	$	155,367	$	263,445	$	556,781	$	795,748

Note 4—~~Acquisitions~~

On March 1, 2018, a subsidiary of the Company acquired all of the issued and outstanding capital of Brabant Alucast Italy Site Verres S.r.l., a limited liability company organized under the laws of Italy, and Brabant Alucast The Netherlands Site Oss B.V., a limited liability company organized under the laws of the Netherlands (collectively "Brabant"). The acquisitions were accounted for as business combinations under the acquisition method in accordance with the FASB ASC Topic 805, ~~Business Combinations. The acquisitions complement Shiloh’s global footprint with the expansion of aluminum and magnesium casting capabilities, while providing capacity for growth.~~

The aggregate fair value of consideration transferred was $65,273 ($62,514 net of cash acquired), on the date of the acquisitions. Assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. The fair values of identifiable intangible assets were based on valuations using the income approach and estimates.

~~Note 5—~~Accounts Receivable, Net

Accounts receivable, net is expected to be collected within one year and is net of an allowance for doubtful accounts in the amount of ~~$831~~$1,147 and ~~$676~~$884 at July 31, ~~2019~~2020 and October 31, ~~2018,~~2019, respectively. We recognized bad debt expense of $3$1,993 and ~~$329~~$2,535 for the three and nine months ended July 31, ~~2019,~~2020 and recognized bad debt expense ~~(benefit)~~ of ~~$(32)~~$3 and ~~$14~~$329 during the three and nine months ended July 31, ~~2018,~~2019, in the condensed consolidated statement of operations.

We continually monitor our exposure with our customers and additional consideration is given to individual accounts ~~in light of~~considering the COVID-19 market conditions in the automotive and commercial vehicle markets.

As a part of our working capital management, ~~we have~~the Company has entered into factoring agreements with third party financial institutions ("institutions") for the sale of certain accounts receivable, with and without recourse. The ~~activity under these agreements~~sale of the receivables is accounted for ~~as sales of accounts receivable under~~in accordance with ASC ~~Topic~~ 860, "Transfers and Servicing.~~" These agreements relate exclusively~~ Under that guidance, receivables are considered sold when they are transferred beyond the reach of the Company and its creditors, the purchaser has the right to pledge or exchange the ~~accounts receivable of certain Italian and Swedish customers. The amounts sold vary each month based on the amount of underlying~~ receivables, and ~~cash flow requirements.~~the Company has surrendered control over the transferred receivables. In addition, ~~the~~certain agreements address events and conditions which may obligate usthe Company to immediately repay to the institutions the outstanding purchase price of the receivables sold.

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The total amount of trade accounts receivable factored was ~~$10,829~~$5,966 and ~~$13,545~~$8,779 as of July 31, ~~2019~~2020 and October 31, ~~2018,~~2019, respectively. As these sales of trade accounts receivable are with recourse, ~~$9,915~~$4,578 and ~~$11,742~~$9,188 were recorded in accounts payable as of July 31, ~~2019~~2020 and October 31, ~~2018,~~2019, respectively. The cost of selling these receivables is dependent upon the number of days between the sale date of the receivables, the date the customer’s invoice is due and the interest rate. The expense associated with

~~SHILOH INDUSTRIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

the sale of these receivables is recorded as a component of selling, general and administrative expense in the accompanying condensed consolidated statements of operations.

As of July 31, 2020 and October 31, 2019, $3,235 and $2,538 of trade accounts receivable were subject to factoring without recourse, respectively. The amounts subject to factoring without recourse for the year 2020 have been included in the proceeds for net cash provided by operating activities in the consolidated statements of cash flows. The expense associated with the sale of the receivables is recorded as a component of selling, general and administrative expense in the accompanying condensed consolidated statements of operations.

Note 6—5—Related Party Receivables

MTD Products Inc. and MTD Holdings LLC are affiliates of Oak Tree Holdings LLC, which is a greater than 5% beneficial owner of the Company's shares of Common Stock.

Sales to MTD Products Inc. and its affiliates were $1,309 and $4,225 for the three and nine months ended July 31, 2020, respectively, and $1,322 and $5,521 for the three and nine months ended July 31, 2019, ~~respectively and $1,114 and $4,380 for the three and nine months ended July 31, 2018,~~ respectively. At July 31, ~~2019~~2020 and October 31, ~~2018,~~2019, we had related party receivable balances of ~~$466~~$605 and ~~$996,~~$1,477, respectively, due from MTD Products Inc. and its affiliates.

Note 7—6—Inventories, Net

Inventories, net consists of the following:


	July 31, 2020		October 31, 2019
Raw materials	$	22,512	$	26,653
Work in process	20,558		21,369
Finished goods	18,860		19,470
Reserves	(7,647)		(3,945)
Total inventories, net	$	54,283	$	63,547

July 31, 2019 October 31, 2018
Raw materials $ 28,978
$ 28,457
Work in process 23,319
24,435
Finished goods 19,785
21,637
Reserves $ (4,467 ) $ (3,117 )
Total inventories, net $ 67,615
$ 71,412

Note 87 —Goodwill and Intangible Assets

Goodwill:

In accordance with FASB ASC Topic 350, "Intangibles – Goodwill and Other", goodwill must be reviewed for impairment annually, or more frequently if events and circumstances arise that suggest the asset may be impaired. We conduct our review for goodwill impairment on September 30 of each year. Goodwill impairment testing is performed at the reporting unit level. The fair value is compared to the carrying value including goodwill. If the carrying value exceeds the fair value, then goodwill impairment exists. The impact of COVID-19 developments and uncertainty with respect to the economic effects of the pandemic has introduced significant volatility in the financial markets and is having a widespread adverse effect on the automotive industry, including reductions in consumer demand and OEM automotive production. In response to the COVID-19 pandemic, our key customers temporarily closed nearly all their production facilities in North America, Europe and Asia (our primary markets) over the course of the quarter ended April 30, 2020. As a result, we concluded that an interim test of our goodwill was required. More specifically, the Company concluded that the following events and circumstances, in the aggregate, indicated that it was more likely than not that the carrying value of our North American reporting unit exceeded its fair value: (1) lower forecasted 2020 industry production volumes for North America, including those for our primary North American customers, due to OEM shutdowns to mitigate the spread of COVID-19 and subsequent reduced production levels over the remainder of the year, as compared to our prior production forecasts (including estimates used in our 2019 assessment) and (2) the volatility in financial markets that has lowered median North American automotive market multiples. Based on the

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

results of our quantitative analysis, we recognized a non-cash goodwill impairment charge equal to the remaining goodwill balance of $21,971 since the carrying value exceeded the fair value of the North American reporting unit by more than the amount of the goodwill balance at April 30, 2020.

We utilized both an income and a market approach, to determine the fair value of the North American reporting unit as part of our goodwill impairment assessment. The income approach is based on projected debt-free cash flow, which is discounted to the present value using discount factors that consider the timing and risk of cash flows. The discount rate used is the weighted average of an estimated cost of equity and of debt (“weighted average cost of capital”). The weighted average cost of capital is adjusted as necessary to reflect risk associated with the business of the North American reporting unit. Financial projections are based on estimated production volumes, product prices and expenses, including raw material cost, wages, energy and other expenses. Other significant assumptions include terminal value cash flow and growth rates, future capital expenditures and changes in future working capital requirements. The market approach is based on the observed share prices of comparable, publicly traded companies. The market approach fair value was determined by multiplying outstanding share capital by the associated market value of the Company’s stock at April 30, 2020. A considerable amount of management judgment and assumptions were required in performing the quantitative impairment test, principally related to determining the fair value of the reporting unit.

The changes in the carrying amount of goodwill for the nine months ended July 31, ~~2019~~2020 are as follows:


Balance October 31, 2019			$	22,395

	Impairment	(21,971)
	Foreign currency translation	(424)
Balance July 31, 2020			$	0

Balance October 31, 2018 $ 27,376
Foreign currency translation 8
Balance July 31, 2019 $ 27,384

Intangible ~~Assets~~Assets:

In accordance with FASB ASC Topic 360, "Property, Plant, and Equipment" (“ASC 360”), we are required to complete impairment testing whenever an event or changes in circumstances indicate the long-lived assets carrying value may not be recoverable. The long-lived assets consist principally of property, plant, equipment, and intangibles. Due to the circumstances surrounding the COVID-19 pandemic and decline in our business it was necessary to test our long-lived assets for impairment as of the interim date of July 31, 2020. In accordance with ASC 360, we tested long-lived assets for impairment at the asset group level for which the lowest level of independent cash flows can be identified. Based on the results of our quantitative analysis, an impairment charge of $4,858 and $104,775 were recorded to intangible assets and property, plant and equipment, respectively as of July 31, 2020.

The changes in the carrying amount of finite-lived intangible assets for the nine months ended July 31, ~~2019~~2020 are as follows:


		Customer Relationships			Developed Technology			Trade Name			Trademark			Total
Balance October 31, 2019			$	8,977		$	2,979		$	1,008		$	61		$	13,025
	Impairment	(3,313)			(1,148)			(377)			(20)			(4,858)
	Amortization expense	(998)			(294)			(93)			(11)			(1,396)
	Foreign currency translation	3			102			0			0			105
Balance July 31, 2020			$	4,669		$	1,639		$	538		$	30		$	6,876

Customer Relationships Developed Technology Non-Compete Trade Name Trademark Total
Balance October 31, 2018 $ 10,311
$ 3,404
$ 15
$ 1,131
$ 78
$ 14,939
Amortization expense (998 ) (296 ) (12 ) (93 ) (12 ) (1,411 )
Foreign currency translation (3 ) (36 ) —
—
—
(39 )
Balance July 31, 2019 $ 9,310
$ 3,072
$ 3
$ 1,038
$ 66
$ 13,489

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Intangible assets are amortized on the straight-line method over their legal or estimated useful lives. The following summarizes the gross carrying value and accumulated amortization for each major class of intangible assets:


	July 31, 2020
	Weighted Average Useful Life (years)	Gross Carrying Value Net of Foreign Currency		Accumulated Amortization		Impairment		Net
Customer relationships	6.2	$	17,564	$	(9,582)	$	(3,313)	$	4,669
Developed technology	8.4	7,236		(4,449)		(1,148)		1,639

Trade name	7.4	1,875		(960)		(377)		538
Trademark	3.0	166		(116)		(20)		30
		$	26,841	$	(15,107)	$	(4,858)	$	6,876

July 31, 2019
Weighted Average Useful Life (years) Gross Carrying Value Net of Foreign Currency Accumulated Amortization Net
Customer relationships 7.2 17,561
$ (8,251 ) $ 9,310
Developed technology 9.1 7,129
(4,057 ) 3,072
Non-compete 0.2 824
(821 ) 3
Trade Name 8.4 1,875
(837 ) 1,038
Trademark 4.0 166
(100 ) 66
$ 27,555
$ (14,066 ) $ 13,489

Total amortization expense was $514 and $1,538 for the three and nine months ended July 31, 2020, respectively, and $518 and $1,558 for the three and nine months ended July 31, 2019, ~~respectively, and $607 and $1,767 for the three and nine months ended July 31, 2018,~~ respectively. A favorable lease asset of $1,458 was acquired as part of the Brabant acquisitions in fiscal year 2018 with a ~~7 year~~7-year useful life. Amortization expense for the three and nine months ended July 31, ~~2019~~2020 was $49 and ~~$147, respectively.~~$145, respectively, and is included within the amortization of intangible assets. A net balance of ~~$1,050~~$909 is included within other assets for the favorable lease asset. Amortization expense related to intangible assets and the favorable lease asset ~~for the following fiscal years ending~~ is estimated to be as follows:


Twelve Months Ended July 31,
2021	$	1,299
2022	1,299
2023	1,299
2024	1,290
2025	1,070
Thereafter	1,528

	$	7,785

Twelve Months Ended July 31,
2020 $ 2,060
2021 2,057
2022 2,057
2023 2,056
2024 2,041
Thereafter 4,268
$ 14,539

Note 9—8—Financing Arrangements

Debt consists of the following:


						July 31, 2020		October 31, 2019
Credit Agreement—interest rate of 6.01% at July 31, 2020 and 5.18% at October 31, 2019					Credit Agreement—interest rate of 6.01% at July 31, 2020 and 5.18% at October 31, 2019	$	322,900	$	248,695
	July 31, 2019		October 31, 2018
Credit Agreement—interest rate of 5.27% at July 31, 2019 and 4.59% at October 31, 2018	$	246,700	$	243,300
Capital lease obligations	2,043		2,640		Capital lease obligations	1,879		1,975
Insurance broker financing agreement	—		738

Total debt	248,743		246,678		Total debt	324,779		250,670
Less: Current debt	350		1,327		Less: Current debt	324,779		1,975
Total long-term debt	$	248,393	$	245,351	Total long-term debt	$	0	$	248,695

At July 31, ~~2019,~~2020, we had total debt, excluding capital leases, of ~~$246,700,~~$322,900, consisting of a revolving line of credit under the Credit Agreement of floating rate ~~debt of $246,700.~~debt. The weighted average interest rate of all debt was ~~5.26%~~5.05% and ~~3.82%~~5.26% for the nine months ended July 31, ~~2019~~2020 and ~~2018,~~2019, respectively.

~~SHILOH INDUSTRIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

Revolving Credit Facility:

The Company and its subsidiaries are party to a Credit Agreement, dated October 25, 2013, as amended (the "Credit Agreement") with Bank of America, N.A., as Administrative Agent, Swing Line Lender, Dutch Swing Line Lender and L/C Issuer, JPMorgan Chase Bank, N.A. as Syndication Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P.

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Morgan Securities, LLC as Joint Lead Arrangers and Joint Book Managers, The PrivateBank and Trust Company, Compass Bank and The Huntington National Bank, N.A., as Co-Documentation Agents and the other lender parties thereto.

On June 6, 2019, we executed the Ninth Amendment to the Credit Agreement which improved certain thresholds for the consolidated leverage ratio and various baskets related to the indebtedness of foreign subsidiaries, disposition of assets, capital expenditures and sale leaseback transactions. The Ninth Amendment also adjusted the interest rate margins based on the applicable pricing tiers, but did not modify the aggregate revolving commitments under the Credit Agreement.

On October 31, 2017, we executed the Eighth Amendment to the Credit Agreement which, among other things, provided for an aggregate availability of $350,000, $275,000 of which is available to the Company through the Tranche A Facility and $75,000 of which is available to the Dutch borrower through the Tranche B Facility, and eliminated the scheduled reductions in such availability; increased the aggregate amount of incremental commitment increase allowed under the Credit Agreement to up to $150,000 subject to our pro forma compliance with financial covenants, the Administrative Agent’s approval and the Company obtaining commitments for any such increase. The Amendment extended the commitment period to October 31, 2022.

On July 31, 2017, we executed the Seventh Amendment which modified investments in subsidiaries and various cumulative financial covenant thresholds, in each case, under the Credit Agreement. The Amendment also enhanced our ability to take advantage of customer supply chain finance programs.

On October 28, 2016, we executed the Sixth Amendment which increased the permitted consolidated leverage ratio for periods beginning after July 31, 2016; increased the permitted consolidated fixed charge coverage ratio for periods beginning after April 30, 2017, modified various baskets related to sale of accounts receivable, disposition of assets, sale-leaseback transactions, and made other ministerial updates.

On October 30, 2015, we executed the Fifth Amendment which increased the permitted leverage ratio with periodic reductions beginning after July 30, 2016. In addition, the Amendment permitted various investments as well as up to $40,000 aggregate outstanding principal amount of subordinated indebtedness, subject to certain conditions. Finally, the Amendment provided for a consolidated fixed charge coverage ratio, and provided for up to $50,000 of capital expenditures by the Company and our subsidiaries throughout the year ending October 31, 2016, subject to certain quarterly baskets.

On April 29, 2015, we executed the Fourth Amendment to the Credit Agreement that maintained the commitment period of September 29, 2019 and allowed for an incremental increase of $25,000 (or if certain ratios are met, $100,000) to the original revolving commitments of $360,000, subject to our pro forma compliance with financial covenants, the administrative agent's approval, and the Company obtaining commitments for such increase.

The Fourth Amendment included scheduled commitment reductions beginning after January 30, 2016 totaling $30,000, allocated proportionately between the Aggregate Revolving A and B commitments. On April 30, 2016, the first committed reduction of $5,000 decreased the existing revolving commitment to $355,000, subject to our pro forma compliance with financial covenants.

Borrowings under the Credit Agreement bear interest, at our option, at LIBOR or the base (or "prime") rate established from time to time by the administrative agent, in each case plus an applicable margin. The Fifth Amendment provided for an interest rate margin on LIBOR loans of 1.5% to 3.0% and of 0.5% to 2.0% on base rate loans depending on the Company's leverage ratio.

The Credit Agreement contains customary restrictive and financial covenants, including covenants regarding our outstanding indebtedness and maximum leverage and interest coverage ratios. ~~The Credit Agreement leverage ratio increases in restriction until maturity.~~ The Credit Agreement also contains standard provisions relating to conditions of borrowing. In addition, the Credit Agreement contains customary events of default, including the non-payment of obligations by the Company and the bankruptcy of the Company. If an event of default occurs, all amounts outstanding under the Credit Agreement may be accelerated

~~SHILOH INDUSTRIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

and become immediately due and payable. ~~We were~~The pre-existing financial covenants include the interest coverage ratio at 3.5 times and the leverage ratio which ranges between 4.50 times in ~~compliance~~the third quarter of 2020 and 3.25 times in the fourth quarter of 2020.

The impact of COVID-19 developments and uncertainty with respect to the economic effects of the pandemic has introduced significant volatility in the financial markets and is having a widespread adverse effect on the automotive industry, including reductions in consumer demand and OEM automotive production. The Company experienced significant operating losses, negative cash flows from operations and working capital deficiencies during the period and as a result was below the established financial thresholds of the interest coverage ratio and leverage ratio covenants as of July 31, 2020.

On June 11, 2020, the Company entered into the Tenth Amendment to the Credit Agreement (the “Tenth Amendment”), pursuant to which, among other things, the Company received a waiver of the interest coverage ratio and leverage ratio covenants for the quarters ended April 30, 2020 and July 31, 2020. As of July 31, 2020, the Company has significant indebtedness due within the next twelve months and cash flow from operations, has not been sufficient to meet the Company's liquidity demands. Our outstanding indebtedness coupled with the Chapter 11 Cases raise substantial doubt about the Company’s ability to continue as a going concern.

The Tenth Amendment added financial covenants that required the Company to (i) maintain week-end liquidity of at least (1) $40 million for the period from June 13, 2020 through June 26, 2020, (2) $35 million for the period from June 27, 2020 through July 11, 2020, and (3) $30 million from July 12, 2020 through October 31, 2020, and (ii) limit capital expenditures to $15 million for the period from May 1, 2020 through August 31, 2020. The Tenth Amendment added, limited or otherwise modified certain debt, disposition and investment baskets. The Tenth Amendment provided that (i) revolving loans and swingline loans bear interest at a rate equal to the base rate or LIBOR plus an applicable margin of 4.00% in the case of base rate loans or 5.00% in the case of LIBOR loans, (ii) the Company pay a commitment fee on the unused portion of the revolving commitments at a rate of 0.65% per annum and (iii) revolving loans bearing interest at the LIBOR rate shall be subject to a LIBOR floor of 1.00%; provided, that, in case of clauses (i) and (ii), if the Company demonstrates, based on the compliance certificate for the fiscal quarter ending July 31, 2020, that (A) the consolidated leverage ratio as of the end of the fiscal quarter ending July 31, 2020 does not exceed 4.25 to 1.0 and (B) the consolidated interest coverage ratio as of the end of the fiscal quarter ending July 31, 2020 is greater than or equal to 3.50 to 1.0, then applicable margin shall revert to the pricing grid that was in effect prior to the Tenth Amendment. The Tenth Amendment also included certain transactional milestones for the Company.

Long-term debt is classified as current in the condensed consolidated balance sheet as of July 31, 2020, because the waivers for the pre-existing financial covenants expire in less than twelve months and the Company will not comply with future covenants based on current forecasts. The Company was unable to obtain new financing and filed the Chapter 11 Cases on August 30, 2020. The filing of the Chapter 11 Cases constituted an event of default and the principal and interest due under the Credit Agreement became immediately due and payable and therefore, we will continue to classify the long-term debt as current in the condensed consolidated balance sheet.

After considering letters of credit of $4,804 that we have issued, the Company has borrowed all the funds available under the Credit Agreement as of July 31, ~~2019 and October 31, 2018.~~

~~After considering letters of credit of $6,206 that we have issued, unused commitments under the Credit Agreement were $97,094 as of July 31, 2019.~~2020. Actual borrowing capacity is subject to the Credit Agreement ~~covenants.~~covenants and could be less than the stated unused commitments.

Borrowings under the Credit Agreement are collateralized by a first priority security interest in substantially all of the tangible and intangible property of the Company and our domestic subsidiaries and 66% of the stock of our foreign subsidiaries.

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Other Debt:

~~On August 1, 2018, we entered into a finance agreement with an insurance broker for various insurance policies that bears interest at a fixed rate of 2.55% and required monthly payments of $94 through~~ ~~May 2019~~.

We maintain ~~capital~~finance leases for equipment used in our manufacturing facilities with lease terms expiring between 2019 and 2020. As of July 31, ~~2019,~~2020, the present value of minimum lease payments under our capital leases amounted to ~~$2,043.~~$1,879.

Scheduled repayments of debt for the next five years are listed below:


Twelve Months Ending July 31,	Credit Agreement			Capital Lease Obligations		Total
2021	$	0		$	1,879	$	1,879
2022	0			0		0
2023	322,900		1	0		322,900
2024	0			0		0
2025	0			0		0

Total	$	322,900		$	1,879	$	324,779

¹- Based on the current credit agreement the $322,900 in debt is due in 2023 but is classified as current debt because the waivers for the pre-existing financial covenants expire in less than twelve months and the Company will not comply with future covenants based on current forecasts. The contractual terms above do not reflect any violation of covenants. Subsequently, the Company filed the Chapter 11 Cases on August 30, 2020.

Note 9 — Leases

The Company leases office space, manufacturing space, computer equipment and other equipment under non-cancellable lease arrangements. Additionally, some of the Company's real estate lease payments vary based on changes in the Consumer Price Index ("CPI"). These specific lease liabilities are not remeasured as a result of changes to the CPI and are recognized in the period in which the obligation for those payments was incurred.

The Company's lease arrangements have lease terms that expire between the years 2020 and 2039. The Company has options to extend the terms of certain leases into future periods and for the options the Company is reasonably certain to exercise, the payments associated with these renewal periods have been included in the measurement of the lease liabilities and ROU assets. The Company's debt covenant requirements do not have any restrictions in terms of leasing arrangements on the Company or place any other restrictions on the Company.

Operating lease expenses are classified as cost of products sold and operating expenses on the Condensed Consolidated Statement of Operations. The components of lease expense for the three and nine months ended July 31, 2020 are as follows:


Lease cost	Three Months Ended July 31, 2020		Nine Months Ended July 31, 2020
Finance lease expense
Amortization of right-of-use asset	$	99	$	427
Interest on lease liability	11		23
Total finance lease cost	$	110	$	450
Operating lease expense
Operating leases	$	3,032	$	9,465
Short-term leases ⁽¹⁾	276		760
Total lease expense	$	3,308	$	10,225

^{(1) Includes expenses for month-to-month equipment leases, which are classified as short-term as the Company is not reasonably certain to renew the lease term beyond a month.}

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Twelve Months Ending July 31, Credit Agreement Capital Lease Obligations Total
2020 $ —
$ 350
$ 350
2021 —
1,693
1,693
2022 —
—
—
2023 246,700
—
246,700
2024 —
—
—
Total $ 246,700
$ 2,043
$ 248,743

The weighted average remaining operating and finance lease terms and weighted average discount rates are as follows:


			July 31, 2020
Weighted average remaining lease term of operating leases (in years)			13.9

Weighted average discount rate of operating leases			6.44%

Weighted average remaining lease term of finance leases (in years)			0.25

Weighted average discount rate of finance leases			4.57%

Other supplemental cash flow information related to leases is as follows:


Other Information	Three Months Ended July 31, 2020		Nine Months Ended July 31, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows from finance leases	$	11	$	23
Operating cash outflows from operating leases	1,879		6,118
Financing cash outflows from finance leases	294		495

Maturities of operating and finance lease liabilities as of July 31, 2020 are as follows:


Years Ending October 31,
2020⁽¹⁾	$	2,955
2021	10,422
2022	8,444
2023	6,806
2024	4,934
Thereafter	40,562
Total lease payments	74,123
Less: imputed interest	20,866
Total lease liabilities ⁽²⁾	$	53,257

^{(1) Excluding the nine months ended July 31, 2020.}

^{(2) Operating lease payments include $18,778 related to options to extend lease terms that are reasonably certain of being exercised.}

The aggregate amount of future minimum annual rental payments applicable to non-cancelable leases as of October 31, 2019 were as follows:


Year Ending October 31,
2020	$	12,040
2021	8,960
2022	5,102
2023	3,816
2024	2,717
Thereafter	10,513
Total	$	43,148

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Note 10—Pension and Other Post-Retirement Benefit Matters

~~U.S~~U.S. Plans

The components of net periodic benefit cost for the three and nine months ended July 31, ~~2019~~2020 and ~~2018~~2019 are as follows:


	Pension Benefits						Other Post-Retirement Benefits
	Three Months Ended July 31,						Three Months Ended July 31,
	2020		2019		2020		2019

Interest cost	$	675	$	843	$	2	$	3
Expected return on plan assets	(831)		(836)		0		0
Amortization of net actuarial loss	374		288		2		1


Net periodic cost	$	218	$	295	$	4	$	4

Pension Benefits
Other Post-Retirement
Benefits
Three Months Ended July 31, Three Months Ended July 31,
2019 2018 2019 2018
Interest cost $ 843
$ 791
$ 3
$ 3
Expected return on plan assets (836 ) (839 ) —
—
Amortization of net actuarial loss 288
328
1
1
Net periodic cost $ 295
$ 280
$ 4
$ 4

~~SHILOH INDUSTRIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~


												Pension Benefits						Other Post-Retirement Benefits
	Pension Benefits						Other Post-Retirement Benefits					Nine months ended July 31,						Nine months ended July 31,
	Nine Months Ended July 31,						Nine Months Ended July 31,					2020		2019		2020		2019
	2019			2018			2019		2018
Interest cost	$	2,525		$	2,375		$	9	$	8	Interest cost	$	2,026	$	2,525	$	6	$	9
Expected return on plan assets	(2,506		)	(2,519		)	—		—		Expected return on plan assets	(2,493)		(2,506)		0		0
Amortization of net actuarial loss	861			984			4		5		Amortization of net actuarial loss	1,122		861		6		4

Net periodic cost	$	880		$	840		$	13	$	13	Net periodic cost	$	655	$	880	$	12	$	13

We made contributions of ~~$1,183~~$219 to our U.S. pension plans during the three and nine months ended July 31, 2020. We were not required to and therefore did not contribute to our U.S. pension plans during the three and nine months ended July 31, 2019. ~~We expect to contribute~~Our expected contribution of an additional ~~$219~~$897 to our U.S. pension plans before the end of fiscal ~~2019.~~2020 may be postponed under the CARES Act as part of COVID-19 relief until fiscal 2021.

We report the service cost component of the net periodic pension and post-retirement costs in the same caption as other compensation costs arising from services rendered. The other components of net period costs are presented outside of operating income in other (income) expense, net.

Non-U.S. Plans

For our Swedish operations, the majority of the pension obligations are covered by insurance policies with insurance companies. Pension commitments in our Polish operations were ~~$1,233~~$1,467 at July 31, ~~2019~~2020 and ~~$1,081~~$1,267 at October 31, ~~2018.~~2019. The liability represents the present value of future obligations and is calculated on an actuarial basis. The Polish operations recognized expense of $361 and $740 for the three and nine months ended July 31, 2020 and $40 and $223 for the three and nine months ended July 31, 2019, ~~respectively and $52 and $163 for the three and nine months ended July 31, 2018,~~ respectively.

The insurance contracts guarantee a minimum rate of return. We have no input into the investment strategy of the assets underlying the contracts, but they are typically heavily invested in active bond markets and are highly regulated by local law.

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Note 11—Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss in stockholders' equity (deficit) by component for the three and nine months ended July 31, ~~2019 and 2018~~2020 is as follows:


		Pension and Post Retirement Plan Liability (1)			Marketable Securities Adjustment (1)			Interest Rate Swap Adjustment (2)			Foreign Currency Translation Adjustment (3)			Accumulated Other Comprehensive Loss
Balance at April 30, 2020			$	(37,303)		$	0		$	(633)		$	(32,518)		$	(70,454)
	Other comprehensive income (loss), net of tax	0			0			(72)			13,671			13,599
	Amounts reclassified from accumulated other comprehensive loss, net of tax	290			0			283			0			573
	Net current-period other comprehensive income (loss)	290			0			211			13,671			14,172

Balance at July 31, 2020			$	(37,013)		$	0		$	(422)		$	(18,847)		$	(56,282)

Pension and Post Retirement Plan Liability (1) Marketable Securities Adjustment (1) Interest Rate Swap Adjustment (2) Foreign Currency Translation Adjustment (3) Accumulated Other Comprehensive Loss
Balance at April 31, 2018 $ (27,373 ) $ (97 ) $ (121 ) $ (13,188 ) $ (40,779 )
Other comprehensive income (loss), net of tax —
(18 ) 95
(2,834 ) (2,757 )
Amounts reclassified from accumulated other comprehensive loss 252
122
153
—
527
Net current-period other comprehensive income (loss) 252
104
248
(2,834 ) (2,230 )
Reclassification to retained earnings (4) (6,138 ) (7 ) (213 ) —
(6,358 )
Balance at July 31, 2018 $ (33,259 ) $ —
—
$ (86 ) —
$ (16,022 ) $ (49,367 )


		Pension and Post Retirement Plan Liability (1)			Marketable Securities Adjustment (1)			Interest Rate Swap Adjustment (2)			Foreign Currency Translation Adjustment (3)			Accumulated Other Comprehensive Loss
Balance at October 31, 2019			$	(37,883)		$	0		$	(628)		$	(26,515)		$	(65,026)
	Other comprehensive income (loss), net of tax	0			0			(428)			7,668			7,240
	Amounts reclassified from accumulated other comprehensive loss, net of tax	870			0			634			0			1,504
	Net current-period other comprehensive income (loss)	870			0			206			7,668			8,744
Balance at July 31, 2020			$	(37,013)		$	0		$	(422)		$	(18,847)		$	(56,282)

Pension and Post Retirement Plan Liability (1) Marketable Securities Adjustment (1) Interest Rate Swap Adjustment (2) Foreign Currency Translation Adjustment (3) Accumulated Other Comprehensive Loss
Balance at April 30, 2019 $ (28,693 ) $ —
$ (358 ) $ (23,652 ) $ (52,703 )
Other comprehensive income (loss), net of tax —
—
(243 ) (1,940 ) (2,183 )
Amounts reclassified from accumulated other comprehensive loss 223
—
51
—
274
Net current-period other comprehensive income (loss) 223
—
(192 ) (1,940 ) (1,909 )
Balance at July 31, 2019 $ (28,470 ) $ —
$ (550 ) $ (25,592 ) $ (54,612 )

(1) Amounts reclassified from accumulated other comprehensive loss, net of tax are classified with other expense included on the statements of operations.

(2) Amounts reclassified from accumulated other comprehensive ~~income~~ loss, net of tax are classified with interest expense included on the statements of operations.

(3) The net investment derivative instrument is recognized in accumulated other comprehensive loss and reclassified to income in the same period when a gain or loss related to that net investment in foreign operation is included in income.

~~(4) In the three months ended July 31, 2018, Shiloh early adopted ASU 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220):Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." As a result, the stranded tax effects resulting from the TCJA enacted in December 2017 were reclassified from accumulated other comprehensive loss to retaining earnings.~~

~~SHILOH INDUSTRIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~Changes in accumulated other comprehensive loss in stockholders' equity by component for the nine months ended July 31, 2019 and 2018 is as follows:~~

Pension and Post Retirement Plan Liability (1) Marketable Securities Adjustment (1) Interest Rate Swap Adjustment (2) Foreign Currency Translation Adjustment (3) Accumulated Other Comprehensive Loss
Balance at October 31, 2017 $ (27,847 ) $ (2 ) $ (1,319 ) $ (13,069 ) $ (42,237 )
Other comprehensive income (loss), net of tax —
(113 ) 798
(2,953 ) (2,268 )
Amounts reclassified from accumulated other comprehensive loss 726
122
648
—
1,496
Net current-period other comprehensive income (loss) 726
9
1,446
(2,953 ) (772 )
Reclassification to retained earnings (4) (6,138 ) (7 ) (213 ) —
(6,358 )
Balance at July 31, 2018 $ (33,259 ) $ —
$ (86 ) $ (16,022 ) $ (49,367 )

Pension and Post Retirement Plan Liability (1) Marketable Securities Adjustment (1) Interest Rate Swap Adjustment (2) Foreign Currency Translation Adjustment (3) Accumulated Other Comprehensive Loss
Balance at October 31, 2018 $ (29,137 ) $ (18 ) $ 104
$ (21,879 ) $ (50,930 )
Other comprehensive income (loss), net of tax —
—
(835 ) (3,713 ) (4,548 )
Amounts reclassified from accumulated other comprehensive loss, net of tax 667
18
181
—
866
Net current-period other comprehensive income (loss) 667
18
(654 ) (3,713 ) (3,682 )
Balance at July 31, 2019 $ (28,470 ) $ —
$ (550 ) $ (25,592 ) $ (54,612 )

~~(1) Amounts reclassified from accumulated other comprehensive loss, net of tax are classified with other expense included on the statements of operations.~~

~~(2) Amounts reclassified from accumulated other comprehensive income loss, net of tax are classified with interest expense included on the statements of operations.~~

~~(4) In the nine months ended July 31, 2018, Shiloh early adopted ASU 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." As a result, the stranded tax effects resulting from the TCJA enacted in December 2017 were reclassified from accumulated other comprehensive loss to retaining earnings.~~

Note 12—Derivatives and Financial Instruments

~~Shiloh~~ The Company is exposed to, among other risks, the impact of changes in commodity prices, foreign currency exchange rates and interest rates in the normal course of business. ~~Shiloh’s~~The Company's financial risk management program is designed to manage the exposure and volatility arising from these risks and utilizes derivative financial instruments to offset a portion of these risks. We do not enter into derivative financial instruments for trading or speculative purposes. On an on-going basis, we monitor counterparty credit ratings. We consider credit non-performance risk to be low because we enter into agreements with commercial institutions that have investment grade credit ~~rating.~~ratings.

On March 1, 2018, we entered into a cross-currency swap in which we would settle interest on the notional amount in Euros and settle interest on the notional amount in dollars, both at a variable rate. The objective of the transaction was to protect the initial net investment in Brabant against adverse changes in the exchange rate between the U.S. dollar and the Euro. Hedge effectiveness was assessed based upon changes in the spot foreign exchange rate. As such, the change in value of the cross-currency interest rate swap related to the change in spot rates was ~~perfectly~~ effective at offsetting changes in the cumulative translation adjustment related to the portion of our net investment in Brabant up to the notional amount of the cross-currency interest rate swap.

Under the cross-currency interest rate swap, we received €53,000 on which we would settle interest at the 1-month Euribor rate, and we lent to the counterparty $64,930 on which we would settle interest at the 1-month LIBOR rate. Interest payments

~~SHILOH INDUSTRIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

were made at the end of every month. The notional amounts in the respective currencies exchanged at the beginning

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

of the cross-currency interest rate swap period were to be repaid at the end of the cross-currency interest rate swap period. The initial maturity of the cross-currency interest rate swap was October 31, 2022. In the second quarter of fiscal 2019, the cross-currency interest rate swap was discontinued and settled in cash for $5,110. The cash value at settlement was driven by changes in foreign currency exchange rates and debt markets from inception to settlement. There was no impact to net income upon settlement.

On February 25, 2014, we entered into an interest rate swap with an aggregate notional amount of $75,000 designated as a cash flow hedge to manage interest rate exposure on our floating rate LIBOR based debt under the Credit Agreement. The interest rate swap is an agreement to exchange payment streams based on the notional principal amount. This agreement fixes our future interest rate at 2.74% plus the applicable margin as provided in the Fifth Amendment ~~discussed in Note 9 - Financing Arrangements,~~to our Credit Agreement, on an amount of our debt principal equal to the then-outstanding swap notional amount. The forward interest rate swap commenced on March 1, 2015 with an initial $25,000 base notional amount. The second notional amount of $25,000 commenced on September 1, 2015 and the final notional amount of $25,000 commenced on March 1, 2016. The base notional amount plus each incremental addition to the base notional amount has a five ~~year~~-year maturity of February 29, 2020, August 31, 2020 and February 28, 2021, respectively. On the date the interest rate swap was entered into, we designated the interest rate swap as a hedge of the variability of cash flows to be paid relative to our variable interest rate monies borrowed. Any ineffectiveness in the hedging relationship is recognized immediately into earnings.

Our derivatives at July 31, ~~2019~~2020 consist of interest rate swap contracts, all of which are over-the-counter and not traded through an exchange. The Company uses widely accepted valuation tools to determine fair value, such as discounting cash flows to calculate a present value for the derivatives. The models use Level 2 inputs, such as forward curves and other commonly quoted observable transactions and prices. The fair value of our derivatives and hedging instruments are all classified as Level 2 investments within the three-tier hierarchy.

The following table discloses the fair value and balance sheet location of our derivative instruments:

Asset (Liability) Derivatives

Balance Sheet Location

July 31, 2020

October 31, 2019

Cash Flow Hedging Instruments:

Interest rate swap contracts

(Other accrued expenses)

(548)

(814)

Asset (Liability) Derivatives
Balance Sheet Location July 31, 2019 October 31, 2018
Net Investment Hedging Instruments:
Cross-currency interest rate swap contract Other assets $ —
$ 4,432
Cash Flow Hedging Instruments:
Interest rate swap contracts (Other liabilities) Other assets $ (715 ) $ 135

As a result of the hedging relationships being highly effective, the net interest payments accrued each period are reflected in net income (loss) as adjustments of interest expense, and the remaining change in the fair value of the derivatives is recognized in accumulated other comprehensive loss ("AOCI").

Derivative activity is included in interest expense and cash paid for interest. The following table presents the effect of our derivative instruments on the condensed consolidated statements of operations and the effects of hedging on those line items:


Location	Three Months Ended July 31, 2020		Three Months Ended July 31, 2019
Interest expense	$	5,379	$	4,633
Effect of hedging on interest expense	$	283	$	51


Location	Nine Months Ended July 31, 2020		Nine Months Ended July 31, 2019
Interest expense	$	14,362	$	11,836
Effect of hedging on interest expense	$	634	$	(564)

Location Three Months Ended July 31, 2019 Three Months Ended July 31, 2018
Interest expense $ 4,633
$ 3,209
Effect of hedging on interest expense $ 51
$ (274 )

Location Nine Months Ended
July 31, 2019 Nine Months Ended
July 31, 2018
Interest expense $ 11,836
$ 8,194
Effect of hedging on interest expense $ (564 ) $ 27

~~Note 13—Stock Incentive Compensation~~

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Note 13—Stock Incentive Compensation

Stock Incentive Compensation requires us to expense share-based payment awards granted. Compensation cost for share-based ~~payments~~payment transactions are measured at fair value. For stock options, we use the simplified method of calculating the expected term and historical volatility to compute fair value under the Black-Scholes option-pricing model. The risk-free rate for periods within the contractual life of the option is based on the U.S. zero coupon Treasury yield in effect at the time of grant. New restricted stock and restricted stock unit grants are calculated using the average market price of our common stock over a consistent predetermined number of days prior to the grant date and then valued at the closing market price of our common stock on the date of grant. We do not estimate a forfeiture rate at the time of grant. Instead, we ~~recognize~~adjust share-based compensation expense when actual forfeitures occur.

2019 Equity and Incentive Compensation Plan

Long-Term / Annual Incentives

On February 26, 2019, stockholders approved and adopted the 2019 Equity and Incentive Compensation Plan ("2019 Plan" or "Incentive Plan"), which replaced the 2016 Equity and Incentive Compensation Plan. The 2019 Plan authorizes the Compensation Committee of the Board of Directors of the Company to grant to the officers and other key employees, including directors, of the Company and our subsidiaries (i) stock options, (ii) appreciation rights, (iii) restricted shares, (iv) restricted stock units, (v) cash incentive awards, performance shares and performance units and (vi) other awards. An aggregate of 1,500,000 shares of ~~Common Stock,~~common stock, subject to adjustment upon occurrence of certain events to prevent dilution or expansion of the rights of participants that might otherwise result from the occurrence of such events, was reserved for issuance pursuant to the Incentive Plan. An individual’s award of options and / or appreciation rights is limited to 500,000 shares during any calendar year. Also, an individual's award of restricted shares, restricted share units and ~~performance based~~performance-based awards is limited to 350,000 shares during any calendar year.

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The following table summarizes the Company’s Incentive Plan activity for the nine months ended July 31, ~~2019~~2020 and ~~2018:~~2019:


	Stock Options					Restricted Stock				Restricted Stock Units
Outstanding at:	Options	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life	Restricted Shares	Grant Fair Value	Weighted Average Remaining Contractual Life	Restricted Share Units	Grant Fair Value	Weighted Average Remaining Contractual Life



November 1, 2018	33	$9.42	1.84	478	$7.45	1.87	27	$8.17	1.37
Granted	0	0		418	6.73		42	6.47
Options exercised or restricted stock vested	0	0		(230)	6.84		(14)	7.98
Forfeited or expired	0	0		(54)	7.39		(4)	7.35
July 31, 2019	33	$9.42	1.09	612	$7.20	1.97	51	$6.84	2.00

November 1, 2019	23	$11.25	1.31	603	$7.00	1.86	47	$6.81	1.88
Granted	0	0		677	3.30		55	3.60
Options exercised or restricted stock vested	0	0		(246)	7.11		(21)	7.10
Forfeited or expired	0	0		(268)	5.08		(38)	4.37
July 31, 2020	23	$11.25	0.56	766	$4.30	1.64	43	$4.75	1.95

Stock Options Restricted Stock Restricted Stock Units
Outstanding at: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life Restricted Shares Grant Fair Value Weighted Average Remaining Contractual Life Restricted Share Units Grant Fair Value Weighted Average Remaining Contractual Life

November 1, 2017 58
$8.16 2.53 441
$7.07 1.60 36
$7.69 1.82
Granted —
—
296
8.12
18
7.90

Options exercised or restricted stock vested (12 ) 3.26
(200 ) 7.51
(15 ) 8.30

Forfeited or expired (3 ) 12.04
(41 ) 7.08
(12 ) 6.18

July 31, 2018 43
$9.33 1.83 496
$7.52 1.95 26
$8.17 1.72

November 1, 2018 33
$9.42 1.84 478
$7.45 1.87 27
$8.17 1.37
Granted —
—
418
6.73
42
6.47

Options exercised or restricted stock vested —
—
(230 ) 6.84
(14 ) 7.98

Forfeited or expired —
—
(54 ) 7.39
(4 ) 7.35

July 31, 2019 33
$9.42 1.09 612
$7.20 1.97 51
$6.84 2.00

We recorded stock compensation expense related to stock options, restricted stock and restricted stock units during the three and nine months ended July 31, ~~2019~~2020 and ~~2018~~2019 as follows:


										Three Months Ended July 31,
	Three Months Ended July 31,				Nine Months Ended July 31,					2020		2019
	2019		2018		2019		2018
Restricted stock	$	544	$	488	$	1,461	$	1,465	Restricted stock	$	250	$	544
Restricted stock units	42		27		115		92		Restricted stock units	14		42
Total	$	586	$	515	$	1,576	$	1,557	Total	$	264	$	586


	Nine Months Ended July 31,
	2020		2019

Restricted stock	$	1,283	$	1,461
Restricted stock units	103		115
Total	$	1,386	$	1,576

Stock Options - The exercise price of each stock option equals the market price of our common stock on the grant date. Compensation expense is recorded at the grant date fair value, adjusted for forfeitures as they occur, and is recognized over the applicable vesting periods. Our stock options generally vest over three years, with a maximum term of ten years. Incentive stock options were not granted during the nine months ended July 31, ~~2019~~2020 and ~~2018.~~2019.

~~Cash received from the exercise of options for the nine months ended July 31, 2019 and July 31, 2018 was $0 and $41, respectively.~~ Options that have an exercise price greater than the market price are excluded from the intrinsic value computation. At July 31, ~~2019~~2020 and October 31, ~~2018,~~2019, the options outstanding and exercisable had an intrinsic value of $0 ~~and $42, respectively.~~for both periods.

Restricted Stock Awards - New restricted stock grants are calculated using the average market price of our common stock over a consistent predetermined number of days prior to the grant date and then valued at the closing market price of our common stock on the date of grant. Compensation expense is recorded at the grant ~~date.~~date fair value, adjusted for forfeitures as they occur and is recognized over the applicable vesting periods. The vesting periods range between one to three years. As of

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

July 31, 2020, there was $2,298 of total unrecognized compensation costs related to these restricted stock awards to be recognized over the next three fiscal years.

Restricted Stock Units - New restricted stock unit grants are calculated using the average market price of our common stock over a consistent predetermined number of days prior to the grant date and then valued at the closing market price of our common stock on the date of grant. Compensation expense is recorded at the grant date fair value, adjusted for forfeitures as they occur and is recognized over the applicable vesting periods. The vesting periods range between one to three years. As of July 31, ~~2019,~~2020, there was ~~$3,280~~$142 of ~~unrecognized compensation expense related to non-vested restricted stock that is expected to be recognized over the next three fiscal years.~~

~~Restricted Stock Units -~~ New restricted stock unit grants are valued at the closing market price of our common stock on the grant date. Compensation expense is recorded at the grant date fair value, adjusted for forfeitures as they occur and is recognized over the applicable vesting periods. The vesting periods range between one to three years. As of July 31, 2019, there was $258 oftotal unrecognized compensation expense related to these restricted stock units that is expected to be recognized over the ~~applicable vesting periods.~~next three fiscal years.

~~SHILOH INDUSTRIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

Note 14—Fair Value of Financial Instruments

The methods that we use may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Assets and liabilities remeasured and disclosed at fair value on a recurring basis at July 31, ~~2019~~2020 and October 31, ~~2018~~2019 are set forth in the table below:


	Asset (Liability)		Level 1	Level 2		Valuation Technique
October 31, 2019

Interest Rate Swap Contracts	$	(814)	0	$	(814)	Income Approach


July 31, 2020
Interest Rate Swap Contracts	(548)		0	(548)		Income Approach

Asset (Liability) Level 1 Level 2 Valuation Technique
October 31, 2018
      Cross-Currency Interest Rate Swap $ 4,432
—
$ 4,432
Income Approach
      Interest Rate Swap Contracts 135
—
135
Income Approach
   Marketable Securities 21
21
—
Market Approach

July 31, 2019
      Interest Rate Swap Contracts $ (715 ) —
$ (715 ) Income Approach

We calculate the fair value of our ~~cross-currency and~~ interest rate swap contracts using quoted interest rate curves to calculate forward values and then discount the forward values.

The discount rates for all derivative contracts are based on quoted swap interest rates or bank deposit rates. For contracts which, when aggregated by counterparty, are in a liability position, the rates are adjusted by the credit spread that market participants would apply if buying these contracts from our counterparties.

~~We calculate the fair value of our marketable securities by using the closing stock price on the last business day of the quarter.~~

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Note 15—Restructuring Charges

During the fourth quarter of fiscal 2017, management initiated restructuring activities to reshape ~~Shiloh's~~the Company's global footprint to be flexible to market conditions. Activities included actions such as consolidating manufacturing facilities, making geographical shifts to place production closer to customer facilities, centralizing departments, optimizing our product portfolio and capturing synergies. Management believes these strategic moves will result in a stronger and more agile organization.

~~During the three and nine months ended July 31, 2019, respectively, we~~ We have incurred ~~$3,905 and $11,371 related to~~ employee, professional, legal and other restructuring related ~~costs. We have incurred restructuring expenses~~costs of ~~$22,761~~$41,859 since initiating the restructuring activities.

Global restructuring initiatives have continued to evolve and expand across the organization. We expect to incur additional restructuring costs over and beyond the next twelve months to execute planned restructuring initiatives. Costs of planned restructuring actions will primarily include employee costs and professional fees to execute initiatives. Future restructuring actions will depend upon market conditions, customer actions and other factors.

The following table presents information about restructuring costs recorded for the three and nine months ended July 31, 2020 and 2019:


	Three Months Ended July 31,						Nine Months Ended July 31,
	2020		2019		2020		2019
Employee costs	$	2,049	$	947	$	4,013	$	2,377
Professional and legal costs	128		2,608		9,013		6,769
Other	19		350		371		2,225
	$	2,196	$	3,905	$	13,397	$	11,371

Three Months Ended July 31, Nine Months Ended July 31,
2019 2018 2019 2018
Employee costs $ 947
$ 1,352
$ 2,377
$ 2,931
Professional and legal costs 2,608
58
6,769
1,170
Other 350
555
2,225
861
$ 3,905
$ 1,965
$ 11,371
$ 4,962

The following table presents a rollforward of the beginning and ending liability balances related to the restructuring costs which are included in the condensed consolidated balance sheets in other accrued expenses for the above-mentioned actions through July 31, 2020 and July 31, 2019:


	Balance as of October 31, 2018		Restructuring Expense		Payments		Balance as of July 31, 2019
Employee costs	$	367	$	2,377	$	(2,744)	$	0

Professional and legal costs	248		6,769		(4,792)		2,225
Other	0		2,225		(2,225)		0
	$	615	$	11,371	$	(9,761)	$	2,225


	Balance as of October 31, 2018		Restructuring Expense		Payments		Balance as of July 31, 2019			Balance as of October 31, 2019		Restructuring Expense		Payments		Balance as of July 31, 2020
Employee costs	$	367	2,377		2,744		$	—	Employee costs	$	2,639	$	4,013	$	(3,947)	$	2,705
Professional and legal costs	248		6,769		$	4,792	2,225		Professional and legal costs	1,672		9,013		(6,141)		4,544
Other	—		2,225		$	2,225	—		Other	1,167		371		(1,482)		56
	$	615	$	11,371	$	9,761	$	2,225		$	5,478	$	13,397	$	(11,570)	$	7,305

Note 16—Income Taxes

The provision for income taxes for the three months ended July 31, 2020 was a benefit of $591 on a loss before income taxes of $137,725 for a consolidated effective tax rate of 0.4%. The provision for income taxes for the nine months ended July 31, 2020 was an expense of $1,650 on a loss before income taxes of $197,872 for a consolidated effective tax rate of 0.8%. The year-to-date expense was calculated using one single effective tax rate for tax jurisdictions not subject to a valuation allowance, applied to the year-to-date ordinary income/(loss). Tax effects of significant, unusual or infrequently occurring items

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

are excluded from the annual effective rate calculation and recognized in the period in which they occur. For the nine months ended July 31, 2020, the valuation allowance adjustments resulted in a negative impact of 28.1% to the effective tax rate.

The provision for income taxes for the three months ended July 31, 2019 was a benefit of $973 on a loss before income taxes of $3,682 for a consolidated effective tax rate of 26.4%. The provision for income taxes for the nine months ended July 31, 2019 was a benefit of $2,612 on a loss before income taxes of $8,907 for a consolidated effective tax rate of 29.3%. The year-to-date benefit was calculated using the year-to-date loss, considering non-taxable and non-deductible items expected to be incurred for the full year multiplied by the statutory rate. This methodology is required by ASC 740, Income Taxes, as the use of an estimated annual effective rate would not be reliable.

On March 27, 2020, the CARES Act was enacted and signed into law. The ~~provision~~CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income ~~taxes~~taxes. The Company continues to examine the impact of the CARES Act to our business and the extent to which we will benefit from the tax provisions in the CARES Act. The CARES Act also contains modifications on the limitation of business interest expense for ~~the three months ended July 31, 2018 was a benefit of $7,014 on income before income taxes of $4,038 for a consolidated effective~~ tax ~~rate of (173.7)%. Income taxes included a $2,300 net benefit related to a return to provision due to a~~years beginning in 2019 and 2020. The change in ~~estimate and a $5,500 benefit based on adjusting~~ the estimated annual tax rate used to calculate the quarterly provision related to 2018. The provision for income taxes for the nine months ended July 31, 2018 was a benefit of $9,854 on income before taxes of $10,081 for a consolidated effective tax rate of (97.7)%. The consolidated effective tax rate for

~~SHILOH INDUSTRIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

the year decreased primarily due to a $2,300 net tax benefit related to a return to provision due to a change in estimate, a $5,500 tax benefit based on adjusting estimated annual tax rate and tax benefit of $3,966 dueinterest expense limitation pursuant to the ~~enactment~~CARES Act will not have an impact to the third quarter of 2020, other than an increase in the ~~TCJA.~~net operating loss deferred tax assets in the U.S. on which a full valuation allowance has been established.

The U.S. Internal Revenue Service has proposed disallowances of ~~the majority~~a portion of fiscal ~~year~~years 2012 and ~~fiscal year~~ 2013 U.S. R&D credits claimed. We have reached agreement with the U.S. Internal Revenue Service and are ~~disputing this tax credit matter and intend~~close to ~~vigorously defend our position. We believe the ultimate resolution~~a settlement of the ~~matters will~~litigation for 2012 and 2013. The U.S. Internal Revenue Service has also been auditing fiscal years 2014 and 2015 and has proposed disallowances of the U.S. R&D credits claimed on 2014 and 2015 federal income tax returns. We have reached an agreement on the audited R&D credits and are bringing the audits to a close. The Company considers these positions to be effectively settled and does not expect the settlement of litigation and audits to materially impact our results of operations, financial position or cash flows. With any tax controversy and litigation, there is, however, a chance of unforeseen loss which due to the number of years involved could materially impact our results, financial position and cash flows. For remaining open tax years through fiscal year ~~2019,~~2020, the total amounts related to the unreserved portion of the tax contingency, inclusive of any related interest, amounts to approximately ~~$8,000,~~$7,000, of which the majority has been assessed by management as being remote as to the likelihood of ultimately resulting in a loss to the Company. We routinely assess tax matters as to the probability of incurring a loss and record our best estimate of the ultimate loss in situations where we assess the likelihood of an ultimate loss as probable.

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Note 17—Earnings Per Share

Basic earnings per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of Common Stock outstanding during the period. In addition, the shares of Common Stock issuable pursuant to restricted stock awards, restricted stock units and stock options outstanding under the 2019 Plan are included in the diluted earnings per share calculation to the extent they are dilutive. For the nine months ended July 31, 2020 and 2019, 46 and ~~2018,~~ 141 ~~and 316~~ stock awards, respectively, were excluded from the computation of diluted earnings per share because their inclusion would be anti-dilutive. The following is a reconciliation of the numerator and denominator of the basic and diluted earnings per share computation for net ~~income (loss)~~loss per share:


												Three Months Ended July 31,						Nine Months Ended July 31,
	Three Months Ended July 31,					Nine Months Ended July 31,						2020		2019		2020		2019
	2019			2018		2019			2018
Net income (loss) available to common stockholders	$	(2,709	)	$	11,052	$	(6,295	)	$	19,935
Net loss available to common stockholders											Net loss available to common stockholders	$	(137,134)	$	(2,709)	$	(199,522)	$	(6,295)
Basic weighted average shares	23,557			23,278		23,486			23,202		Basic weighted average shares	23,824		23,557		23,754		23,486
Effect of dilutive securities:											Effect of dilutive securities:
Restricted stock, units and stock options (1)	—			175		—			139		Restricted stock, units and stock options (1)	0		0		0		0
Diluted weighted average shares	23,557			23,453		23,486			23,341		Diluted weighted average shares	23,824		23,557		23,754		23,486
Basic income (loss) per share	$	(0.11	)	$	0.47	$	(0.27	)	$	0.86
Diluted income (loss) per share	$	(0.11	)	$	0.47	$	(0.27	)	$	0.85
Basic loss per share											Basic loss per share	$	(5.76)	$	(0.11)	$	(8.40)	$	(0.27)
Diluted loss per share											Diluted loss per share	$	(5.76)	$	(0.11)	$	(8.40)	$	(0.27)

(1) Due to a loss for the three and nine months ended July 31, 2020 and three and nine months ended July 31, 2019 no restricted stock, restricted stock units or stock options are included because the effect would be anti-dilutive.

Note 18—Business Segment Information

We conduct our business and report our information as one operating segment and, therefore, disclose one reportable segment - Automotive and Commercial Vehicles. Our chief operating decision maker is the executive leadership team, which includes certain Vice Presidents, all Senior Vice Presidents and the Chief Executive Officer. This team has the final authority over performance assessment and resource allocation decisions. In determining that one operating segment is appropriate, we considered the nature of the business activities and the existence of managers responsible for the operating activities. Customers and suppliers are substantially the same in the automotive and commercial vehicle industry.

Foreign net revenues ~~(those outside the United States before eliminations)~~ were ~~$82,621~~$50,722 or ~~31.4%~~32.6% and ~~$245,376~~$175,924 or ~~30.8%~~31.6% of net revenues for the three and nine months ended July 31, ~~2019,~~2020, respectively, and ~~$87,393~~$78,588 or ~~29.6%~~29.8% and ~~$235,037~~$233,929 or ~~28.0%~~29.4% of net revenues for the three and nine months ended July 31, ~~2018,~~2019, respectively. Foreign net revenues, and geographic regions quantified in the table below, are based upon the location of the entity recording the sale.


	Net Revenues						Net Revenues
	Three Months Ended July 31,						Nine Months Ended July 31,
Geographic Region:	2020		2019		2020		2019
North America	$	112,141	$	198,409	$	404,498	$	590,577
Europe	34,176		61,507		131,113		194,294
Asia	9,050		3,529		21,170		10,877

Total Company	$	155,367	$	263,445	556,781		$	795,748

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Net Revenues Net Revenues
Three Months Ended July 31, Nine Months Ended July 31,
Geographic Region: 2019 2018 2019 2018
North America $ 203,920
$ 223,074
$ 606,872
$ 648,705
Europe & Asia 65,214
77,438
205,760
206,108
Eliminations (5,689 ) (5,629 ) (16,884 ) (14,924 )
Total Company $ 263,445
$ 294,883
795,748
$ 839,889

The foreign currency gain (loss) is included as a component of other expense, net in the condensed consolidated statements of operations.


	Foreign Currency Gain (Loss)						Foreign Currency Gain (Loss)
	Three Months Ended July 31,						Nine Months Ended July 31,
Geographic Region:	2020		2019		2020		2019
North America	$	234	$	(221)	$	(286)	$	(10)
Europe	(2,308)		679		$	(1,684)	$	476
Asia	8		(195)		$	(15)	$	2

Foreign Currency Gain (Loss) Foreign Currency Gain (Loss)
Three Months Ended July 31, Nine Months Ended July 31,
Geographic Region: 2019 2018 2019 2018
North America $ (221 ) $ 259
$ (10 ) $ 228
Europe & Asia $ 484
$ 21
$ 478
$ (222 )

Long-lived assets consist primarily of net property, plant and equipment, goodwill and intangibles. Due to the continued decline of our business, we concluded an interim test of long-lived assets was required. During the nine months ended July 31, 2020, we recorded an asset impairment charge on fixed assets and intangible assets of $109,633 related to a decline in fair value and $2,500 related to equipment not placed in service.


	Long-Lived Assets					Long-Lived Assets
Geographic Region:	July 31, 2019		October 31, 2018		Geographic Region:	July 31, 2020		October 31, 2019
North America	$	272,595	$	253,711	North America	$	139,777	$	268,913
Europe & Asia	102,118		104,780
Europe					Europe	57,029		81,532
Asia					Asia	13,117		13,001
Total Company	$	374,713	$	358,491	Total Company	$	209,923	$	363,446

Note 19—Commitments and Contingencies

From time to time, we are involved in legal proceedings, claims or investigations that are incidental to the conduct of our business. We vigorously defend ourselves against such claims. In future periods, we could be subject to cash costs or non-cash charges to earnings if a matter is resolved on unfavorable terms. However, although the ultimate outcome of any legal matter cannot be predicted with certainty, based on current information, including assessment of the merits of the particular claims, we do not expect that our legal proceedings or claims will have a material impact on our future consolidated financial position, results of operations or cash flows.

SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Note 20—Other Matters

The Company acquired a small facility in Italy in 2018 in connection with the acquisition of a larger plant in the Netherlands. Since the acquisition, the small facility has lost approximately half of its sales volume and has generated significant losses relative to the size of the facility. The Italy facility had $26.5 million in sales and a net loss of $4.5 million in fiscal 2019. COVID-19 further negatively impacted the financial results of the facility in the second quarter of 2020. An investment is required to start-up the small facility in Italy and even further investment to create a sustainable business. On June 1, 2020, the subsidiary filed with the competent Italian Court a “pre-concordato” petition to seek protection for past accrued liabilities as we engage with customers to renegotiate contracts to ensure the Italy facility is a viable business going forward. The Court granted the Italian subsidiary with a term until October 30, 2020, which may be potentially extended for up to an additional 60 days, to file a reorganization and debt restructuring plan to be approved by the Court and the concerned creditors. If the negotiations are not successful, we may have to discontinue the Italian facility operations and enter a bankruptcy liquidation process in Italy. Refer to Note 7, "Goodwill and Intangible Assets," for further information on the impairment testing of long-lived assets.

Note 21—Subsequent Events

Chapter 11 Filing

On August 30, 2020, Shiloh Industries, Inc., a Delaware corporation, and its U.S. subsidiaries (together with Shiloh Industries, Inc., the “Debtors”) filed voluntary petitions (the “Bankruptcy Petitions,” and the cases commenced thereby, the “Chapter 11 Cases”) for relief under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Chapter 11 Cases are being jointly administered under the caption “In re Shiloh Industries, Inc.”

No trustee has been appointed and the Company will continue to manage itself and its subsidiaries as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code. In connection with the Chapter 11 Cases, the Debtors are seeking authority to sell substantially all of their assets pursuant to Section 363 of the Bankruptcy Code.

On September 1 and 2, 2020, the Bankruptcy Court issued orders approving the “first day” relief motions on an interim basis(the “Interim DIP Order”), authorizing the Company to, among other things, enter into the DIP Credit Agreement (as defined below) and initially borrow an approved amount, maintain existing cash management system and pay employee wages and benefits.

On September 1, 2020, we received notice from the Listing Qualifications Staff of the Nasdaq Stock Market LLC (“Nasdaq”) that it had determined to commence proceedings to delist our common stock at the opening of business on September 10, 2020 as a result of the Chapter 11 Cases. The Company does not intend to take any further action to appeal Nasdaq’s decision. Therefore, it is expected that the Company’s common stock will be delisted after the completion of Nasdaq’s application to the SEC to delist the Company’s common stock.

Stock and Asset Purchase Agreement

In connection with the Chapter 11 Cases, on August 30, 2020, the Debtors entered into a Stock and Asset Purchase Agreement (the “Stock and Asset Purchase Agreement”) with Grouper Holdings, LLC, a Delaware limited liability company (the “Purchaser”) and subsidiary of MiddleGround Capital LLC. Pursuant to the Stock and Asset Purchase Agreement, the Purchaser will acquire substantially all of the Debtors’ assets, including the equity interests of certain of the Debtors’ direct subsidiaries. The aggregate consideration for the purchased assets and equity interests will be $218 million in cash, subject to working capital and net debt adjustments, and assumption of certain liabilities of the Debtors.

The consummation of the transactions contemplated by the Stock and Asset Purchase Agreement is subject to customary closing conditions, including, among others, (i) entry of an order approving the Stock and Asset Purchase Agreement by the Bankruptcy Court; (ii) the accuracy of representations and warranties of the parties; and (iii) material compliance with the obligations set forth in the Stock and Asset Purchase Agreement.

The asset and equity purchase pursuant to the Stock and Asset Purchase Agreement is expected to be conducted under the provisions of Section 363 of the Bankruptcy Code and will be subject to proposed bidding procedures and receipt of higher or otherwise better competing bids. Upon entry by the Bankruptcy Court, the bidding procedures order will provide that Purchaser is the “stalking horse” bidder for the assets and equity identified in the Stock and Asset Purchase Agreement. The Stock and Asset Purchase Agreement calls for the Company to pay a break-up fee to Purchaser equal to $7.1 million upon the consummation of an alternate transaction involving the sale of a material portion of the Debtors’ assets to any person or entity other than the Purchaser (an “Alternative Transaction”). The Stock and Asset Purchase Agreement also provides for reimbursement of an amount not to exceed $1.5 million for expenses incurred by the Purchaser in connection with the Stock and Asset Purchase Agreement in the event the Stock and Asset Purchase Agreement is terminated in certain circumstances, including, among others, upon the entry into an Alternative Transaction.

DIP Financing

Filing of the Bankruptcy Petitions resulted in a default on the Credit Agreement. In connection with the Chapter 11 Cases, on August 30, 2020, the Debtors filed a motion (the "DIP Motion") seeking Bankruptcy Court approval of, among other things, interim and final approval of postpetition, debtor-in-possession financing on the terms set forth in that certain proposed Superpriority Secured Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”), among the Company, as borrower, the other Debtors as guarantors thereto, the various lenders from time to time party thereto and Bank of America, N.A., as administrative agent and collateral agent (the “DIP Agent”).

On September 2, 2020, the Company entered into the DIP Credit Agreement with the Lenders, as well as the related postpetition security and pledge agreements with the DIP Agent. The DIP Credit Agreement is subject to approval by the Bankruptcy Court, which has only been granted on an interim basis. The Debtors will seek final approval of the DIP Credit Agreement at a hearing before the Bankruptcy Court on or about September 25, 2020.

The DIP Credit Agreement provides for a senior secured superpriority debtor-in-possession financing in an aggregate principal amount not to exceed $123.5 million (the “DIP Facility”) consisting of (i) an approximately $23.5 million new money subfacility comprised of revolving loans and (ii) a roll-up of approximately $100 million of commitments under the Company’s existing revolving credit facility, which will be deemed loans under the DIP Facility. $18.1 million of the DIP Facility is available following entry of the Interim DIP Order and until the entry of the final order approving the DIP Credit Agreement (the “Final DIP Order”), secured by, among other things, (a) a first priority lien on all unencumbered tangible and intangible property and assets of the Loan Parties, (b) a first priority, senior priming lien on all prepetition collateral, and (c) all real property owned or leased by the Company or the Guarantors, subject to certain carve outs.

The proceeds from the DIP Financing will be used, subject to the Interim DIP Order and the Final DIP Order, for working capital, administrative costs, and premiums and fees associated with the Chapter 11 Cases, payment of court-approved prepetition obligations and other purposes such as are consistent with the DIP Credit Agreement or as otherwise approved by the agent and lenders.

Retention Bonus Plan

On August 25, 2020, the compensation committee of the board of directors (the “Board”) of the Company approved a Key Employee Retention Program, pursuant to which certain executive officers and key employees of the Company received one-time cash retention incentive awards (the “Retention Incentives”).

The Retention Incentives were paid on August 28, 2020 and are subject to the terms of the corresponding Retention Incentive Letter Agreements (the “Retention Letter Agreement”). Pursuant to the Retention Letter Agreement, if the employee terminates his or her employment for any reason or the employee’s employment is terminated by the Company for cause prior to the earlier of (i) the Closing Date (as such term is defined in the Retention Letter Agreement) or (ii) December 31, 2020, the employee will forfeit his or her entitlement to the Retention Incentive and must repay to the Company the full, aggregate amount of the Retention Incentive before the date on which the Company pays the employee his or her final wages.

Reorganization accounting

Effective August 31, 2020, we will apply ASC, No. 852, “Reorganizations” (“ASC 852”), which is applicable to companies under Chapter 11 bankruptcy protection. ASC 852 requires the financial statements for periods subsequent to the

Chapter 11 filing to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Expenses, realized gains and losses, and provisions for losses that are directly associated with reorganization proceedings must be reported separately as “Reorganization items, net” in the condensed consolidated statements of operations. In addition, the balance sheet must distinguish between debtor pre-petition liabilities subject to compromise from pre-petition or post-petition liabilities that are not subject to compromise. Liabilities subject to compromise are pre-petition obligations that are not fully secured and have at least a possibility of not being repaid at the full claim amount.

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FORWARD-LOOKING STATEMENTS

Certain statements made by ~~Shiloh Industries~~the Company set forth in this Quarterly Report on Form 10-Q regarding our operating performance, events or developments that we believe or expect to occur in the future, including those that discuss strategies, goals, outlook or other non-historical matters, or which relate to future sales, earnings expectations, cost savings, awarded sales, volume growth, earnings or general belief in our expectations of future operating or financial results are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995.

The forward-looking statements are made on the basis of management's assumptions and expectations. As a result, there can be no guarantee or assurance that these assumptions and expectations will in fact occur. The forward-looking statements are subject to risks and uncertainties that may cause actual results to materially differ from those contained in the statements.

Listed below are some of the factors that could potentially cause actual results to differ materially from expected future results.

•our ability to accomplish our strategic objectives;

•our ability to derive a substantial portion of our sales from large customers;

•our ability to obtain future sales;

•changes in worldwide economic, social and political conditions, including adverse effects from war, natural disasters, terrorism or related hostilities;

•the duration and severity of the COVID-19 pandemic, any preventive or protective actions taken by governmental authorities, and the effectiveness of actions taken globally to contain or mitigate its effects;

•unfavorable effects of the COVID-19 pandemic on either our manufacturing operations, or those of our customers or suppliers;

•reduction in demand for our solutions, including any reduction in demand as a result of a COVID-19 triggered economic recession, including any determination that the value of our assets is impaired or that we do not have the ability to continue as a going concern;

•our ability to take advantage of programs and policies implemented in response to COVID-19;

•our ability to obtain Bankruptcy Court approval with respect to motions in the Chapter 11 Cases;

•the effects of the Chapter 11 cases on us and the interest of various constituents;

•potential delays in the Chapter 11 process due to the effects of the COVID-19 pandemic;

•objections to the Stock and Asset Purchase Agreement, DIP Credit Agreement or other pleadings filed that could protract the Chapter 11 Cases;

•the Bankruptcy Court’s rulings in the Chapter 11 Cases, including the approvals of the terms and conditions of, and the transactions contemplated by, the Stock and Asset Purchase Agreement and the DIP Credit Agreement;

•the outcome of the Chapter 11 Cases in general;

•the length of time the Company will operate under the Chapter 11 Cases;

•risks associated with third-party motions in the Chapter 11 Cases;

•the potential adverse effects of the Chapter 11 Cases on our liquidity or results of operations and increased legal and other professional costs related to the Chapter 11 Cases;

•our ability to meet the closing conditions and successfully consummate the Stock and Asset Purchase Agreement;

•the Chapter 11 Case has consumed and will continue to consume a substantial portion of the time and attention of our management, which may have an adverse effect on our business and results of operations, and we may face increased levels of employee attrition;

•we may be subject to claims that will not be discharged in the Chapter 11 cases, which could have a material adverse effect on our financial condition and results of operations;

•if we are unable to consummate a sale of substantially all assets pursuant to Section 363, we could be required to liquidate under Chapter 7 of the Bankruptcy Code in which case our common stock would likely be worthless;

•the Chapter 11 Cases and our financial condition may adversely impact our non-U.S. businesses and affiliates, which may themselves become subject to insolvency proceedings;

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•our ability to retain executive officers or key employees to manage the day-to-day aspects of our business and maintain our relationships with our customers and suppliers;

•our ability to obtain new financing with new covenants that we are able to achieve in the future, which could limit our access to current and future financing sources;

•our ability to access capital on favorable terms or at all, including through our current financing arrangements;

•costs related to legal and administrative matters;

•our ability to realize cost savings expected to offset price concessions;

•our ability to successfully integrate acquired businesses, including businesses located outside of the United States;

•risks associated with doing business internationally, including economic, political and social instability, foreign currency exposure and the lack of acceptance of our products;

•operational systems and security systems could be affected by cyber incidents;

•inefficiencies related to production and product launches that are greater than anticipated;

•changes in technology and technological risks;

•work stoppages and strikes at our facilities and that of our customers or suppliers;

•our dependence on the automotive and ~~heavy truck~~commercial vehicle industries, which are highly cyclical;

•the dependence of the automotive industry on consumer spending, which is subject to the impact of domestic and international economic conditions affecting car and light truck production;

•regulations and policies regarding international trade;

•financial and business downturns of our customers or vendors, including any production cutbacks or bankruptcies;

•increases in the price of, or limitations on the availability of aluminum, magnesium or steel, our primary raw materials, or decreases in the price of scrap steel;

•the successful launch and consumer acceptance of new vehicles for which we supply parts;

•the impact on financial statements of any known or unknown accounting errors or ~~irregularities;~~irregularities, and the magnitude of any adjustments in restated financial statements of our operating results;

•the occurrence of any event or condition that may be deemed a material adverse effect under our outstanding indebtedness or a decrease in customer demand which could cause a covenant default under our outstanding indebtedness;

•a successful transition of the CEO position and our ability to successfully identify a qualified and effective full-time CEO;

•increases in pension plan funding requirements; and

•other factors besides those listed here could also materially affect our business.

See "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2018~~2019 and "Part II, Item 1A. Risk Factors" in this Quarterly Report on Form 10-Q for a more complete discussion of these risks and uncertainties. Any or all of these risks and uncertainties could cause actual results to differ materially from those reflected in the forward-looking statements. These forward-looking statements reflect management's analysis only as of the date of this Quarterly Report on Form 10-Q.

We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date of filing this Quarterly Report on Form 10-Q. In addition to the disclosures contained herein, readers should carefully review risks and uncertainties contained in other documents we file from time to time with the SEC.

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

(Dollars in thousands, except per share data)

General

Shiloh Industries is a global innovative solutions provider to the automotive and commercial vehicle market with a strategic focus on designing, engineering and manufacturing lightweight technologies that improve performance and benefit the environment. We offer a broad portfolio of lightweighting solutions in the industry through our BlankLight®, CastLight® and StampLight® brands and are uniquely qualified to supply product solutions utilizing multiple lightweighting solutions. This includes combining castings and stampings or innovative, multi-material products in aluminum, magnesium, steel and steel alloys. We design and manufacture components in body, chassis, interior structures and powertrain systems with expertise in precision blanks, ShilohCore® acoustic laminates, aluminum and steel laser welded blanks, complex stampings, modular assemblies, aluminum and magnesium die casting, as well as precision machined components. We have approximately ~~4,000~~3,150 dedicated employees with operations, sales and technical centers throughout Asia, Europe and North America.

COVID-19

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has spread throughout the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of COVID-19 a “Public Health Emergency of International Concern,” and on March 11, 2020, it characterized the outbreak as a “pandemic”. The impact of COVID-19 developments and uncertainty with respect to the economic effects of the pandemic has introduced significant volatility in the financial markets and is having a widespread adverse effect on the automotive industry, including reductions in consumer demand and OEM automotive production.

Many of our customers suspended manufacturing operations, particularly in North America, Europe and Asia, on a temporary basis due to market conditions and matters associated with COVID-19. In response to these COVID-19 related conditions and to protect the health and safety of our employees globally, we began closing production at our Asian facilities in February 2020 and our European and North American facilities in March 2020. Our facilities in Asia reopened in March 2020 while production remained suspended at the majority of our European and North American global facilities for all of April 2020 and most of May 2020. As of the beginning of June all of our facilities in Europe and North America reopened. Due to these significant disruptions, our profitability has been significantly impacted during the second and third quarters of 2020.

In response to the COVID-19 pandemic, we took several proactive steps to preserve cash, maximize our financial flexibility and protect our employees in order to efficiently manage through the COVID-19 pandemic:

•We maximized our liquidity position by borrowing on our Revolving Credit Facility;

•We aggressively reduced operating costs, capital expenditures and working capital, including eliminating discretionary spending and adjusting production activity;

•We temporarily reduced salaried employee costs 20% to 25% throughout the organization via salary reductions;

•We pursued any opportunities or relief offered under government incentive programs in the countries we are located;

•We temporarily reduced the compensation of the Board of Directors by 50%;

•We reduced hourly factory worker costs via furloughs during part of March and all of April;

•We delayed planned pension funding and deferred other retirement plan contributions;

•We instituted mandatory vacations during March or April; and

•We developed safety protocols that were implemented at all global facilities to promote safe reopening of our manufacturing facilities.

Recent ~~Trends~~Developments

Bankruptcy Proceedings and ~~General~~ Going Concern

On August 30, 2020, the Company and its U.S. subsidiaries (collectively with the Company, the “Debtors”) each filed a voluntary petition for relief (the “Bankruptcy Petitions,” and the cases commenced thereby, the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”), in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) under the caption In re Shiloh Industries, Inc. et al. The Company's foreign

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subsidiaries were not included in the Chapter 11 Cases and continue to operate their businesses without supervision from the Bankruptcy Court, and are not subject to the requirements of the Bankruptcy Code.

As a result of the commencement of the Chapter 11 Cases on August 30, 2020, the Debtors are operating as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. To ensure their ability to continue operating in the ordinary course of business, the Debtors also filed with the Bankruptcy Court a variety of “first day” relief motions, including authority to pay employee wages and benefits and certain vendors and suppliers in the ordinary course of business, which motions were granted by the Bankruptcy Court. Under the Bankruptcy Code, third-party actions to collect pre-petition indebtedness owed by the Debtors, as well as most litigation then pending against these entities, have been subject to an automatic stay during the pendency of the Chapter 11 Cases.

As of July 31, 2020, the Company has significant indebtedness due within the next twelve months and cash flow from operations has not been sufficient to meet the Company’s liquidity demands. Our outstanding indebtedness coupled with the Chapter 11 Cases raise substantial doubt about the Company’s ability to continue as a going concern.

Stock and Asset Purchase Agreement

In connection with the Chapter 11 Cases, on August 30, 2020 the Debtors entered into the Stock and Asset Purchase Agreement (the “Stock and Asset Purchase Agreement”) with Grouper Holdings, LLC, a Delaware limited liability company (the “Purchaser”) and subsidiary of MiddleGround Capital LLC. Pursuant to the Stock and Asset Purchase Agreement, the Purchaser will acquire substantially all of the Debtors’ assets, including the equity interests of certain of the Debtors’ direct subsidiaries. The consummation of the transactions contemplated by the Stock and Asset Purchase Agreement is subject to customary closing conditions, including, among others, entry of an order approving the Stock and Asset Purchase Agreement by the Bankruptcy Court. The asset and equity purchase pursuant to the Stock and Asset Purchase Agreement is expected to be conducted under the provisions of Section 363 of the Bankruptcy Code and will be subject to proposed bidding procedures and receipt of higher or otherwise better competing bids. Upon entry by the Bankruptcy Court, the bidding procedures order will provide that the Purchaser is the “stalking horse” bidder for the assets and equity identified in the Stock and Asset Purchase Agreement.

DIP Financing

In connection with the Chapter 11 Cases, on September 2, 2020, the Company, as borrower, and certain of its wholly-owned direct and indirect subsidiaries, as guarantors, entered into a Superpriority Secured Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”) with the various lenders from time to time party thereto and Bank of America, N.A., as administrative agent and collateral agent (the “DIP Agent”).

To ensure sufficient liquidity throughout the Chapter 11 Cases, the DIP Credit Agreement provides for a senior secured superpriority debtor-in-possession financing in an aggregate principal amount not to exceed $123.5 million (the “DIP Facility”) consisting of (i) an approximately $23.5 million new money subfacility comprised of revolving loans and (ii) a roll-up of approximately $100 million of commitments under the Company’s existing revolving credit facility, which are deemed term loans under the DIP Facility.

Refer to “Liquidity and Capital Resources” for a description of the DIP Credit Agreement.

Retention Bonus Plan

On August 25, 2020, the compensation committee of the board of directors (the “Board”) of the Company approved a Key Employee Retention Program, pursuant to which certain executive officers of the Company received one-time cash retention incentive awards (the “Retention Incentives”). The Retention Incentives were paid on August 28, 2020 and are subject to the terms of the corresponding Retention Incentive Letter Agreements.

Refer to Note 21, “Subsequent Events,” to the condensed consolidated financial statements for details of the Key Employee Retention Program.

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Economic Conditions Affecting the Automotive Industry

~~Our business~~

Current industry volumes and ~~operating results are directly affected by the relative strength of~~demand in the Asian, European and North American automotive industries ~~which~~have decreased due to COVID-19 but have recovered somewhat since the onset of the pandemic. Global economies are facing record-high unemployment levels, collapsing business and consumer confidence, and historic recession levels driven by quarantines and lockdowns instituted throughout the world. The United States has entered into a recession as a result of COVID-19, with consumer spending expected to remain low as social distancing and high unemployment continue. China's outlook continues to recover from the economic uncertainties of the COVID-19 pandemic. Europe and Mexico's economies have also declined as COVID-19 has negatively hit their tourist sectors, as well as severely impacted supply chains and reduced both domestic and external demand. Management has observed improvements during the third quarter but expects lower demand through the fourth quarter of 2020.

Our operating results are driven by ~~factors that continue~~our ability to ~~be critical to our success including winning new business awards, managing~~manage our overall global manufacturing footprint to ensure proper placement and workforce levels in line with ~~business needs, maintaining competitive wages and benefits, maximizing efficiencies~~the decrease in ~~manufacturing processes and reducing overall costs.~~industry volumes. In addition, our ability to adapt to key industry trends, such as shifts in consumer preferences to other vehicles ~~in response to higher fuel costs~~ and other economic and social factors, increasing technologically sophisticated content, increasing environmental standards and extended product life of automotive parts, also play a critical role in our success. Other factors that are critical to our success include managing changes in the prices of our principal raw ~~material costs,~~materials, negotiation of price increases and cost reduction initiatives. ~~In addition, recent trade actions initiated by the U.S. imposing tariffs~~The impact of COVID-19 has not had a significant impact on imports have been met with retaliatory tariffs by other countries, adding a level of tension and uncertainty to the global economic environment. These and other actions are likely to impact trade policies with other countries and the overall global economy. We are carefully monitoring capacity and availability of the alloys utilized in our ~~production process. The automotive industry remains susceptible to these factors that impact consumer spending habits and could adversely impact consumer demand~~supply chain for ~~vehicles.~~our principal raw materials.

We operate in an extremely competitive industry, driven by global vehicle production volumes. Business is typically awarded to the supplier offering the most favorable combination of cost, quality, technology and service. Additionally, due to the challenges of COVID-19 our customers may consider supplier financial liquidity in awarding new business. Customers continue to demand periodic cost reductions that require us to assess, redefine and improve operations, products, and manufacturing capabilities to maintain and improve profitability. Our management continues to develop and execute initiatives designed to meet challenges of the industry and to achieve our strategy for sustainable global profitable growth.

We continue to adapt our capacity to meet customer demand, both expanding capabilities in growth areas as well as reallocating capacity between manufacturing facilities as needs arise. We employ new technologies to differentiate our products from our competitors and to achieve higher quality and productivity. ~~We believe that we have sufficient capacity to meet current and expected manufacturing needs.~~

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Our products are included in many models of vehicles manufactured by nearly all OEMs that produce vehicles in Asia, Europe and North America. Our revenues are dependent upon the production of automobiles, ~~and~~ light trucks and commercial vehicles in these markets. According to industry statistics, Asia, Europe and North America production volumes for the three months and nine months ended July 31, ~~2019~~2020 and ~~2018~~2019 were as follows:


Automotive Production Volumes	Three Months Ended July 31,					Nine Months Ended July 31,
	2020		2019	2020		2019
	(Number of Vehicles in Thousands)					(Number of Vehicles in Thousands)
Asia	5,840		5,442	16,168		18,273
Europe	3,453		5,587	11,502		16,452
North America	2,533		4,132	8,768		12,313
Total	11,826		15,161	36,438		47,038

Asia
Increase (decrease) from prior year	398			(2,105)
% Increase (decrease) from prior year	7.3	%		(11.5)	%
Europe
Decrease from prior year	(2,134)			(4,950)
% Decrease from prior year	(38.2)	%		(30.1)	%
North America
Decrease from prior year	(1,599)			(3,545)
% Decrease from prior year	(38.7)	%		(28.8)	%
Total
Decrease from prior year	(3,335)			(10,600)
% Decrease from prior year	(22.0)	%		(22.5)	%

Production Volumes Three Months Ended July 31, Nine Months Ended July 31,
2019 2018 2019 2018
(Number of Vehicles in Thousands) (Number of Vehicles in Thousands)
Asia 5,442
6,435
18,273
21,404
Europe 5,587
5,744
16,452
17,361
North America 4,132
4,018
12,313
12,429
Total 15,161
16,197
47,038
51,194

Asia
Decrease from prior year (993 ) (3,131 )
% Decrease from prior year (15.4 )% (14.6 )%
Europe
Decrease from prior year (157 ) (909 )
% Decrease from prior year (2.7 )% (5.2 )%
North America
Increase (decrease) from prior year 114
(116 )
% Increase (decrease) from prior year 2.8 % (0.9 )%
Total
Decrease from prior year (1,036 ) (4,156 )
% Decrease from prior year (6.4 )% (8.1 )%
Asia Market:

~~Asia:~~

The Asia Pacific automotive market production volumes ~~declined~~increased during ~~2019.~~the third quarter of 2020. The decline in production volumes ~~was due to uncertainty related to the trade dispute between China and the U.S., increasing emission standards and tightened credit~~ for prospective buyers. The ongoing trade dispute between China and the U.S. has negatively impacted consumer confidence. New emission standards recently became effective, which require all new vehicles sold in China meet higher standards. Consumers pulled forward purchases to buy cars under the old emission standards. In June the Chinese government announced measures to stimulate sales. Industry analysts anticipate a stabilization of production volumes through the remainder of 2019. In 2020, we expect that China may show signs of modest recovery as the impact of the new emissions standards subside and the market returns to a more normalized basis supported by government stimulus measures and the potential resolution of the China and the U.S. trade dispute.

~~Europe:~~

Uncertainty remains in the economic environment in Europe due to a number of factors, resulting in a decrease in year over year vehicle production. Implementation of fuel consumption and emissions standards such as the Worldwide Harmonized Light Vehicle Test Procedure ("WLTP") have caused disruption in the European automotive market requiring manufacturers to shift production to comply. The United Kingdom's pending withdrawal from the European Union has also had an effect on the economy of the remaining European Union countries, as no trade deal has been signed. The European economy is showing signs of a slowdown with manufacturing slumping, especially with the end of Quantitative Easing by the European Central Bank. The end of the program, which was used to stimulate the economy and increase liquidity, will primarily affect Southern Europe. The European automotive market outlook has declined with this uncertainty.

~~North America:~~

~~North America volumes have been trending downward in~~ the first nine months was due mainly to the lingering effects of the ~~fiscal year. The~~COVID-19 outbreak. Automotive production in most of China was stopped during the month of February and returned to partial capacity starting in March and returned to more normal levels in the month of April. During the third quarter the volumes ~~did recover slightly but we expect~~recovered from the ~~current North American economic climate~~pandemic disruptions and increased over last year by 7.3%.

Europe Market:

The significant decline in Europe production volumes was mainly due to ~~continue to decline~~the COVID-19 outbreak. With the disruptions and stoppages of manufacturing through a significant portion of the quarter, the volumes were down 38.2%. The lingering effects of COVID-19 and other uncertainties such as the lack of a trade deal between the United Kingdom and the European Union may negatively impact the anticipated volumes in Europe for the remainder of fiscal 2020 and beyond.

North America Market:

The significant decline in North America production volumes was mainly due to the ~~year~~COVID-19 outbreak. Automotive production was for the most part shut-down during the last half of March and ~~into~~all of April and May. With the disruptions and stoppages of manufacturing through a significant portion of the quarter the volumes were down 38.7%. The lingering impact of COVID-19 may continue to negatively impact North America revenue volumes anticipated in the remainder of fiscal 2020 ~~albeit there is some uncertainty surrounding the potential effects of trade policies~~ and ~~restrictions and practices being implemented or considered by the United States government.~~beyond. High levels of consumer debt, recessionary pressures, and ~~declining used car prices are also developments that~~uncertainty due to COVID-19 could constrict future demand for new vehicles.

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Critical Accounting Estimates

Preparation of our financial statements are in conformity with accounting principles generally accepted in the United States and requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and in the accompanying notes. We believe our estimates and assumptions are reasonable; however, actual results and the timing of the recognition of such amounts could differ from those estimates. We have identified the following items as critical accounting policies and estimates utilized by management in the preparation of the Company’s accompanying financial statements. These estimates were selected because of inherent imprecision that may result from applying judgment to the estimation process. The expenses and accrued liabilities or allowances related to these policies are initially based on our best estimates at the time they are recorded. Adjustments are charged or credited to income and the related balance sheet account when actual experience differs from the expected experience underlying the estimates. We make frequent comparisons of actual experience and expected experience in order to mitigate the likelihood that material adjustments will be required.

Income Taxes. The Company accounts for income taxes in accordance with ASC Topic 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Management judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities and the valuation allowance recorded against the Company’s net deferred tax assets. In determining the need for a valuation allowance, the historical and projected financial performance of the operation recording the net deferred tax ~~asset~~assets is considered along with any other pertinent information. Since future financial results may differ from previous estimates, periodic adjustments to the Company’s valuation allowance may be necessary.

The Company is subject to income taxes in the U.S. at the federal and state level and numerous non-U.S. jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes and recording the related assets and liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is less than certain. Accruals for income tax contingencies are provided for in accordance with the requirements of ASC Topic 740. The Company’s U.S. federal and certain state income tax returns and certain non-U.S. income tax returns are currently under various stages of audit by applicable tax authorities. Although the outcome of ongoing tax audits is always uncertain, management believes that it has appropriate support for the positions taken on its tax returns. The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained by the tax authorities based on the technical merits of the position. Nonetheless, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year.

Refer to Note 16, ~~"Income~~"Income Taxes," to the Condensed Consolidated Financial Statements in Item 1 of this report for more information regarding income taxes.

Intangible Assets. Intangible assets with finite lives are amortized over their estimated useful lives. We amortize our acquired intangible assets with finite lives on a straight-line basis over periods ranging from three months to 15 years. ~~See~~Refer to Note 87, "Goodwill and Intangible Assets," to the condensed consolidated financial statements for a description of the current intangible assets and their estimated amortization expense.

Finite-lived intangible assets are evaluated for impairment whenever events or changes in circumstances indicate their related carrying value may not be fully recordable.

Goodwill. Goodwill is the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill relates to and is assigned directly to specific reporting units. Goodwill is not amortized but is subject to impairment assessment. In accordance with ASC 350, "Intangibles-Goodwill and Other," we assess goodwill for impairment on an annual basis, or more frequently, if an event occurs or circumstances change that would more likely than not reduce the fair value below the carrying amount. Our annual impairment assessment is performed as of September 30. Such assessment can be done on a qualitative or quantitative basis. When conducting a qualitative assessment, we consider relevant events and circumstances that affect the fair value or carrying amount of the reporting unit. A quantitative test is required only if we conclude that it is more likely than not that a reporting unit’s fair value is less than its carrying amount, or we elect not to perform a qualitative assessment of a reporting unit. We consider the extent to which each of the events and circumstances identified affect the comparison of the reporting unit's fair value or the carrying amount. Such events and circumstances could include macroeconomic conditions, industry and market considerations, overall financial performance, entity and reporting unit specific events, product brand level specific events and cost factors. We place more weight on the

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events and circumstances that may affect our determination of whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

We ~~perform~~performed a quantitative goodwill impairment assessment by comparing the fair value of a reporting unit to its carrying amount, including ~~goodwill. If the~~goodwill as of April 30, 2020. The carrying amount ~~exceeds~~exceeded the fair value, so we ~~recognize an impairment charge for~~impaired the ~~amount~~goodwill balance, which ~~the carrying amount exceeds the fair value, not to exceed the total amount of goodwill~~is further discussed in ~~that reporting unit.~~Note 7, "Goodwill and Intangible Assets".

Share-based Payments. We record compensation expense for the fair value of nonvested stock option awards, restricted stock awards and restricted stock ~~awards~~units over the ~~remaining~~ vesting period. We use the simplified method to calculate the expected term of the stock options outstanding at five to six years and have utilized historical weighted average volatility. We determine the volatility and risk-free rate assumptions used in computing the fair value using the Black-Scholes option-pricing model. The expected term for the restricted stock award is between three months and four years. In addition, we do not estimate a forfeiture rate at the time of grant, instead, we elected to ~~recognize~~adjust share-based compensation expense when actual forfeitures occur.

The Black-Scholes option valuation model requires the input of highly subjective assumptions, including the expected life of the stock-based award and stock price volatility. The assumptions used are management’s best estimates, but the estimates involve inherent uncertainties and the application of management judgment. As a result, if other assumptions had been used, the recorded stock-based compensation expense could have been materially different from that depicted in the financial statements.

New restricted stock and restricted stock units grants are valued at the closing market price on the date of grant.

U.S. Pension and Other Post-Retirement Costs and Liabilities. We have recorded pension and other post-retirement benefit liabilities that are developed from actuarial valuations for our U.S. operations. The pension plans were frozen in November of ~~2006 and therefore contributions by participants are not allowed.~~2006. The determination of our pension liabilities requires key assumptions regarding discount rates used to determine the present value of future benefit payments and the expected return on plan assets. The discount rate is also significant to the development of other post-retirement liabilities. We determine these assumptions in consultation with, and after input from our actuaries.

The discount rate reflects the estimated rate at which the pension and other post-retirement liabilities could be settled at the end of the year. For our U.S. operations, we use the Principal Pension Discount Yield Curve ("Principal Curve") as the basis for determining the discount rate for reporting pension and retiree medical liabilities. ~~At October 31, 2018, the resulting discount rate from the use of the Principal Curve was 4.35%, an increase of 0.70% that contributed to a decrease of the benefit obligation of $5,627.~~ A change of 25 basis points in the discount rate at October 31, ~~2018~~2019 would increase expense on an annual basis by $6$19 or decrease expense on an annual basis by ~~$9.~~$260.

The assumed long-term rate of return on pension assets is applied to the market value of plan assets to derive a reduction to pension expense that approximates the expected average rate of asset investment return over ten or more years. A decrease in the expected long-term rate of return will increase pension expense whereas an increase in the expected long-term rate will reduce pension expense. Decreases in the level of plan assets will serve to increase the amount of pension expense whereas increases in the level of actual plan assets will serve to decrease the amount of pension expense. Any shortfall in the actual return on plan assets from the expected return will increase pension expense in future years due to the amortization of the shortfall, whereas any excess in the actual return on plan assets from the expected return will reduce pension expense in future periods due to the amortization of the excess. A change of 25 basis points in the assumed rate of return on pension assets would increase or decrease expense by ~~$159.~~$166.

Our investment policy for assets of the plans is to maintain an allocation generally of 30% to 70% in equity securities, 30% to 70% in debt securities and 0% to 10% in real estate. Equity security investments are structured to achieve an equal balance between growth and value stocks. We determine the annual rate of return on pension assets by first analyzing the composition of its asset portfolio. Historical rates of return are applied to the portfolio. Our investment advisors and actuaries review this computed rate of return. Industry comparables and other outside guidance are also considered in the annual selection of the expected rates of return on pension assets.

For the year ended October 31, ~~2018,~~2019, the actual return on pension plans’ assets for all of our plans was ~~0.70%~~10.2%, which is ~~lower~~higher than the expected rate of return on plan assets of 6.50% used to derive pension expense. The long-term expected rate of return takes into account years with exceptional gains and years with exceptional losses.

Actual results that differ from these estimates may result in more or less future Company funding into the pension plans than is planned by management.

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Results of Operations

Three Months Ended July 31, ~~2019~~2020 Compared to Three Months Ended July 31, ~~2018~~2019

REVENUES. Revenues for the third quarter of fiscal ~~2019~~2020 were ~~$263,445~~$155,367 compared to revenues of ~~$294,883~~$263,445 in the third quarter of fiscal ~~2018,~~2019, a decrease of ~~$31,438,~~$108,078, or ~~10.7%~~41.0%. The decrease in third quarter sales was ~~attributable to negative currency effects of approximately $3.5 million, lower volume of $9.9 million, prior year non-repeating emergency orders of $12.4 million and the impact~~driven by unprecedented industry disruptions related to the ~~exit~~COVID-19 pandemic. Our plants in Europe and North America were for the most part closed for the month of ~~certain unprofitable products~~May. In the month of June and July we slowly began shipping to our customers in Europe and North America at rates lower than prior to the COVID-19 disruption. Our Asia operation continued to recover from the pandemic disruptions and sales were higher than the prior year ~~of $5.6 million.~~third quarter.

GROSS PROFIT. Gross profit for the third quarter of fiscal ~~2019~~2020 was ~~$23,588~~$7,032 compared to gross profit of ~~$32,880~~$23,588 in the third quarter of fiscal ~~2018,~~2019, a decrease of ~~$9,292, or 28.3%.~~$16,556. Gross profit as a percentage of sales was 4.5% for the third quarter of 2020 and 9.0% for the third quarter of ~~2019 and 11.2%~~2019. With most of our plants being closed for the ~~third~~first month of the quarter, we took proactive mitigating actions, including temporary reduction of ~~2018. The~~salaries in the month of May, reduction of discretionary spending, mandatory vacations, headcount reduction and furloughs. These actions reduced our variable and fixed costs significantly but not enough to completely mitigate the significant decline in gross profit as a percentage of sales was primarily due to program launch costs in the third quarter of fiscal 2019 and approximately $8 million due to one-time emergency orders in the third quarter of fiscal 2018.sales.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses ~~support the growth in sales opportunities, new technologies~~were $25,165 and ~~new product launches. Expenses were~~ $18,105 ~~and $22,773~~ in the third quarter of fiscal ~~2019~~2020 and ~~2018,~~2019, respectively. As a percentage of sales, these expenses were 16.2% of sales for the third quarter of fiscal 2020 and 6.9% of sales for the third quarter of fiscal ~~2019~~2019. Selling, general and ~~7.7% of sales for~~administrative expenses increased significantly during the ~~first~~third quarter of ~~fiscal 2018. The decrease is~~2020 due to approximately $8 million in professional fees related to the Tenth Amendment to the Revolving Credit Facility (the "Tenth Amendment"), due diligence, contingency planning, cash management, and consulting for strategic ~~cost saving initiatives taken~~activities. Additionally, we had higher bad debt expense during the quarter of $1,993 due to ~~better optimize~~the current liquidity constraints and challenges of some of our customers. Partially offsetting the professional fees were reductions of employee salaries for the month of May, temporary reduction in board fees, reduction of discretionary spending, mandatory vacations, headcount reduction and ~~administrative resources.~~furloughs.

AMORTIZATION OF INTANGIBLE ASSETS. Amortization of intangible assets expense was $514 for the third quarter of fiscal 2020 and $518 for the third quarter of fiscal ~~of 2019 and $607 for~~2019.

ASSET IMPAIRMENT. In the ~~first fiscal~~third quarter of ~~2018.~~fiscal 2020, the negative effects of COVID-19 continued to adversely impact the Company. In the third quarter of fiscal 2020, the business continued to decline and we concluded an interim test of long-lived assets was required, which resulted in impairing fixed assets and intangible assets by $109,633. There were no asset impairments recorded in the third quarter of fiscal 2019.

RESTRUCTURING. Restructuring charges of ~~$3,905~~$2,196 were recorded in the third quarter of fiscal ~~2019~~2020 compared to ~~the $1,965~~$3,905 in the third quarter of fiscal ~~2018.~~2019. Our restructuring costs decreased during the quarter as we focused on preserving cash, refinancing and other strategic alternatives. Our restructuring charges relate to our global strategic plan to become a more efficient and focused footprint allowing us to operate with lower fixed ~~costs.~~costs and capitalize on growth opportunities. These costs primarily included employee, professional, legal and other costs.

INTEREST EXPENSE. Interest expense for the third quarter of fiscal ~~2019~~2020 was ~~$4,633,~~$5,379 compared to interest expense of ~~$3,209~~$4,633 in the third quarter of fiscal ~~2018.~~2019. The ~~increase in~~ interest expense ~~was~~increased because the ~~result of~~Company drew down on the revolving credit facility, which resulted in higher average ~~borrowed funds along with a higher effective interest rate on our borrowing. Borrowed funds averaged $297,650~~borrowings during the third quarter of ~~fiscal 2019 and the effective interest rate was 6.23%. In the third quarter of fiscal 2018, borrowed funds averaged $271,681 and the effective interest rate of debt was 4.72%.~~2020 related to managing operations during COVID-19.

OTHER (INCOME) EXPENSE, NET. Other (income) expense, net was $1,875 expense and $113 ~~and $289~~expense for the third quarter of fiscal 2020 and 2019, respectively. Other (income) expense, net primarily reflects foreign currency transaction gains and ~~2018, respectively.~~losses and periodic pension gains and losses.

~~BENEFIT FOR~~ INCOME ~~TAXES.~~TAX PROVISION (BENEFIT). The income tax provision in the third quarter of fiscal 2020 was a benefit of $591 on a loss before income taxes of $137,725 for a negative effective tax rate of 0.4%. The income taxes in the third quarter of fiscal 2019 was a benefit of $973 on a loss before income ~~before~~ taxes of $3,682 for ana negative effective tax rate of 26.4%~~. The benefit for income taxes in the third quarter of fiscal 2018 was $7,014 on income before taxes of $4,038 for an effective tax rate of (173.7)%~~. The effective tax rate for the three months ended July 31, 2020 and 2019 ~~and 2018~~ varied ~~from the statutory rate primarily~~ due to several jurisdictions, including the ~~effect~~United States, being subject to a full valuation allowance, such that no benefits were realized on the losses.

T able of ~~foreign currency losses without tax benefit in 2019 and 2018 as well as the Tax Reform Act for 2018.~~Contents

NET ~~INCOME (LOSS).~~LOSS. Net ~~income (loss)~~loss for the third quarter of fiscal 2020 was $(137,134) or $(5.76) per share diluted decreased compared to a net loss for the third quarter of fiscal 2019 ~~was~~of $(2,709), or $(0.11) ~~per share, diluted compared to net income for the third quarter of fiscal 2018 of $11,052, or $0.47~~ per share, diluted for the reasons discussed above.

~~Results of Operations~~

Nine Months Ended July 31, ~~2019~~2020 Compared to Nine Months Ended July 31, ~~2018~~2019

REVENUES. Revenues for the first nine months of fiscal ~~2019~~2020 were ~~$795,748~~$556,781 compared to revenues of $795,748 in the first nine months of fiscal ~~2018 revenues of $839,889,~~2019, a decrease of $44,141. The decrease was attributable to negative currency effects of approximately $16.3 million, higher volume of $8.1 million, prior year non-repeating emergency orders of $12.4 million and the impact$238,967, or 30.0%. Unprecedented industry disruptions related to the ~~exit~~COVID-19 pandemic during the second and third quarter of 2020 impacted our customer orders and operations in every region of the world. We closed certain ~~unprofitable products~~of our operating facilities during part of the second and third quarter in ~~prior year~~response to our customers closing their facilities and ceasing orders. We began closing production at our Asian facilities in February 2020 and our European and North American facilities in March 2020. Our facilities in Asia reopened in March 2020 while production remained suspended at the majority of ~~$23.5 million.~~our European and North American global facilities for all of April and May 2020. As of the beginning of June all of our facilities in Europe and North America reopened.

GROSS PROFIT. Gross profit for the first nine months of fiscal ~~2019~~2020 was ~~$65,958~~$25,795 compared to gross profit of ~~$92,273~~$65,958 in the first nine months of fiscal ~~2018,~~2019, a decrease of ~~$26,315.~~$40,163. Gross profit as a percentage of sales was 4.6% for the first nine months of 2020 and 8.3% for the first nine months of 2019. With most of our plants being closed for approximately two and a half months, we took proactive mitigating actions, including temporary salary reductions for employees, reduction of discretionary spending, mandatory vacations, headcount reduction and furloughs. These actions reduced our variable and fixed costs significantly but not enough to completely mitigate the significant decline in sales. The prolonged shut-downs resulted in some start-up inefficiencies and premium freight costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses were $58,059 and $51,069 in the first nine months of fiscal 2020 and 2019, and 11.0% in the first nine months of fiscal 2018. The decline in gross profit as a percentage of sales was primarily due to program launch costs in fiscal 2019 and approximately $8 million due to one-time emergency orders in fiscal 2018.

~~SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Expenses were $51,069 and $66,159 in the first nine months of fiscal 2019 and 2018, respectively, a decrease of $15,090.~~respectively. As a percentage of sales, these expenses were ~~6.4%~~10.4% of sales infor the first nine months of fiscal ~~2019~~2020 and ~~7.9%~~6.4% of sales infor the first nine months of fiscal ~~2018.~~2019. Selling, general and administrative expenses increased significantly during the first nine months of fiscal 2020 due to approximately $8 million in professional fees and higher bad debt expense due to the current liquidity constraints and challenges of some of our customers. The ~~decrease is~~professional fees related to the Tenth Amendment, due diligence, contingency planning, cash management, and consulting for strategic ~~cost saving initiatives taken to better optimize employee~~activities. Offsetting the increases were temporary salary reductions for employees, temporary reduction in board fees, reduction of discretionary spending, mandatory vacations, headcount reduction and ~~administrative resources.~~furloughs.

AMORTIZATION OF INTANGIBLE ASSETS. Amortization of intangible assets expense was $1,538 for the first nine months of fiscal 2020 and $1,558 for the first nine months of ~~2019 compared~~fiscal 2019.

ASSET IMPAIRMENT. In response to ~~$1,767 for~~the COVID-19 pandemic, our customers temporarily closed nearly all their production facilities in North America, Europe and Asia (our primary markets) during the quarter ended April 30, 2020 and during a portion of the quarter ended July 31, 2020. As a result, we concluded that an interim test of our goodwill and long-lived assets was required. Due to the decline in carrying value, we impaired all the $21,971 of goodwill in the second quarter of fiscal 2020 and $2,500 related to an idle fixed asset. In the third quarter of fiscal 2020, the business continued to decline and we concluded an interim test of long-lived assets was required, which resulted in impairing fixed assets and intangible assets by $109,633. There were no asset impairments recorded in the first nine months of ~~2018.~~fiscal 2019.

RESTRUCTURING. Restructuring charges of ~~$11,371~~$13,397 were recorded in the first nine months of fiscal ~~2019~~2020 compared to ~~the $4,962~~$11,371 in the first nine months of fiscal ~~2018.~~2019. Our restructuring ~~activities~~charges relate to our global strategic plan to become a more efficient and focused footprint allowing us to operate with lower fixed ~~costs.~~costs and capitalize on growth opportunities. These costs primarily included employee, professional, legal and other costs. The costs increased in the first nine months of fiscal 2020 as we terminated the relationship with our principal restructuring advisor due to the uncertainty of COVID-19, which resulted in recording the remaining contract costs in the period.

INTEREST EXPENSE. Interest expense for the first nine months of fiscal ~~2019~~2020 was ~~$11,836,~~$14,362, compared to interest expense of ~~$8,194~~$11,836 in the first nine months of fiscal 2019. The interest expense increased because the Company drew down on the revolving credit facility, which resulted in higher average borrowings during the first nine months of ~~fiscal 2018. The increase in interest expense was the result of higher average borrowed funds along with a higher effective interest rate on our borrowing. Borrowed funds averaged $290,484~~2020 related to managing operations during ~~the first nine months of fiscal 2019 and the effective interest rate was 5.43%. In the first nine months of fiscal 2018, borrowed funds averaged $258,016 and the effective interest rate was 4.23%.~~COVID-19.

OTHER (INCOME) EXPENSE, NET. Other (income) expense, net was ~~$(959)~~$2,221 expense and ~~$1,119~~$959 income for the first nine months of fiscal 2020 and 2019, respectively. Other (income) expense, net primarily reflects foreign currency transaction

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gains and ~~2018, respectively.~~losses and periodic pension gains and losses. Other (income) expense, net reflects the gain on ~~the~~ sale of a building ~~for~~in the first nine months of fiscal 2019.

~~BENEFIT FOR~~ INCOME ~~TAXES.~~TAX PROVISION (BENEFIT). The income tax provision in the first nine months of fiscal 2020 was $1,650 on a loss before taxes of $197,872 for an effective tax rate of 0.8%. The income tax benefit ~~for income taxes for~~in the first nine months of fiscal 2019 was ~~benefit of~~ $2,612 on a loss before taxes of $8,907 for ana negative effective tax rate of 29.3%~~. The benefit for income taxes for the first nine months of fiscal 2018 was a benefit of $9,854 on income before income taxes of $10,081 for an effective tax rate of (97.7)%~~. The effective tax rate for the nine months ended July 31, 2020 and 2019 ~~and 2018 varies from the statutory rate~~varied due to ~~income taxes on foreign earnings which are taxed at rates different from~~several jurisdictions being subject to valuation allowances. During the ~~U.S. statutory rate, certain foreign losses without tax benefits, change to~~first nine months of 2020 the Company established a valuation allowance against ~~certain foreign deferred tax assets, and tax return to provision adjustments. The~~the net operating losses of its two Swedish affiliates.

NET LOSS. Net loss for the first nine months of fiscal ~~2018 benefited from TCJA.~~

~~NET INCOME (LOSS). Net (loss)~~2020 was $199,522, or $8.40 per share diluted compared to a net loss for the first nine months of fiscal 2019 ~~was $(6,295),~~of $6,295, or ~~$(0.27) per share, diluted. Net income for the first nine months of fiscal 2018 was $19,935 or $0.85~~$0.27 per share, diluted for the reasons discussed above.

For further information on the discussion of results of operations in prior quarterly financial statements refer to the "Results of Operations" section in our prior filings.

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Liquidity and Capital Resources

General:

~~Our~~ The Company’s cash balance was $30,262 as of July 31, 2020 and $14,320 as of October 31, 2019. Subsequent to July 31, 2020, the Chapter 11 Cases triggered defaults on substantially all debt obligations of the Company and, as a result, those debt obligations are due and payable. As a result of the commencement of the Chapter 11 Cases on August 30, 2020, the Debtors are operating as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. To ensure their ability to ~~obtain adequate cash~~continue operating in the ordinary course of business, the Debtors also filed with the Bankruptcy Court a variety of “first day” relief motions, including authority to ~~fund our needs depends~~pay employee wages and benefits and certain vendors and suppliers in the ordinary course of business, which motions were granted by the Bankruptcy Court. Under the Bankruptcy Code, third-party actions to collect pre-petition indebtedness owed by the Debtors, as well as most litigation then pending against these entities, have been subject to an automatic stay during the pendency of the Chapter 11 Cases.

In connection with the Chapter 11 Cases, on ~~our results~~September 2, 2020, the Company, as borrower, and certain of ~~operations~~its wholly-owned direct and indirect subsidiaries, as guarantors, entered into a Superpriority Secured Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”) with the various lenders from time to time party thereto and Bank of America, N.A., as administrative agent and collateral agent (the “DIP Agent”).

The proceeds from the DIP Financing will be used, subject to the Interim DIP Order and the ~~availability~~Final DIP Order, for working capital, administrative costs, and premiums and fees associated with the Chapter 11 Cases, payment of ~~financing. We believe that cash~~court-approved prepetition obligations and other purposes such as are consistent with the DIP Credit Agreement or as otherwise approved by the agent and lenders.

The maturity date of the DIP Financing will be the earliest to occur of (a) January 2, 2021, (b) the effective date of a sale of all or substantially all assets of the Debtors and (c) the date upon which any plan of reorganization or plan of liquidation becomes effective. In addition, the DIP Financing is subject to certain repayment events, including, without limitation, 30 days after entry of the Interim DIP Order if the Final DIP Order has not been entered as and when required under the DIP Credit Agreement.

Interest on ~~hand, cash flow from operations and available borrowings~~the outstanding principal amount of the revolving loans under ~~our~~the DIP Credit Agreement will be ~~sufficient~~payable monthly in arrears and on the maturity date at a per annum rate equal to ~~fund capital~~the then applicable Eurocurrency Rate plus: (a) with respect to Eurocurrency Rate Loans, 10.00% and (b) with respect to Base Rate Loans, 9.00%. Upon the occurrence and during the continuance of an event of default, at the election of the agent with the written consent of the required lenders or at the written instruction of the required lenders, all obligations under the DIP Credit Agreement will bear interest at a rate equal to the then current rate plus an additional 2.0% per annum.

The DIP Financing will be subject to certain covenants, including, without limitation, related to the incurrence of additional debt, liens, the making of investments, the making of restricted payments, limits as set forth in the DIP Budget, and certain bankruptcy-related covenants, in each case as set forth in the DIP Credit Agreement, the Interim DIP Order and the Final DIP Order.

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The DIP Credit Agreement requires delivery of, among other things, (a) a weekly financial statement including the balance of cash and cash equivalents of the Loan Parties, (b) a weekly “Budget Reconciliation Report,” and (c) an updated budget of projected receipts and expenditures ~~and meet our operating obligations~~of the Loan Parties for the ~~next twelve months. However, there can be no assurance that we~~thirteen-week period following such delivery.

The DIP Credit Agreement provides for customary events of default, including defaults resulting from non-payment of principal, interest or other amounts when due, failure to perform or observe covenants, and the occurrence of certain matters related to the Chapter 11 Cases. Pursuant to the DIP Credit Agreement, the Loan Parties will ~~meet these expectations. For additional information, refer~~act in good faith and use commercially reasonable efforts to ~~Risk Factors included in Part 1, Item 1A~~comply with the sale milestones as described below.

In addition, pursuant to the Interim DIP Order, the Company is subject to the following sale milestones relating to the Chapter 11 Cases:

•within three business days following the Petition Date, the Debtors must file a motion with the Bankruptcy Court seeking to establish bidding procedures governing the sale of ~~Shiloh's Annual Report on Form 10-K~~substantially all of the Debtors’ assets (the “Bidding Procedures Motion”);

•by September 28, 2020 (subject to the availability of the Bankruptcy Court), entry of an order by the Bankruptcy Court approving the Bidding Procedures Motion;

•by October 26, 2020, deadline for interested parties to submit bids for the ~~fiscal year ended~~purchase of the Debtors’ assets;

•by October ~~31, 2018.~~29, 2020, deadline to hold an auction;

•by November 10, 2020 (subject to the availability of the Bankruptcy Court), deadline for a Bankruptcy Court hearing to approve the sale(s) of substantially all of the Debtors’ assets (the “Sale Hearing”); and

•by December 15, 2020, deadline to consummate the sale(s) of substantially all of the Debtors’ assets.

Cash Flows and Working Capital:

At July 31, ~~2019,~~2020, total debt was ~~$248,743~~$324,779 and total ~~equity~~deficit was ~~$191,121,~~$(21,880), resulting in a capitalization rate of ~~56.5% debt, 43.5% equity.~~107.2% debt. Current assets were ~~$289,032~~$258,279 and current liabilities were ~~$215,963,~~$159,756, excluding long-term debt, resulting in positive working capital of ~~$73,069.~~$98,523. Including long-term debt in current liabilities results in negative working capital of $224,377.

The following table summarizes the Company's cash flows from operating, investing and financing activities:


	Nine Months Ended July 31,						2020 vs. 2019
	2020		2019		change
Net cash (used in) provided by operating activities	$	(40,217)	$	24,354	$	(64,571)
Net cash used in investing activities	$	(20,227)	$	(30,435)	$	10,208
Net cash provided by financing activities	$	74,006	$	957	$	73,049

Nine Months Ended July 31, 2019 vs. 2018
2019 2018 change
Net cash provided by operating activities $ 24,354
$ 50,881
$ (26,527 )
Net cash used in investing activities $ (30,435 ) $ (98,453 ) $ 68,018
Net cash provided by financing activities $ 957
$ 55,776
$ (54,819 )

Net Cash (Used In) Provided By Operating Activities:


	Nine Months Ended July 31,							Nine Months Ended July 31,
	2019			2018				2020		2019
Operational cash flow before changes in operating assets and liabilities	$	29,633		$	57,077		Operational cash flow before changes in operating assets and liabilities	$	(22,631)	$	29,633

Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Accounts receivable, net	30,213			18,599			Accounts receivable, net	31,054		30,213
Inventories, net	3,900			(2,656		)	Inventories, net	9,488		3,900
Prepaids and other assets	(1,564		)	(4,884		)	Prepaids and other assets	(1,695)		(1,564)
Payables and other liabilities	(30,965		)	(6,989		)	Payables and other liabilities	(55,496)		(30,965)
Accrued income taxes	(6,863		)	(10,266		)	Accrued income taxes	(937)		(6,863)
Total change in operating assets and liabilities	$	(5,279	)	$	(6,196	)	Total change in operating assets and liabilities	$	(17,586)	$	(5,279)

Net cash provided by operating activities	$	24,354		$	50,881
Net cash (used in) provided by operating activities							Net cash (used in) provided by operating activities	$	(40,217)	$	24,354

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Cash inflows and outflows from changes in operating assets and liabilities:

Cash outflows from changes in operating assets and liabilities was $5,279 for the nine months ended July 31, 2019 and $6,196 for the nine months ended July 31, 2018 which was negatively impacted by product launches with increased costs until production stabilizes.

•Cash inflows from changes in accounts receivable for the nine months ended July 31, 2020 and 2019, were $31,054 and ~~2018, were~~ $30,213, ~~and $18,599,~~ respectively. The cash inflows increased slightly due to the timing of collection of the accounts receivable balances in relation to the shutdowns and reopening of our plants during the first nine months of 2020. The cash inflows in the nine months ended July 31, 2019 were due mainly to continuing efforts to collect receivables and sales volume changes.

•Cash inflows from changes in inventory for the nine months ended July 31, ~~2019~~2020 were ~~$3,900~~$9,488, and cash ~~outflows~~inflows from changes in inventory were ~~$2,656~~$3,900 for the nine months ended July 31, ~~2018.~~2019. While our customers’ plants were shut-down during part of March and April due to COVID-19, we only built a minimal amount of finished goods for some key products to ensure we could meet orders when our customers reopened their plants in June and July. The ~~difference~~cash inflows in the nine months ended July 31, 2019 was primarily driven by operational performance, as well as a change in customer mix and delivery.

•Cash outflows from changes in prepaids and other assets for the nine months ended July 31, 2020 were $1,695, and cash outflows from changes in prepaids and other assets for the nine months ended July 31, 2019 were ~~$1,564 and cash outflows from changes in prepaids and other assets for the nine months ended July 31, 2018 were $4,884.~~$1,564. The difference was primarily driven by the timing of invoicing customer-funded ~~tooling.~~tooling in both periods.

•Cash outflows from changes in payables and other liabilities for the nine months ended July 31, 2020 were $55,496, and cash outflows from changes in payables and other liabilities for the nine months ended July 31, 2019 were ~~$30,965~~$30,965. While our plants were shut-down during part of March through mid-June 2020 due to COVID-19, the amount of expenditures decreased significantly, and as a result, our accounts payable declined considerably. The difference was also partially driven by the timing of payments. The cash outflows ~~from changes~~ in ~~payables and other liabilities for~~ the nine months ended July 31, ~~2018 were $6,989. The difference~~2019 was primarily driven by payment terms with our customers and vendors, offset partially by the timing of payments related to capital expenditures and ~~customer-funded~~customer funded tooling.

•Cash outflows from changes in accrued income taxes for the nine months ended July 31, 2020 were $937, and cash outflows from changes in accrued income taxes for the nine months ended July 31, 2019 ~~and 2018~~ were ~~$6,863 and $10,266, respectively.~~$6,863. The changes were primarily driven by ~~payment~~the timing of payments of income taxes in foreign jurisdictions.

Net Cash Used In Investing Activities:

Net cash used in investing activities for the nine months ended July 31, 2020 and 2019 were $20,227 and ~~2018 were~~ $30,435, ~~and $98,453,~~ respectively. Capital expenditures were ~~$48,643~~$23,501 and ~~$38,668~~$48,643 for the nine months ended July 31, 2020 and 2019, ~~and 2018,~~ respectively. ~~The~~Due to the negative impact of COVID-19, we cut capital expenditures ~~are attributed to projects for new awards and product launches.~~in the first nine months of 2020. Additionally, for the nine months ended July 31, 2019, proceeds from the sale of assets generated $12,339, primarily from the sale of the Pendergrass building and other equipment, as well as cash inflows from derivative settlements of $5,855. ~~The nine months ended July 31, 2018 includes $62,481 net cash paid related to the acquisition of Brabant.~~

Net Cash Provided By Financing Activities:

Net cash provided by financing activities for the nine months ended July 31, 2020 was $74,006 due to draw downs on the revolving credit facility, and net cash provided by financing activities for the nine months ended July 31, 2019 was ~~$957 and net cash provided by financing activities for~~$957. During the nine months ended July 31, ~~2018 was $55,776. Financing need is~~2020, we borrowed more on our credit facility to manage operations during the COVID-19 pandemic. During the nine months ended July 31, 2019 we borrowed more on our credit facility as a result of changes in cash flows from operating activities and capital expenditures. ~~For the nine months ended July 31, 2018 cash provided by financing activities was used to fund the acquisition of Brabant.~~

~~As of July 31, 2019, the Company's long-term indebtedness was $248,393.~~Long-term debt and short-term borrowings:

Refer to "Item 1. – Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 98 – Financing ~~Arrangements"~~Arrangements and Note 21 – Subsequent Events of this Quarterly Report on Form 10-Q for more information.

~~Long-term debt and short-term borrowings:~~

As of July 31, 2019, we were in compliance with our long-term financial debt covenants. Refer to "Item 1. – Financial Statements – Notes to Consolidated Financial Statements – Note 9 – Financing Arrangements" of this Quarterly Report on Form 10-Q for more information.

We continue to closely monitor the business conditions affecting the automotive industry. In addition, we closely monitor our working capital and capital expenditure needs and believe that the combination of cash from operations, cash balances and available credit facilities will be sufficient to satisfy our cash needs for our current level of operations and our planned operations for the foreseeable future.

Contractual Obligations

~~Our~~Besides the additional borrowings on our credit facility,our contractual obligations have not changed materially as of July 31, 2020 from those disclosed in "Part II – Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations – ~~Contractual Obligations"~~Liquidity and Capital Resources – Other Debt" of our ~~2018~~2019 Form 10-K. Refer to the details of the DIP Credit Agreement in Liquidity and Capital Resources above for contractual obligations entered into after July 31, 2020.

Item 3. Qualitative and Quantitative Disclosures About Market Risk ~~Discussion~~

Market risk is the potential loss arising from adverse changes in market rates and prices. We are exposed to market

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risk throughout the normal course of our business operations due to purchases of metals, sales of scrap steel, our ongoing investing and financing activities and exposure to foreign currency exchange rates. As such, we have established policies and procedures to govern our management of market risks. There have been no material changes to market risk exposures related to changes in commodity pricing, interest rates or currency exchange rates from those discussed in Item 7A of our ~~2018~~2019 Form 10-K.


~~Item 4.~~	~~Controls and Procedures~~

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time

periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including the Principal Executive Officer ("PEO"), Principal Financial Officer ("PFO") and Principal Accounting Officer ("PAO"), as appropriate to allow for timely decisions regarding required disclosure. An evaluation was performed under the supervision and with the participation of our management, including the PEO, PFO and PAO, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(b) or 15d-15(b), as amended as of July 31, ~~2019.~~2020. Based on their evaluation, our PEO, PFO and PAO have determined that our disclosure controls and procedures were effective as of July 31, ~~2019.~~2020.

Although most of our salaried employees began working remotely in mid-March 2020 due to the COVID-19 pandemic, we have not experienced any material impact to our internal controls over financial reporting. We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact to their design and operating effectiveness.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended July 31, ~~2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.~~2020.

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Part II. OTHER INFORMATION

Item 1.Legal Proceedings

~~See~~Refer to Note 19, "Commitments and Contingencies" and Note 21, "Subsequent Events," in ~~Item~~Part I of this report, which is incorporated by reference herein.

Item 1A.Risk Factors

We are exposed to certain risks and uncertainties that could have a material adverse impact on our business, financial position and operating results. ~~There have been no other material changes to~~The Risk Factors set forth below update the Risk Factors described in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2018.~~2019. The impact of COVID-19 may also exacerbate the risks discussed therein and herein, any of which could have a material effect on the Company.

We are in the process of Chapter 11 reorganization cases under the Bankruptcy Code, which may cause our common stock to decrease in value or may render our common stock worthless.

On August 30, 2020, the Company and certain of its U.S. subsidiaries filed voluntary petitions under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The price of our common stock has been volatile following the commencement of the Chapter 11 Cases and may decrease in value or become worthless. Accordingly, any trading in our common stock during the pendency of our Chapter 11 Cases is highly speculative and poses substantial risks to purchasers of our common stock. If a sale of the Company's assets is consummated in the Chapter 11 Cases, it is likely that our existing common stock will be extinguished, and existing equity holders will likely not receive consideration in respect of their existing equity interests.Further, on September 1, 2020, we received written notification from The NASDAQ Global Select Market (“Nasdaq”) that it had determined to commence proceedings to delist the common stock of the Company at the opening of business on September 10, 2020, and a Form 25-NSE will be filed with the Securities and Exchange Commission on such date, which will remove the Company’s securities from listing and registration on The NASDAQ Stock Market.

Further, delisting of our common stock may adversely impact our liquidity, impair our stockholders’ ability to buy and sell our common stock, impair our ability to raise capital, and the market price of our common stock could decrease. Delisting our common stock could also adversely impact the perception of our financial condition and have additional negative ramifications, including further loss of confidence by our employees, the loss of institutional investor interest and fewer business opportunities.

As a result of the Chapter 11 Cases, we are subject to the risks and uncertainties associated with Chapter 11 Cases and operating under Chapter 11 may restrict our ability to pursue strategic and operational initiatives.

For the duration of the Chapter 11 Cases, our operations and our ability to execute our business strategy will be subject to the risks and uncertainties associated with bankruptcy. These risks include:

•our ability to obtain Bankruptcy Court approval with respect to motions filed in the Chapter 11 Cases from time to time;

•our ability to comply with and operate under the requirements and constraints of the Bankruptcy Code and under any cash management, cash collateral, adequate protection, or other orders entered by the Bankruptcy Court from time to time;

•our ability to engage in intercompany transactions and to fund operations from cash on hand or from financings and, in the event of such financings, our ability to comply with the terms of such financings;

•our ability to meet the closing conditions and successfully consummate the Stock and Asset Purchase Agreement;

•our ability to develop, fund, and execute our business plan;

•our ability to maintain our relationships with our suppliers, service providers, customers, employees and other third parties;

•the high costs of bankruptcy proceedings and related fees;

•the actions and decisions of our creditors and other third parties who have interests in the Chapter 11 Cases that may be inconsistent with our plans; and

•our ability to maintain contracts that are critical to our operations.

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These risks and uncertainties could affect our business and operations in various ways. For example, negative events or publicity associated with the Chapter 11 Cases could adversely affect our relationships with our suppliers, customers and employees. In particular, critical vendors, suppliers, and/or customers may determine not to do business with us due to the Chapter 11 Cases and we may not be successful in securing alternative sources. Also transactions outside the ordinary course of business are subject to the prior approval of the Bankruptcy Court, which may limit our ability to respond timely to certain events or take advantage of opportunities. Because of the risks and uncertainties associated with the Chapter 11 Cases, we cannot predict or quantify the ultimate impact that events occurring during the Chapter 11 process may have on our business, financial condition and results of operations, and there is no certainty as to our ability to continue as a going concern.

If we are not able to consummate the Stock and Asset Purchase Agreement under Section 363, we could be required to liquidate under Chapter 7 ("Chapter 7") of the Bankruptcy Code.

On August 30, 2020, the Debtors entered into a Stock and Asset Purchase Agreement with the Purchaser. Pursuant to the Stock and Asset Purchase Agreement, the Purchaser will acquire substantially all of the Debtors' assets, including the equity interests of certain of the Debtors' direct subsidiaries under Section 363 of the Bankruptcy Code. If we are unable to consummate a stock and asset purchase, the Bankruptcy Court could convert the Chapter 11 Cases to cases under Chapter 7. In such event, a Chapter 7 trustee would be appointed or elected to liquidate our assets for distribution to creditors in accordance with the priorities established by the Bankruptcy Code. We believe that liquidation under Chapter 7 would result in significantly smaller distributions being made to our creditors than those provided for in a Chapter 11 sale because of (i) the likelihood that the assets would have to be sold or otherwise disposed of in a distressed fashion over a short period of time rather than in a controlled manner and as a going concern, (ii) additional administrative expenses involved in the appointment of a Chapter 7 trustee, and (iii) additional expenses and claims, some of which would be entitled to priority, that would be generated during the liquidation and from the rejection of leases and other executory contracts in connection with a cessation of operations.

Operating in bankruptcy for a long period of time may harm our business.

A long period of operations in the Chapter 11 Cases under Bankruptcy Court protection could have a material adverse effect on our business, financial condition, results of operations, and liquidity. So long as the Chapter 11 Cases continue, senior management will be required to spend a significant amount of time and effort dealing with the reorganization instead of focusing exclusively on business operations. A prolonged period of operating under Bankruptcy Court protection also may make it more difficult to retain management, other key personnel and employees necessary to the success of our business and we may experience increased levels of employee attrition. A loss of key personnel or material erosion of employee morale could have a materially adverse effect on our ability to meet customer expectations, thereby adversely affecting our business and results of operations. In addition, the longer the Chapter 11 Cases continue, the more likely it is that customers and suppliers will lose confidence in our ability to reorganize our business successfully and will seek to establish alternative commercial relationships.

So long as the Chapter 11 Cases continue, we will be required to incur substantial costs for professional fees and other expenses associated with the administration of the Chapter 11 Cases, including potentially the cost of litigation. In general, litigation can be expensive and time consuming to bring or defend against. Such litigation could result in settlements or damages that could significantly affect our financial results. It is also possible that certain parties will commence litigation with respect to the treatment of their claims under a plan. It is not possible to predict the potential litigation that we may become party to, nor the final resolution of such litigation. The impact of any such litigation on our business and financial stability, however, could be material.

Should the Chapter 11 Cases be protracted, we may also need to seek new financing to fund operations. Although we believe that we will have sufficient liquidity to operate our business during the pendency of the Chapter 11 Cases, there can be no assurance that the cash made available to us under the DIP Credit Agreement and revenue generated by our business operations will be sufficient to fund our operations. In the event that revenue flows and other available cash are not sufficient to meet our liquidity requirements, we may be required to seek additional financing. There can be no assurance that such additional financing would be available or, if available, offered on terms that are acceptable. If we are unable to obtain such financing on favorable terms or at all, the chances of continuing our operations may be seriously jeopardized and the likelihood that we will instead be required to liquidate our assets may increase.

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We may be unable to comply with restrictions or other covenants imposed by the agreements governing the DIP Credit Agreement.

The DIP Credit Agreement contains customary affirmative and negative covenants for debtor-in-possession financings, which include restrictions on (i) incurring further indebtedness, (ii) liens and guaranties, (iii) liquidations, mergers, consolidations, acquisitions, (iv) disposition of assets or subsidiaries, (v) affiliate transactions, (vi) creation or ownership of certain subsidiaries, partnerships and joint ventures, (vii) continuation of or change in business, (viii) restricted payments, (ix) sanctions and anti-corruption matters, (x) no restriction in agreements on dividends or certain loans, (xi) loans and investments, (xii) transactions with respect to our subsidiaries and (xiii) hedging transactions. In addition, the DIP Credit Agreement contains milestones relating to the Chapter 11 Cases. Our ability to comply with these provisions may be affected by events beyond our control and our failure to comply, or obtain a waiver in the event we cannot comply with a covenant, may result in an event of default under the DIP Credit Agreement and permit the lenders thereunder to accelerate the loans and otherwise exercise remedies allowable by the agreements governing the DIP Facility.

Our Chapter 11 Cases and financial condition may adversely impact our non-U.S. subsidiaries and affiliates, which may themselves become subject to insolvency proceedings.

We have significant businesses and affiliates that are located outside of the United States. The filing of the Chapter 11 Cases may result in negative consequences to our businesses outside of the United States and our non-U.S. subsidiaries and affiliates may become subject to insolvency proceedings.

The COVID-19 pandemic has disrupted, and will likely continue to disrupt, our business, which has adversely affected and will likely continue to adversely affect our results of operations, financial position, and cash flow from operations.

In December 2019, COVID-19 was reported to have surfaced in Wuhan, China, which has since spread throughout the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of COVID-19 a “Public Health Emergency of International Concern,” and on March 11, 2020, the World Health Organization characterized the outbreak as a “pandemic”.

Pandemics or disease outbreaks, such COVID-19, have disrupted, and may continue to disrupt, automotive industry customer sales and production volumes. Vehicle production, including by our customers, has decreased significantly as a result of the COVID-19 pandemic, and resulted in the shutdown of manufacturing operations. As a result, we have experienced, and will likely continue to experience, reductions in orders from our customers globally. This reduction in orders may be further exacerbated by a global economic downturn resulting from the pandemic which could decrease consumer demand for vehicles or result in the financial distress of one or more of our customers or suppliers. As a result, our future sales volumes and revenue remain highly uncertain.

The extent to which the COVID-19 pandemic adversely affects our financial performance will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the pandemic, its severity, the effectiveness of actions to contain the virus or treat its impact and how quickly and to what extent normal economic and operating conditions can resume. Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts on our business and financial performance as a result of its global economic impact, including a recession that has occurred or may occur in the future. Our cash flow from operations, liquidity and financial position could be adversely affected by COVID-19 depending upon the length and severity of the disruption and impact upon our customers, suppliers and our ability to effectively restart production.

Due to the adverse impact of COVID-19, interim tests of goodwill and long-lived assets could result in further impairment.

Due to the significant disruptions caused due to the impact of COVID-19, our profitability has been significantly impacted and the Company has written-down goodwill. Goodwill represents the excess cost of an acquisition over the fair value of the net assets acquired. Generally accepted accounting principles require that goodwill and long-lived assets be periodically evaluated for impairment. In accordance with generally accepted accounting principles, we periodically assess these assets to determine if they are impaired. Significant negative industry or economic trends, disruptions to our business, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in use of these assets, changes in the structure of our business, divestitures, market capitalization declines, or increases in associated discount rates may impair our long lived assets. Any charges relating to impairments of goodwill or long-lived assets may adversely affect our results of operations in the periods recognized. Due to the adverse impact of COVID-19 on our profitability in the second and third quarters of fiscal 2020, the goodwill and long-lived assets were tested for impairment as of April 30, 2020 and July 31, 2020. Based on the results, we recognized a non-cash goodwill impairment charge for the full remaining amount of the

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goodwill balance for the quarter ended April 30, 2020. We also recognized an impairment of $109,633 on long-lived assets for the quarter ended July 31, 2020. There can be no assurance that we will not recognize further asset impairments in the future.

Deterioration in the capital and credit markets in the United States, Europe and other world economies could harm our customers’ and suppliers’ ability to access the capital markets, which may affect our business, financial position, results of operations and cash flows.

Disruptions in the capital and credit markets related to COVID-19 could adversely affect our customers and suppliers by making it increasingly difficult for them to obtain financing for their businesses and for their customers to obtain financing for automobile purchases. Our OEM customers typically require significant financing for their respective businesses. This financing often comes from securitization markets, which experience severe disruptions during global economic crises. Our suppliers, as well as our customers’ suppliers, may face similar difficulties in obtaining financing for their businesses. If capital is not available due to COVID-19 to our customers or suppliers, or if the cost of capital is prohibitively high, their businesses would be adversely affected, which could result in their restructuring or even reorganization or liquidation under applicable bankruptcy laws. Any such adverse effect on our customers or suppliers could materially adversely affect us, either through loss of revenues from any of our customers so affected, or due to our inability to meet our commitments without excessive expense, as a result of disruptions in supply caused by the suppliers so affected. Financial difficulties experienced by any of our major customers could have a material adverse effect on us if such customers were unable to pay for the products we provide or if we experienced a loss of, or material reduction in, business from such customer. As a result of such difficulties, we could experience lost revenues, significant write-offs of accounts receivable, significant impairment charges, or additional restructurings. In addition, severe financial or other difficulties at any of our major suppliers could have a material adverse effect on us if we are unable to obtain on a timely basis and on similar economic terms the quantity and quality of components we require to produce products. Moreover, severe financial or operating difficulties at any automotive vehicle manufacturer or other significant supplier could have a significant disruptive effect on the entire industry, leading to supply chain disruptions and labor unrest, among other things. These disruptions could force OEMs and, in turn, other suppliers, including us, to reduce production or shut down plants.

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~~Item 6.~~	~~Exhibits~~

Item 6.Exhibits

Incorporated By Reference

Exhibit #

Exhibit Description

Form

File Number

Date of First Filing

Exhibit Number

Filed Herewith

2.1

Stock and Asset Purchase Agreement, dated as of August 30, 2020, by and among Grouper Holdings, LLC, Shiloh Industries, Inc., and each of Shiloh Industries, Inc.’s subsidiaries listed on the signature pages to the Stock and Asset Purchase Agreement.

8-K

000-21964

August 31, 2020

2.1

3.1

Certificate of Amendment of Restated Certificate of Incorporation of the Registrant, dated March 1, 2019.

10-Q

000-21964

March 12, 2019

3.1

3.2

Certificate of Amendment to Restated Certificate of Incorporation of the Registrant, dated March 9, 2016 (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q filed on June 8, 2016).

10-Q

000-21964

June 8, 2016

3.1

3.3

Certificate of Designation, dated December 31, 2001 (incorporated herein by reference to Exhibit 3.1(ii) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended October 31, 2001).

10-K

000-21964

February 13, 2002

3.1(ii)

3.4

Restated Certificate of Incorporation of the Registrant, dated June 23, 1993 (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q filed on June 8, 2016).

10-Q

000-21964

June 8, 2016

3.1

3.5

Amended and Restated By-Laws of the Registrant, as amended through December 18, 2018 (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on December 21, 2018).

8-K

000-21964

December 21, 2018

3.1

10.1

Tenth Amendment to Credit Agreement, dated June 11, 2020, among Shiloh Industries, Inc. and Shiloh Holdings Netherlands B.V., a besloten vennootschap met beperkte aansprakelijkheid organized under the laws of the Netherlands, as the borrowers, and certain of the domestic subsidiaries of Shiloh Industries, Inc., as guarantors, the lenders party thereto, and Bank of America, N.A., as administrative agent, swing line lender and an L/C issuer.

8-K

000-21964

June 15, 2020

10.1

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.

32.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

* Management contract or compensatory plan or arrangement

Incorporated By Reference
Exhibit # Exhibit Description Form File Number Date of First Filing Exhibit Number Filed Herewith
3.1
Certificate of Amendment of Restated Certificate of Incorporation of the Registrant, dated March 1, 2019.

10-Q 000-21964 March 12, 2019 3.1

3.2
Certificate of Amendment to Restated Certificate of Incorporation of the Registrant, dated March 9, 2016 (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q filed on June 8, 2016).

10-Q 000-21964 June 8, 2016 3.1

3.3
Certificate of Designation, dated December 31, 2001 (incorporated herein by reference to Exhibit 3.1(ii) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended October 31, 2001).

10-K 000-21964 February 13, 2002 3.1(ii)

3.4
Restated Certificate of Incorporation of the Registrant, dated June 23, 1993 (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q filed on June 8, 2016).

10-Q 000-21964 June 8, 2016 3.1

3.5
Amended and Restated By-Laws of the Registrant, as amended through December 18, 2018 (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on December 21, 2018).

8-K 000-21964 December 21, 2018 3.1

10.1
Executive Nonqualified Excess Plan Document X

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

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

32.1
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X

101.INS XBRL Instance Document X

101.SCH XBRL Taxonomy Extension Schema Document X

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document X

101.LAB XBRL Taxonomy Extension Label Linkbase Document X

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document X

101.DEF XBRL Taxonomy Extension Definition Linkbase Document X

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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.


			SHILOH INDUSTRIES, INC.

			S~~HILOH~~ I~~NDUSTRIES, I~~NC.

			~~By:~~

			By:			/s/ Lillian Etzkorn
						Lillian Etzkorn
						Senior Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

Date: September ~~5, 2019~~

9, 2020



			Page
PART I. FINANCIAL INFORMATION
	Item 1. Condensed Consolidated Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Operations	4
		Condensed Consolidated Statements of Comprehensive Income (Loss)	5
		Condensed Consolidated Statements of Cash Flows	6
		Condensed Consolidated Statements of Stockholders' Equity	7
		Notes to Condensed Consolidated Financial Statements	8
	Forward-Looking Statements			2831
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2933
	Item 3. Qualitative and Quantitative Disclosures About Market Risk			3644
	Item 4. Controls and Procedures			3645
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings			3846
	Item 1A. Risk Factors			3846
	Item 6. Exhibits			3950



	July 31, 2019			October 31, 2018
	July 31, 2019			October 31, 2018
	(Unaudited)
ASSETS
Cash and cash equivalents	$	11,936		$	16,843
Accounts receivable, net	180,502			209,733
Related party accounts receivable	466			996
Prepaid income taxes	6,341			1,391
Inventories, net	67,615			71,412
Prepaid expenses	11,854			10,478
Other current assets	10,318			22,124
Total current assets	289,032			332,977
Property, plant and equipment, net	333,840			316,176
Goodwill	27,384			27,376
Intangible assets, net	13,489			14,939
Deferred income taxes	2,811			5,665
Other assets	7,732			12,542
Total assets	$	674,288		$	709,675
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current debt	$	350		$	1,327
Accounts payable	170,175			177,400
Other accrued expenses	45,411			63,031
Accrued income taxes	27			1,874
Total current liabilities	215,963			243,632
Long-term debt	248,393			245,351
Long-term benefit liabilities	14,579			15,553
Deferred income taxes	792			2,894
Other liabilities	3,440			2,723
Total liabilities	483,167			510,153
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 per share; 5,000,000 shares authorized; no shares issued and outstanding at July 31, 2019 and October 31, 2018, respectively	—			—
Common stock, par value $0.01 per share; 75,000,000 and 50,000,000 shares authorized at July 31, 2019 and October 31, 2018, respectively; 23,799,035 and 23,417,107 shares issued and outstanding at July 31, 2019 and October 31, 2018, respectively	238			234
Paid-in capital	115,977			114,405
Retained earnings	129,518			135,813
Accumulated other comprehensive loss, net	(54,612		)	(50,930		)
Total stockholders’ equity	191,121			199,522
Total liabilities and stockholders’ equity	$	674,288		$	709,675



Balance October 31, 2018		$	27,376
	Foreign currency translation	8
Balance July 31, 2019		$	27,384



		Customer Relationships			Developed Technology			Non-Compete			Trade Name			Trademark			Total
Balance October 31, 2018		$	10,311		$	3,404		$	15		$	1,131		$	78		$	14,939
	Amortization expense	(998		)	(296		)	(12		)	(93		)	(12		)	(1,411		)
	Foreign currency translation	(3		)	(36		)	—			—			—			(39		)
Balance July 31, 2019		$	9,310		$	3,072		$	3		$	1,038		$	66		$	13,489



Twelve Months Ended July 31,
2020	$	2,060
2021	2,057
2022	2,057
2023	2,056
2024	2,041
Thereafter	4,268
	$	14,539



Location	Three Months Ended July 31, 2019		Three Months Ended July 31, 2018
Interest expense	$	4,633	$	3,209
Effect of hedging on interest expense	$	51	$	(274	)



Location	Nine Months Ended July 31, 2019			Nine Months Ended July 31, 2018
Interest expense	$	11,836		$	8,194
Effect of hedging on interest expense	$	(564	)	$	27



Production Volumes	Three Months Ended July 31,			Nine Months Ended July 31,
	2019		2018	2019		2018
	(Number of Vehicles in Thousands)			(Number of Vehicles in Thousands)
Asia	5,442		6,435	18,273		21,404
Europe	5,587		5,744	16,452		17,361
North America	4,132		4,018	12,313		12,429
Total	15,161		16,197	47,038		51,194

Asia
Decrease from prior year	(993	)		(3,131	)
% Decrease from prior year	(15.4	)%		(14.6	)%
Europe
Decrease from prior year	(157	)		(909	)
% Decrease from prior year	(2.7	)%		(5.2	)%
North America
Increase (decrease) from prior year	114			(116	)
% Increase (decrease) from prior year	2.8	%		(0.9	)%
Total
Decrease from prior year	(1,036	)		(4,156	)
% Decrease from prior year	(6.4	)%		(8.1	)%



	Nine Months Ended July 31,						2019 vs. 2018
	2019			2018			change
Net cash provided by operating activities	$	24,354		$	50,881		$	(26,527	)
Net cash used in investing activities	$	(30,435	)	$	(98,453	)	$	68,018
Net cash provided by financing activities	$	957		$	55,776		$	(54,819	)