x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
51-0347683
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
Large accelerated filer
|
¨
|
Accelerated filer
|
x
|
Non-accelerated filer
|
¨
|
Smaller Reporting Company
|
¨
|
Emerging Growth Company
|
¨
|
|
|
|
Page
|
|
|||
|
Item 1. Condensed Consolidated Financial Statements (Unaudited)
|
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|||
|
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Item 4.
Controls and Procedures
|
||
|
|||
|
Item 1.
Legal Procee
d
ings
|
||
|
Item 1A.
Risk Factors
|
||
|
Item 6.
Exhibits
|
Item 1.
|
Condensed Consolidated Financial Statements
|
|
April 30,
2017 |
|
October 31,
2016 |
||||
|
|
||||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
11,126
|
|
|
$
|
8,696
|
|
Investment in marketable securities
|
222
|
|
|
174
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $836 and $790 at April 30, 2017 and October 31, 2016, respectively
|
182,233
|
|
|
183,862
|
|
||
Related-party accounts receivable
|
1,575
|
|
|
1,235
|
|
||
Prepaid income taxes
|
347
|
|
|
1,653
|
|
||
Inventories, net
|
59,953
|
|
|
60,547
|
|
||
Prepaid expenses and other assets
|
32,857
|
|
|
36,986
|
|
||
Total current assets
|
288,313
|
|
|
293,153
|
|
||
Property, plant and equipment, net
|
264,273
|
|
|
265,837
|
|
||
Goodwill
|
27,557
|
|
|
27,490
|
|
||
Intangible assets, net
|
16,151
|
|
|
17,279
|
|
||
Deferred income taxes
|
9,268
|
|
|
9,974
|
|
||
Other assets
|
9,607
|
|
|
12,696
|
|
||
Total assets
|
$
|
615,169
|
|
|
$
|
626,429
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current debt
|
$
|
1,479
|
|
|
$
|
2,023
|
|
Accounts payable
|
150,653
|
|
|
158,514
|
|
||
Other accrued expenses
|
47,454
|
|
|
40,824
|
|
||
Accrued income taxes
|
764
|
|
|
1,686
|
|
||
Total current liabilities
|
200,350
|
|
|
203,047
|
|
||
Long-term debt
|
242,808
|
|
|
256,922
|
|
||
Long-term benefit liabilities
|
23,439
|
|
|
23,312
|
|
||
Deferred income taxes
|
5,462
|
|
|
4,734
|
|
||
Interest rate swap agreement
|
2,815
|
|
|
5,036
|
|
||
Other liabilities
|
679
|
|
|
588
|
|
||
Total liabilities
|
475,553
|
|
|
493,639
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $.01 per share; 5,000,000 shares authorized; no shares issued and outstanding at April 30, 2017 and October 31, 2016, respectively
|
—
|
|
|
—
|
|
||
Common stock, par value $.01 per share; 50,000,000 shares authorized; 17,875,242 and 17,614,057 shares issued and outstanding at April 30, 2017 and October 31, 2016, respectively
|
179
|
|
|
176
|
|
||
Paid-in capital
|
71,295
|
|
|
70,403
|
|
||
Retained earnings
|
120,884
|
|
|
118,673
|
|
||
Accumulated other comprehensive loss, net
|
(52,742
|
)
|
|
(56,462
|
)
|
||
Total stockholders’ equity
|
139,616
|
|
|
132,790
|
|
||
Total liabilities and stockholders’ equity
|
$
|
615,169
|
|
|
$
|
626,429
|
|
|
Three Months Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net revenues
|
$
|
273,031
|
|
|
$
|
284,264
|
|
|
$
|
520,969
|
|
|
$
|
535,319
|
|
Cost of sales
|
239,815
|
|
|
257,983
|
|
|
463,953
|
|
|
493,149
|
|
||||
Gross profit
|
33,216
|
|
|
26,281
|
|
|
57,016
|
|
|
42,170
|
|
||||
Selling, general and administrative expenses
|
21,695
|
|
|
16,992
|
|
|
41,883
|
|
|
34,336
|
|
||||
Amortization of intangible assets
|
564
|
|
|
565
|
|
|
1,129
|
|
|
1,129
|
|
||||
Asset impairment
|
—
|
|
|
—
|
|
|
41
|
|
|
273
|
|
||||
Operating income
|
10,957
|
|
|
8,724
|
|
|
13,963
|
|
|
6,432
|
|
||||
Interest expense
|
4,200
|
|
|
4,520
|
|
|
9,012
|
|
|
8,872
|
|
||||
Interest income
|
—
|
|
|
(4
|
)
|
|
(2
|
)
|
|
(6
|
)
|
||||
Other (income) expense
|
205
|
|
|
(365
|
)
|
|
495
|
|
|
31
|
|
||||
Income (loss) before income taxes
|
6,552
|
|
|
4,573
|
|
|
4,458
|
|
|
(2,465
|
)
|
||||
Provision (benefit) for income taxes
|
2,323
|
|
|
364
|
|
|
2,247
|
|
|
(1,547
|
)
|
||||
Net income (loss)
|
$
|
4,229
|
|
|
$
|
4,209
|
|
|
$
|
2,211
|
|
|
$
|
(918
|
)
|
Income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic income (loss) per share
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
$
|
0.12
|
|
|
$
|
(0.05
|
)
|
Basic weighted average number of common shares
|
17,858
|
|
|
17,615
|
|
|
17,788
|
|
|
17,615
|
|
||||
Diluted income (loss) per share
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
$
|
0.12
|
|
|
$
|
(0.05
|
)
|
Diluted weighted average number of common shares
|
17,888
|
|
|
17,620
|
|
|
17,809
|
|
|
17,615
|
|
|
|
|
|
Three Months Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss):
|
$
|
4,229
|
|
|
$
|
4,209
|
|
|
$
|
2,211
|
|
|
$
|
(918
|
)
|
|||
Other comprehensive income:
|
|
|
|
|
|
|
|
|||||||||||
|
Defined benefit pension plans & other postretirement benefits
|
|
|
|
|
|
|
|
||||||||||
|
|
|
Amortization of net actuarial loss
|
323
|
|
|
310
|
|
|
700
|
|
|
620
|
|
||||
|
|
|
Income tax provision
|
(140
|
)
|
|
(112
|
)
|
|
(280
|
)
|
|
(224
|
)
|
||||
|
|
Total defined benefit pension plans & other post retirement benefits, net of tax
|
183
|
|
|
198
|
|
|
420
|
|
|
396
|
|
|||||
|
Marketable securities
|
|
|
|
|
|
|
|
||||||||||
|
|
|
Unrealized gain (loss) on marketable securities
|
(128
|
)
|
|
31
|
|
|
48
|
|
|
(175
|
)
|
||||
|
|
|
Income tax benefit (provision)
|
45
|
|
|
(10
|
)
|
|
(17
|
)
|
|
55
|
|
||||
|
|
Total marketable securities, net of tax
|
(83
|
)
|
|
21
|
|
|
31
|
|
|
(120
|
)
|
|||||
|
Derivatives and hedging
|
|
|
|
|
|
||||||||||||
|
|
|
Unrealized gain (loss) on interest rate swap agreements
|
(11
|
)
|
|
(299
|
)
|
|
1,435
|
|
|
(1,404
|
)
|
||||
|
|
|
Income tax benefit (provision)
|
(132
|
)
|
|
(23
|
)
|
|
(877
|
)
|
|
268
|
|
||||
|
|
|
Reclassification adjustments for settlement of derivatives included in net income (loss)
|
368
|
|
|
332
|
|
|
786
|
|
|
666
|
|
||||
|
|
Change in fair value of derivative instruments, net of tax
|
225
|
|
|
10
|
|
|
1,344
|
|
|
(470
|
)
|
|||||
|
Foreign currency translation adjustments:
|
|
|
|
|
|
|
|
||||||||||
|
|
|
Foreign currency translation loss
|
2,483
|
|
|
3,178
|
|
|
1,925
|
|
|
1,887
|
|
||||
|
|
|
Reclassification adjustments for settlement of foreign currency included in net income
|
—
|
|
|
149
|
|
|
—
|
|
|
149
|
|
||||
|
|
Unrealized income on foreign currency translation
|
2,483
|
|
|
3,327
|
|
|
1,925
|
|
|
2,036
|
|
|||||
Comprehensive income, net
|
$
|
7,037
|
|
|
$
|
7,765
|
|
|
$
|
5,931
|
|
|
$
|
924
|
|
|
Six Months Ended April 30,
|
||||||
|
2017
|
|
2016
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income (loss)
|
$
|
2,211
|
|
|
$
|
(918
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
20,100
|
|
|
18,923
|
|
||
Asset impairment, net
|
41
|
|
|
273
|
|
||
Amortization of deferred financing costs
|
1,663
|
|
|
1,244
|
|
||
Deferred income taxes
|
(834
|
)
|
|
(2
|
)
|
||
Stock-based compensation expense
|
817
|
|
|
451
|
|
||
(Gain) loss on sale of assets
|
765
|
|
|
(26
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
1,769
|
|
|
11,978
|
|
||
Inventories
|
860
|
|
|
(2,106
|
)
|
||
Prepaids and other assets
|
6,248
|
|
|
6,209
|
|
||
Payables and other liabilities
|
(125
|
)
|
|
(5,344
|
)
|
||
Prepaid and accrued income taxes
|
392
|
|
|
2,229
|
|
||
Net cash provided by operating activities
|
33,907
|
|
|
32,911
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures
|
(17,983
|
)
|
|
(8,692
|
)
|
||
Investment in joint venture
|
—
|
|
|
(1,500
|
)
|
||
Proceeds from sale of assets
|
642
|
|
|
1,166
|
|
||
Net cash used for investing activities
|
(17,341
|
)
|
|
(9,026
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Payment of capital leases
|
(360
|
)
|
|
(403
|
)
|
||
Proceeds from long-term borrowings
|
87,100
|
|
|
63,300
|
|
||
Repayments of long-term borrowings
|
(100,855
|
)
|
|
(95,649
|
)
|
||
Payment of deferred financing costs
|
(221
|
)
|
|
(308
|
)
|
||
Proceeds from exercise of stock options
|
78
|
|
|
—
|
|
||
Net cash used for financing activities
|
(14,258
|
)
|
|
(33,060
|
)
|
||
Effect of foreign currency exchange rate fluctuations on cash
|
122
|
|
|
935
|
|
||
Net increase (decrease) in cash and cash equivalents
|
2,430
|
|
|
(8,240
|
)
|
||
Cash and cash equivalents at beginning of period
|
8,696
|
|
|
13,100
|
|
||
Cash and cash equivalents at end of period
|
$
|
11,126
|
|
|
$
|
4,860
|
|
|
|
|
|
||||
Supplemental Cash Flow Information:
|
|
|
|
||||
Cash paid for interest
|
$
|
7,321
|
|
|
$
|
7,641
|
|
Cash paid for (refund of) income taxes
|
$
|
1,199
|
|
|
$
|
(3,203
|
)
|
|
|
|
|
||||
Non-cash Activities:
|
|
|
|
||||
Capital equipment included in accounts payable
|
$
|
2,697
|
|
|
$
|
3,823
|
|
|
Three Months Ended April 30, 2016
|
||||||||||
Statement of Operations
|
As Reported
|
|
Adjustment
|
|
As Adjusted
|
||||||
Cost of sales
|
$
|
259,039
|
|
|
$
|
(1,056
|
)
|
|
$
|
257,983
|
|
Gross profit
|
25,225
|
|
|
1,056
|
|
|
26,281
|
|
|||
Operating income
|
7,668
|
|
|
1,056
|
|
|
8,724
|
|
|||
Other (income) expense
|
83
|
|
|
(448
|
)
|
|
(365
|
)
|
|||
Income before income taxes
|
3,069
|
|
|
1,504
|
|
|
4,573
|
|
|||
Provision for income taxes
|
12
|
|
|
352
|
|
|
364
|
|
|||
Net income
|
$
|
3,057
|
|
|
$
|
1,152
|
|
|
$
|
4,209
|
|
Earnings per share:
|
|
|
|
|
|
||||||
Basic earnings per share
|
$0.17
|
|
$0.07
|
|
$0.24
|
||||||
Diluted earnings per share
|
$0.17
|
|
$0.07
|
|
$0.24
|
|
Six Months Ended April 30, 2016
|
||||||||||
Statement of Operations
|
As Reported
|
|
Adjustment
|
|
As Adjusted
|
||||||
Cost of sales
|
$
|
494,113
|
|
|
$
|
(964
|
)
|
|
$
|
493,149
|
|
Gross profit
|
41,206
|
|
|
964
|
|
|
42,170
|
|
|||
Selling, general and administrative expenses
|
34,576
|
|
|
(240
|
)
|
|
34,336
|
|
|||
Asset impairment
|
—
|
|
|
273
|
|
|
273
|
|
|||
Operating income
|
5,501
|
|
|
931
|
|
|
6,432
|
|
|||
Other expense
|
479
|
|
|
(448
|
)
|
|
31
|
|
|||
Loss before income taxes
|
(3,844
|
)
|
|
1,379
|
|
|
(2,465
|
)
|
|||
Benefit for income taxes
|
(1,842
|
)
|
|
295
|
|
|
(1,547
|
)
|
|||
Net loss:
|
$
|
(2,002
|
)
|
|
$
|
1,084
|
|
|
$
|
(918
|
)
|
Loss per share:
|
|
|
|
|
|
||||||
Basic loss per share
|
$(0.11)
|
|
$0.06
|
|
$(0.05)
|
||||||
Diluted loss per share
|
$(0.11)
|
|
$0.06
|
|
$(0.05)
|
|
Six Months Ended April 30, 2016
|
||||||||||
Statement of Cash Flows
|
As Reported
|
|
Adjustment
|
|
As Adjusted
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(2,002
|
)
|
|
$
|
1,084
|
|
|
$
|
(918
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
18,873
|
|
|
50
|
|
|
18,923
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
11,909
|
|
|
69
|
|
|
11,978
|
|
|||
Inventories
|
(2,172
|
)
|
|
66
|
|
|
(2,106
|
)
|
|||
Prepaids and other assets
|
6,663
|
|
|
(454
|
)
|
|
6,209
|
|
|||
Payables and other liabilities
|
(5,608
|
)
|
|
264
|
|
|
(5,344
|
)
|
|||
Prepaid and accrued income taxes
|
1,934
|
|
|
295
|
|
|
2,229
|
|
|||
Net cash provided by operating activities
|
31,537
|
|
|
1,374
|
|
|
32,911
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Capital expenditures
|
(8,818
|
)
|
|
126
|
|
|
(8,692
|
)
|
|||
Investment in joint venture
|
—
|
|
|
(1,500
|
)
|
|
(1,500
|
)
|
|||
Net cash used for investing activities
|
(7,652
|
)
|
|
(1,374
|
)
|
|
(9,026
|
)
|
|
April 30, 2017
|
|
October 31, 2016
|
||||
Raw materials
|
$
|
24,532
|
|
|
$
|
26,367
|
|
Work-in-process
|
16,822
|
|
|
16,149
|
|
||
Finished goods
|
18,599
|
|
|
18,031
|
|
||
Total inventory
|
$
|
59,953
|
|
|
$
|
60,547
|
|
|
|
|
April 30, 2017
|
|
October 31, 2016
|
||||
Tooling (1)
|
|
$
|
13,668
|
|
|
$
|
19,792
|
|
|
Prepaid expenses and other assets
|
|
12,689
|
|
|
10,694
|
|
|||
Assets held for sale
|
|
6,500
|
|
|
6,500
|
|
|||
|
Total
|
|
$
|
32,857
|
|
|
$
|
36,986
|
|
|
April 30,
2017 |
|
October 31,
2016 |
||||
Land and improvements
|
$
|
11,357
|
|
|
$
|
11,358
|
|
Buildings and improvements
|
118,193
|
|
|
117,291
|
|
||
Machinery and equipment
|
511,235
|
|
|
505,768
|
|
||
Furniture and fixtures
|
20,358
|
|
|
18,200
|
|
||
Construction in progress
|
45,511
|
|
|
37,612
|
|
||
Total, at cost
|
706,654
|
|
|
690,229
|
|
||
Less: Accumulated depreciation
|
442,381
|
|
|
424,392
|
|
||
Property, plant and equipment, net
|
$
|
264,273
|
|
|
$
|
265,837
|
|
|
April 30,
2017 |
|
October 31,
2016 |
||||
Leased Property:
|
|
|
|
||||
Machinery and equipment
|
$
|
6,894
|
|
|
$
|
7,295
|
|
Less: Accumulated depreciation
|
2,095
|
|
|
1,781
|
|
||
Leased property, net
|
$
|
4,799
|
|
|
$
|
5,514
|
|
Twelve Months Ending April 30,
|
|
||
2018
|
$
|
864
|
|
2019
|
835
|
|
|
2020
|
425
|
|
|
2021
|
1,927
|
|
|
|
4,051
|
|
|
Plus amount representing interest ranging from 3.05% to 3.77%
|
428
|
|
|
Future minimum rental payments
|
$
|
4,479
|
|
Balance October 31, 2016
|
|
$
|
27,490
|
|
|
|
Foreign currency translation
|
|
67
|
|
|
Balance April 30, 2017
|
|
$
|
27,557
|
|
|
|
Customer Relationships
|
|
Developed Technology
|
|
Non-Compete
|
|
Trade Name
|
|
Trademark
|
|
Total
|
||||||||||||
Balance October 31, 2016
|
$
|
12,975
|
|
|
$
|
2,768
|
|
|
$
|
47
|
|
|
$
|
1,377
|
|
|
$
|
112
|
|
|
$
|
17,279
|
|
|
|
Amortization expense
|
(665
|
)
|
|
(386
|
)
|
|
(8
|
)
|
|
(62
|
)
|
|
(8
|
)
|
|
(1,129
|
)
|
||||||
|
Foreign currency translation
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Balance April 30, 2017
|
$
|
12,311
|
|
|
$
|
2,382
|
|
|
$
|
39
|
|
|
$
|
1,315
|
|
|
$
|
104
|
|
|
$
|
16,151
|
|
|
|
Weighted Average Useful Life (years)
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Foreign Currency Adjustment
|
|
Net
|
||||||||
|
Customer relationships
|
13.2
|
|
$
|
17,598
|
|
|
$
|
(5,254
|
)
|
|
$
|
(33
|
)
|
|
$
|
12,311
|
|
|
Developed technology
|
7.3
|
|
5,007
|
|
|
(2,625
|
)
|
|
—
|
|
|
2,382
|
|
||||
|
Non-compete
|
2.3
|
|
824
|
|
|
(785
|
)
|
|
—
|
|
|
39
|
|
||||
|
Trade Name
|
14.8
|
|
1,875
|
|
|
(560
|
)
|
|
—
|
|
|
1,315
|
|
||||
|
Trademark
|
10.0
|
|
166
|
|
|
(62
|
)
|
|
—
|
|
|
104
|
|
||||
|
|
|
|
$
|
25,470
|
|
|
$
|
(9,286
|
)
|
|
$
|
(33
|
)
|
|
$
|
16,151
|
|
|
April 30,
2017 |
|
October 31, 2016
|
||||
Credit Agreement—interest rate of 4.28% at April 30, 2017 and 5.14% at October 31, 2016
|
$
|
239,400
|
|
|
$
|
252,900
|
|
Equipment security note
|
741
|
|
|
996
|
|
||
Capital lease obligations
|
4,051
|
|
|
4,388
|
|
||
Insurance broker financing agreement
|
95
|
|
|
661
|
|
||
Total debt
|
244,287
|
|
|
258,945
|
|
||
Less: Current debt
|
1,479
|
|
|
2,023
|
|
||
Total long-term debt
|
$
|
242,808
|
|
|
$
|
256,922
|
|
Twelve Months Ending April 30,
|
|
Credit Agreement
|
|
Equipment Security Note
|
|
Capital Lease Obligations
|
|
Other Debt
|
|
Total
|
||||||||||
2018
|
|
$
|
—
|
|
|
$
|
520
|
|
|
$
|
864
|
|
|
$
|
95
|
|
|
$
|
1,479
|
|
2019
|
|
—
|
|
|
221
|
|
|
835
|
|
|
—
|
|
|
1,056
|
|
|||||
2020
|
|
239,400
|
|
|
—
|
|
|
425
|
|
|
—
|
|
|
239,825
|
|
|||||
2021
|
|
—
|
|
|
—
|
|
|
1,927
|
|
|
—
|
|
|
1,927
|
|
|||||
Total
|
|
$
|
239,400
|
|
|
$
|
741
|
|
|
$
|
4,051
|
|
|
$
|
95
|
|
|
$
|
244,287
|
|
|
Pension Benefits
|
|
Other Post-Retirement
Benefits
|
||||||||||||
|
Three Months Ended April 30,
|
|
Three Months Ended April 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Interest cost
|
$
|
820
|
|
|
$
|
892
|
|
|
$
|
3
|
|
|
$
|
4
|
|
Expected return on plan assets
|
(864
|
)
|
|
(1,142
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of net actuarial loss
|
377
|
|
|
310
|
|
|
2
|
|
|
3
|
|
||||
Net periodic cost
|
$
|
333
|
|
|
$
|
60
|
|
|
$
|
5
|
|
|
$
|
7
|
|
|
Pension Benefits
|
|
Other Post-Retirement
Benefits
|
||||||||||||
|
Six months ended April 30,
|
|
Six months ended April 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Interest cost
|
$
|
1,641
|
|
|
$
|
1,783
|
|
|
$
|
6
|
|
|
$
|
8
|
|
Expected return on plan assets
|
(1,728
|
)
|
|
(2,284
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of net actuarial loss
|
754
|
|
|
620
|
|
|
5
|
|
|
6
|
|
||||
Net periodic cost
|
$
|
667
|
|
|
$
|
119
|
|
|
$
|
11
|
|
|
$
|
14
|
|
|
|
Stock Options
|
|
Restricted Stock
|
|
Restricted Stock Units
|
|||||||||||||||||
Outstanding at:
|
|
Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Life
|
|
Restricted Shares
|
|
20 Day EMA (1)
|
|
Weighted Average Remaining Contractual Life
|
|
Restricted Share Units
|
|
20 Day EMA (1)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
November 1, 2015
|
|
90,666
|
|
|
$9.70
|
|
4.10
|
|
124,255
|
|
|
$13.77
|
|
2.28
|
|
—
|
|
|
—
|
|
|||
Granted
|
|
—
|
|
|
—
|
|
|
|
|
309,251
|
|
|
4.28
|
|
|
|
|
21,539
|
|
|
$4.17
|
||
Options exercised or restricted stock vested
|
|
—
|
|
|
—
|
|
|
|
|
(21,458
|
)
|
|
16.64
|
|
|
|
|
—
|
|
|
—
|
|
|
Forfeited or expired
|
|
(1,000
|
)
|
|
12.04
|
|
|
|
|
(1,500
|
)
|
|
10.13
|
|
|
|
|
—
|
|
|
—
|
|
|
April 30, 2016
|
|
89,666
|
|
|
$9.67
|
|
3.59
|
|
410,548
|
|
|
$6.48
|
|
2.25
|
|
21,539
|
|
|
$4.17
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
November 1, 2016
|
|
89,666
|
|
|
$9.67
|
|
3.09
|
|
376,340
|
|
|
$6.40
|
|
1.83
|
|
21,539
|
|
|
$4.17
|
||||
Granted
|
|
—
|
|
|
—
|
|
|
|
|
245,932
|
|
|
7.93
|
|
|
|
|
29,253
|
|
|
8.62
|
|
|
Options exercised or restricted stock vested
|
|
(8,000
|
)
|
|
9.79
|
|
|
|
|
(157,512
|
)
|
|
5.71
|
|
|
|
|
(13,574
|
)
|
|
4.17
|
|
|
Forfeited or expired
|
|
(23,500
|
)
|
|
13.38
|
|
|
|
|
(3,443
|
)
|
|
10.10
|
|
|
|
|
—
|
|
|
—
|
|
|
April 30, 2017
|
|
58,166
|
|
|
$8.16
|
|
3.13
|
|
461,317
|
|
|
$7.19
|
|
1.83
|
|
37,218
|
|
|
$7.53
|
|
|
Three Months Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Restricted stock
|
|
$
|
395
|
|
|
$
|
253
|
|
|
$
|
771
|
|
|
$
|
442
|
|
Restricted stock units
|
|
24
|
|
|
9
|
|
|
46
|
|
|
9
|
|
||||
Total
|
|
$
|
419
|
|
|
$
|
262
|
|
|
$
|
817
|
|
|
$
|
451
|
|
(Shares in thousands)
|
Three Months Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss) available to common stockholders
|
$
|
4,229
|
|
|
$
|
4,209
|
|
|
$
|
2,211
|
|
|
$
|
(918
|
)
|
Basic weighted average shares
|
17,858
|
|
|
17,615
|
|
|
17,788
|
|
|
17,615
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Restricted share units and stock options (a)
|
30
|
|
|
5
|
|
|
21
|
|
|
—
|
|
||||
Diluted weighted average shares
|
17,888
|
|
|
17,620
|
|
|
17,809
|
|
|
17,615
|
|
||||
Basic income (loss) per share
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
$
|
0.12
|
|
|
$
|
(0.05
|
)
|
Diluted income (loss) per share
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
$
|
0.12
|
|
|
$
|
(0.05
|
)
|
|
|
Asset (Liability)
|
|
Level 2
|
|
Valuation Technique
|
||||
October 31, 2016:
|
|
|
|
|
|
|
||||
Interest Rate Swap Contracts
|
|
$
|
(5,036
|
)
|
|
$
|
(5,036
|
)
|
|
Income Approach
|
Marketable Securities
|
|
174
|
|
|
174
|
|
|
Income Approach
|
||
April 30, 2017:
|
|
|
|
|
|
|
||||
Interest Rate Swap Contracts
|
|
(2,815
|
)
|
|
(2,815
|
)
|
|
Income Approach
|
||
Marketable Securities
|
|
$
|
222
|
|
|
$
|
222
|
|
|
Income Approach
|
|
|
|
Pension and Post Retirement Plan Liability (1)
|
|
Marketable Securities Adjustment
|
|
Interest Rate Swap Adjustment
|
|
Foreign Currency Translation Adjustment
|
|
Accumulated Other Comprehensive Loss
|
||||||||||
Balance at January 31, 2017
|
|
$
|
(32,422
|
)
|
|
$
|
(352
|
)
|
|
$
|
(1,993
|
)
|
|
$
|
(20,783
|
)
|
|
$
|
(55,550
|
)
|
|
|
Other comprehensive income (loss)
|
|
183
|
|
|
(83
|
)
|
|
(143
|
)
|
|
2,483
|
|
|
2,440
|
|
|||||
|
Amounts reclassified from accumulated other comprehensive loss
|
|
—
|
|
|
—
|
|
|
368
|
|
|
—
|
|
|
368
|
|
|||||
|
Net current-period other comprehensive income (loss)
|
|
183
|
|
|
(83
|
)
|
|
225
|
|
|
2,483
|
|
|
2,808
|
|
|||||
Balance at April 30, 2017
|
|
$
|
(32,239
|
)
|
|
$
|
(435
|
)
|
|
$
|
(1,768
|
)
|
|
$
|
(18,300
|
)
|
|
$
|
(52,742
|
)
|
|
|
|
Pension and Post Retirement Plan Liability (1)
|
|
Marketable Securities Adjustment
|
|
Interest Rate Swap Adjustment
|
|
Foreign Currency Translation Adjustment
|
|
Accumulated Other Comprehensive Loss
|
||||||||||
Balance at October 31, 2016
|
|
$
|
(32,659
|
)
|
|
$
|
(466
|
)
|
|
$
|
(3,112
|
)
|
|
$
|
(20,225
|
)
|
|
$
|
(56,462
|
)
|
|
|
Other comprehensive income
|
|
420
|
|
|
31
|
|
|
558
|
|
|
1,925
|
|
|
2,934
|
|
|||||
|
Amounts reclassified from accumulated other comprehensive loss
|
|
—
|
|
|
—
|
|
|
786
|
|
|
—
|
|
|
786
|
|
|||||
|
Net current-period other comprehensive income
|
|
420
|
|
|
31
|
|
|
1,344
|
|
|
1,925
|
|
|
3,720
|
|
|||||
Balance at April 30, 2017
|
|
$
|
(32,239
|
)
|
|
$
|
(435
|
)
|
|
$
|
(1,768
|
)
|
|
$
|
(18,300
|
)
|
|
$
|
(52,742
|
)
|
|
|
Three Months Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
|
Revenues
|
|
Revenues
|
||||||||||||
Geographic Region:
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
United States
|
|
$
|
223,563
|
|
|
$
|
235,855
|
|
|
$
|
426,763
|
|
|
$
|
444,041
|
|
Europe
|
|
$
|
42,503
|
|
|
$
|
39,806
|
|
|
78,172
|
|
|
72,805
|
|
||
Rest of World
|
|
$
|
6,965
|
|
|
$
|
8,603
|
|
|
16,034
|
|
|
18,473
|
|
||
Total Company
|
|
$
|
273,031
|
|
|
$
|
284,264
|
|
|
$
|
520,969
|
|
|
$
|
535,319
|
|
|
|
Three Months Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
|
Foreign Currency Gain (Loss)
|
|
Foreign Currency Gain (Loss)
|
||||||||||||
Geographic Region:
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Europe
|
|
$
|
(173
|
)
|
|
$
|
805
|
|
|
$
|
(32
|
)
|
|
$
|
(30
|
)
|
Rest of World
|
|
$
|
(131
|
)
|
|
$
|
(56
|
)
|
|
$
|
(404
|
)
|
|
$
|
57
|
|
|
Long-Lived Assets
|
||||||
Geographic Region:
|
April 30, 2017
|
|
October 31, 2016
|
||||
United States
|
$
|
237,086
|
|
|
$
|
243,225
|
|
Europe
|
51,789
|
|
|
48,709
|
|
||
Rest of World
|
19,106
|
|
|
18,672
|
|
||
Total Company
|
$
|
307,981
|
|
|
$
|
310,606
|
|
•
|
The Company's ability to accomplish its strategic objectives.
|
•
|
The Company's ability to obtain future sales.
|
•
|
Changes in worldwide economic and political conditions, including adverse effects from terrorism or related hostilities.
|
•
|
Costs related to legal and administrative matters.
|
•
|
The Company's ability to realize cost savings expected to offset price concessions.
|
•
|
The Company's 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 its products.
|
•
|
Inefficiencies related to production and product launches that are greater than anticipated; changes in technology and technological risks.
|
•
|
Work stoppages and strikes at the Company's facilities and that of the Company's customers or suppliers.
|
•
|
The Company's dependence on the automotive and heavy truck 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 the Company's customers or vendors, including any production cutbacks or bankruptcies. Increases in the price of, or limitations on the availability of, steel, aluminum or magnesium, the Company's primary raw materials, or decreases in the price of scrap steel.
|
•
|
The successful launch and consumer acceptance of new vehicles for which the Company supplies parts.
|
•
|
The occurrence of any event or condition that may be deemed a material adverse effect under the Company’s outstanding indebtedness or a decrease in customer demand which could cause a covenant default under the Company’s outstanding indebtedness.
|
•
|
Pension plan funding requirements.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Production Volumes
|
Three Months Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
|
(Number of Vehicles in Thousands)
|
|
(Number of Vehicles in Thousands)
|
||||||||
Europe
|
5,840
|
|
|
5,924
|
|
|
11,126
|
|
|
10,829
|
|
North America
|
4,576
|
|
|
4,601
|
|
|
8,759
|
|
|
8,660
|
|
Total
|
10,416
|
|
|
10,525
|
|
|
19,885
|
|
|
19,489
|
|
|
|
|
|
|
|
|
|
||||
Europe:
|
|
|
|
|
|
|
|
||||
Increase from prior year
|
(84
|
)
|
|
|
|
297
|
|
|
|
||
% Increase from prior year
|
(1.4
|
)%
|
|
|
|
2.7
|
%
|
|
|
||
North America
|
|
|
|
|
|
|
|
||||
Increase from prior year
|
(25
|
)
|
|
|
|
99
|
|
|
|
||
% Increase from prior year
|
(0.5
|
)%
|
|
|
|
1.1
|
%
|
|
|
||
Total
|
|
|
|
|
|
|
|
||||
Increase from prior year
|
(109
|
)
|
|
|
|
396
|
|
|
|
||
% Increase from prior year
|
(1.0
|
)%
|
|
|
|
2.0
|
%
|
|
|
|
Six Months Ended April 30,
|
|
2017 vs. 2016
|
||||||||
|
2017
|
|
2016
|
|
change
|
||||||
Net cash provided by operating activities
|
$
|
33,907
|
|
|
$
|
32,911
|
|
|
$
|
996
|
|
Net cash used in investing activities
|
$
|
(17,341
|
)
|
|
$
|
(9,026
|
)
|
|
$
|
(8,315
|
)
|
Net cash used in financing activities
|
$
|
(14,258
|
)
|
|
$
|
(33,060
|
)
|
|
$
|
18,802
|
|
|
Six Months Ended April 30,
|
||||||
|
2017
|
|
2016
|
||||
Operational cash flow before changes in operating assets and liabilities
|
$
|
24,763
|
|
|
$
|
19,945
|
|
|
|
|
|
||||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
1,769
|
|
|
11,978
|
|
||
Inventories
|
860
|
|
|
(2,106
|
)
|
||
Prepaids and other assets
|
6,248
|
|
|
6,209
|
|
||
Payables and other liabilities
|
(125
|
)
|
|
(5,344
|
)
|
||
Accrued income taxes
|
392
|
|
|
2,229
|
|
||
Total change in operating assets and liabilities
|
$
|
9,144
|
|
|
$
|
12,966
|
|
|
|
|
|
||||
Net cash provided by operating activities
|
$
|
33,907
|
|
|
$
|
32,911
|
|
•
|
Cash inflows from changes in operating assets and liabilities were
$9,144
and
$12,966
for the
six months ended April 30,
2017
and
2016
, respectively, and were positively impacted by working capital initiatives.
|
•
|
Cash inflows from changes in accounts receivable for the
six months ended April 30,
2017
and
2016
, were
$1,769
and
$11,978
, respectively. The cash inflows were due to continuing efforts in collecting receivables and the lower level of revenues in 2017.
|
•
|
Cash inflows from changes in inventory for the
six months ended April 30,
2017
was
$860
compared to a cash outflow of
$2,106
for the
six months ended April 30,
2016
. The decrease was primarily driven by improvements in inventory management.
|
•
|
Cash inflows from changes in prepaids and other assets for the
six months ended April 30,
2017
and
2016
, were
$6,248
and
$6,209
, respectively, resulting from improved cash flow alignment of customer reimbursed tooling awards.
|
•
|
Cash outflows from changes in payables and other liabilities for the
six months ended April 30,
2017
and
2016
were
$125
and
$5,344
, respectively, resulting from the matching of terms with the Company's customers and vendors, offset partially by the timing of payments related to capital expenditures and customer funded tooling.
|
•
|
Cash inflows from changes in accrued income taxes for the
six months ended April 30,
2017
and 2016, were
$392
and
$2,229
, respectively. The changes were driven primarily by an increase in the federal income tax accrual as a result of an increase in pre-tax income.
|
April 30, 2017
|
|
Credit Agreement
|
|
Equipment Security Note
|
|
Capital Lease Obligations
|
|
Other Debt
|
|
Total
|
||||||||||
2018
|
|
$
|
—
|
|
|
$
|
520
|
|
|
$
|
864
|
|
|
$
|
95
|
|
|
$
|
1,479
|
|
2019
|
|
—
|
|
|
221
|
|
|
835
|
|
|
—
|
|
|
1,056
|
|
|||||
2020
|
|
239,400
|
|
|
—
|
|
|
425
|
|
|
—
|
|
|
239,825
|
|
|||||
2021
|
|
—
|
|
|
—
|
|
|
1,927
|
|
|
—
|
|
|
1,927
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total
|
|
$
|
239,400
|
|
|
$
|
741
|
|
|
$
|
4,051
|
|
|
$
|
95
|
|
|
$
|
244,287
|
|
|
|
Liability Derivatives
|
||
|
|
Balance Sheet
|
April 30,
|
October 31,
|
|
|
Location
|
2017
|
2016
|
|
|
(Thousands of dollars)
|
||
Derivatives Designated as Cash Flow Hedging Instruments:
|
|
|
|
|
|
Interest rate swap contracts
|
Other liabilities
|
$(2,815)
|
$(5,036)
|
|
Amount of Gain Recognized in OCI on Derivatives (Effective Portion)
|
Location of Loss Reclassified from AOCI into Income (Effective Portion)
|
Amount of Loss Reclassified from AOCI into Net Income (Effective Portion)
|
||
|
|
(Thousands of dollars)
|
|||
Derivatives Designated as Hedging Instruments:
|
|
|
|
||
|
Interest rate swap contracts
|
$1,344
|
Interest expense
|
$786
|
|
Amount of Loss Recognized in OCI on Derivatives (Effective Portion)
|
Location of Loss Reclassified from AOCI into Income (Effective Portion)
|
Amount of Loss Reclassified from AOCI into Income (Effective Portion)
|
||
|
|
(Thousands of dollars)
|
|||
Derivatives Designated as Hedging Instruments:
|
|
|
|
||
|
Interest rate swap contracts
|
$(470)
|
Interest expense
|
$666
|
Item 4.
|
Controls and Procedures
|
•
|
Management replaced one key operational leader, and removed one key financial leader. The current country controller continued his capacity as the interim plant controller. To fill the plant controllership, an employment offer was extended and accepted with a planned start date in the third fiscal quarter. Management continues to evaluate additional changes, as needed.
|
•
|
Third party accounting professionals have been contracted to provide daily assistance with accounting activities, month-end closing processes and other accounting related procedures.
|
•
|
Management increased fiscal oversight, including additional detailed reviews by corporate accounting personnel of balance sheet activity and account reconciliations throughout remediation and beyond.
|
•
|
Reinforcement of key internal controls continues through the Company’s oversight and review activities, as well as cross-facility utilization of personnel.
|
Item 6.
|
Exhibits
|
|
|
Incorporated By Reference
|
|
|
||||
Exhibit #
|
|
Exhibit Description
|
Form
|
File Number
|
Date of First Filing
|
Exhibit Number
|
Filed Herewith
|
|
4.1
|
|
Form of Indenture
|
S-3
|
333-216571
|
March 9, 2017
|
4.1
|
|
|
|
|
|
|
|
|
|
||
10.1
|
|
Agreement on Terms and Conditions of Stock Award - Director Restricted Stock Award
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
||
10.2
|
|
Agreement on Terms and Conditions of RSU Award - Director Restricted Stock Unit
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
||
10.3
|
|
Agreement on Terms and Conditions of Stock Award - Employee Restricted Stock Award
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
||
10.4
|
|
Agreement on Terms and Conditions of Cash Incentive Award - Employee Cash Incentive Award
|
|
|
|
|
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
|
|
S
HILOH
I
NDUSTRIES
, I
NC
.
|
|
|
|
|
|
By:
|
/s/ W. Jay Potter
|
|
|
W. Jay Potter
|
|
|
Senior Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)
|
|
|
Incorporated By Reference
|
|
|
||||
Exhibit #
|
|
Exhibit Description
|
Form
|
File Number
|
Date of First Filing
|
Exhibit Number
|
Filed Herewith
|
|
4.1
|
|
Form of Indenture
|
S-3
|
333-216571
|
March 9, 2017
|
4.1
|
|
|
|
|
|
|
|
|
|
||
10.1
|
|
Agreement on Terms and Conditions of Stock Award - Director Restricted Stock Award
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
||
10.2
|
|
Agreement on Terms and Conditions of RSU Award - Director Restricted Stock Unit
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
||
10.3
|
|
Agreement on Terms and Conditions of Stock Award - Employee Restricted Stock Award
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
||
10.4
|
|
Agreement on Terms and Conditions of Cash Incentive Award - Employee Cash Incentive Award
|
|
|
|
|
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
|
(a)
|
The Restricted Shares covered by this Agreement shall become nonforfeitable (“
Vest
,” or similar terms) on the [_____] anniversary of the Date of Grant, conditioned upon the Grantee’s continuous service on the Board through such date (the period from the Date of Grant until the [_____] anniversary of the Date of Grant, the “
Vesting Period
”). Any Restricted Shares that do not so Vest will be forfeited, including, except as provided in
Section 4(b)
or
Section 4(c)
below, if the Grantee ceases to continuously serve on the Board prior to the end of the Vesting Period.
|
(b)
|
Notwithstanding
Section 4(a)
above, the Restricted Shares shall Vest if the Grantee should die or become Disabled prior to the end of the Vesting Period while the Grantee is continuously serving on the Board (to the extent the Restricted Shares have not previously Vested).
|
(c)
|
(i) Notwithstanding
Section 4(a)
above, if at any time before the end of the Vesting Period or forfeiture of the Restricted Shares, and while the Grantee is continuously serving on the Board, a Change in Control occurs, then all of the Restricted Shares will become Vested, except to the extent that a Replacement Award is provided to the
|
(d)
|
For purposes of this Agreement, “
Disabled
” shall mean that the Grantee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
|
(a.)
|
The RSUs covered by this Agreement shall become nonforfeitable and payable to the Grantee pursuant to
Section 5
hereof (“
Vest
,” or similar terms) on the [_____] anniversary of the Date of Grant, conditioned upon the Grantee’s continuous service on the Board through such date (the period from the Date of Grant until the [_____] anniversary of the Date of Grant, the “
Vesting Period
”). Any RSUs that do not so Vest will be forfeited, including, except as provided in
Section 4(b)
or
Section 4(c)
below, if the Grantee ceases to continuously serve on the Board prior to the end of the Vesting Period.
|
(b.)
|
Notwithstanding
Section 4(a)
above, the RSUs shall Vest if the Grantee should die or become Disabled prior to the end of the Vesting Period while the Grantee is continuously serving on the Board (to the extent the RSUs have not previously Vested).
|
(c.)
|
(i) Notwithstanding
Section 4(a)
above, if at any time before the end of the Vesting Period or forfeiture of the RSUs, and while the Grantee is continuously serving on the Board, a Change in Control occurs, then all of the RSUs will become Vested and payable to the Grantee in accordance with
Section 5
hereof, except to the extent that a Replacement Award is provided to the Grantee in accordance with
|
(d.)
|
For purposes of this Agreement, “
Disabled
” shall mean that the Grantee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
|
(a)
|
Payment for the RSUs, after and to the extent they have become Vested, shall be made in the form of Common Shares. Payment shall be made as soon as administratively practicable following (but no later than thirty (30) days following) the date that the RSUs become Vested pursuant to
Section 4
hereof.
|
(b)
|
Except to the extent provided by Section 409A of the Code and permitted by the Committee, no Common Shares may be issued to the Grantee at a time earlier than otherwise expressly provided in this Agreement.
|
(c)
|
The Company’s obligations to the Grantee with respect to the RSUs will be satisfied in full upon the issuance of Common Shares corresponding to such RSUs.
|
(a)
|
The Grantee shall have no rights of ownership in the Common Shares underlying the RSUs and no right to vote the Common Shares underlying the RSUs until the date on which the Common Shares underlying the RSUs are issued or transferred to the Grantee pursuant to
Section 5
above.
|
(b)
|
From and after the Date of Grant and until the earlier of (i) the time when the RSUs become Vested and are paid in accordance with
Section 5
hereof or (ii) the time when the Grantee’s right to receive Common Shares in payment of the RSUs is forfeited in accordance with
Section 4
hereof, on the date that the Company pays a cash dividend (if any) to holders of Common Shares generally, the Grantee shall be credited with cash per RSU equal to the amount of such dividend. Any amounts credited pursuant to the immediately preceding sentence shall be subject to the same applicable terms and conditions (including vesting, payment and forfeitability) as apply to the RSUs based on which the dividend equivalents were credited, and such amounts shall be paid in cash at the same time as the RSUs to which they relate.
|
(c)
|
The obligations of the Company under this Agreement will be merely that of an unfunded and unsecured promise of the Company to deliver Common Shares in the future, and the rights of the Grantee will be no greater than that of an unsecured general creditor. No assets of the Company will be held or set aside as security for the obligations of the Company under this Agreement.
|
(a)
|
the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan or the Agreement;
|
(b)
|
all decisions with respect to future grants of RSUs, if any, will be at the sole discretion of the Company;
|
(c)
|
The Grantee is voluntarily participating in the Plan;
|
(d)
|
the RSUs are an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company, its Subsidiaries, and/or its affiliates, and that is outside the scope of the Grantee’s services contract with the Company or its affiliates, if any;
|
(e)
|
the RSUs are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments;
|
(f)
|
the future value of the underlying Common Shares is unknown and cannot be predicted with certainty;
|
(g)
|
in consideration of the grant of the RSUs, no claim or entitlement to compensation or damages shall arise from forfeiture or termination of the RSUs or diminution in value of the RSUs or the Common Shares resulting from the Grantee’s termination of service (for any reason whatsoever and whether or not in breach of local labor laws), and the Grantee irrevocably releases the Company, its affiliates and/or its Subsidiaries from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, the Grantee will be deemed irrevocably to have waived the Grantee’s entitlement to pursue such claim; and
|
(h)
|
notwithstanding any terms or conditions of the Plan to the contrary, in the event of the involuntary termination of the Grantee’s Board services, the Grantee’s right to receive the RSUs and vest in the RSUs under the Plan, if any, will terminate effective as of the date that the Grantee is no longer actively providing services and will not be extended by any notice period mandated under local law (e.g., active service would not include a period of “garden leave” or similar period pursuant to local law); furthermore, in the event of the involuntary termination of services, the Grantee’s right to vest in the RSUs after termination, if any, will be measured by the date of termination of the Grantee’s active service and will not be extended by any notice period mandated under local law.
|
(a.)
|
The Restricted Shares covered by this Agreement shall become nonforfeitable (“
Vest
” or similar terms) in substantially equal installments on each of the [_____] anniversaries of the Date of Grant, conditioned upon the Grantee’s continuous employment with the Company or a Subsidiary through each such date (the period from the Date of Grant until the [_____] anniversary of the Date of Grant, the “
Vesting Period
”). Any Restricted Shares that do not so Vest will be forfeited, including, except as provided in
Section 4(b)
or
Section 4(c)
below, if the Grantee ceases to be continuously employed by the Company or a Subsidiary prior to the end of the Vesting Period. For purposes of this Agreement, “continuously employed” (or substantially similar terms) means the absence of any termination of the Grantee’s employment with the Company or a Subsidiary. Continuous employment shall not be considered terminated in the case of transfers between locations of the Company and its Subsidiaries.
|
(b.)
|
Notwithstanding
Section 4(a)
above, the Restricted Shares shall Vest upon the occurrence of any of the following events at a time when the Restricted Shares have not been forfeited (to the extent the Restricted Shares have not previously become Vested) in the following manner:
|
(i)
|
all of the Restricted Shares shall Vest if the Grantee should die prior to the end of the Vesting Period while the Grantee is continuously employed by the Company or any of its Subsidiaries;
|
(ii)
|
if the Grantee should Retire or become Disabled prior to the end of the Vesting Period while the Grantee is continuously employed by the Company or any of its Subsidiaries, the Restricted Shares shall continue to Vest following such Retirement or Disability to the extent that the Restricted Shares would have Vested had the Grantee remained continuously employed by the Company or a Subsidiary through the end of the Vesting Period or the occurrence of a circumstance referenced in
Section 4(b)(i)
or
Section 4(b)(iii)
, whichever occurs first.
|
(iii)
|
in the event of a Change in Control that occurs prior to the end of the Vesting Period, the Restricted Shares shall become Vested and payable in accordance with
Section 4(c)
below
|
(c.)
|
(i) Notwithstanding
Section 4(a)
above, if at any time before the end of the Vesting Period or forfeiture of the Restricted Shares, and while the Grantee is continuously employed by the Company or a Subsidiary, a Change in Control occurs, then all of the Restricted Shares will become Vested, except to the extent that a Replacement Award is provided to the Grantee in accordance with
Section 4(c)(ii)
to continue, replace or assume the Restricted Shares covered by this Agreement (the “
Replaced Award")
.
|
(d.)
|
For purposes of this Agreement, the following definitions apply:
|
(i)
|
“
Cause
” shall mean any of the following: (A) a material breach by the Grantee of any agreement then in effect between the Grantee and the Successor; (B) the Grantee’s conviction of or plea of “guilty” or “no contest” to a felony under the laws of the United States or any state thereof; (C) any material violation or breach by the Grantee of the Company's Code of Business Conduct and Ethics as in effect immediately prior to the Change in Control, as determined by the Board (or the board of directors of the Successor); or (D) the Grantee’s willful and continued failure to substantially perform the duties associated with the Grantee’s position (other than any such failure resulting from the Grantee’s incapacity due to physical or mental illness), which failure has not been cured within thirty (30) days after a written demand for substantial performance is delivered to the Grantee by the Board (or the board of directors of the Successor), which demand specifically identifies the manner in which the Board (or the board of directors of the Successor) believes that the Grantee has not substantially performed his duties.
|
(ii)
|
“
Disabled
,” or similar terms, shall mean (A) the Grantee is unable to engage in any substantial gainful activity due to medically determinable physical or mental impairment expected to result in death or to last for a continuous period of not less than 12 months, or (B) due to any medically determinable physical or mental impairment expected to result in death or last for a continuous period not less than 12 months, the Grantee has received income replacement benefits for a period of not less than three months under an accident and health plan sponsored by the Company.
|
(iii)
|
“
Good Reason
” shall mean (A) a material and permanent diminution in the Grantee’s duties or responsibilities; (B) a material reduction in the aggregate value of base salary and bonus opportunity provided to the Grantee by the Successor; or (C) a permanent reassignment of the Grantee to another primary office more than 50 miles from the current office location. The Grantee must notify the Successor of the Grantee’s intention to invoke termination for Good Reason within 90 days after the Grantee has knowledge of such event and provide the Successor 30 days’ opportunity for cure, or such event shall not constitute Good Reason. The Grantee may not invoke termination for Good Reason if Cause exists at the time of such termination.
|
(iv)
|
“
Retirement
,” or similar terms, shall mean termination of employment with the Company or a Subsidiary, other than by the Company or a Subsidiary for Cause, after the attainment of age 60 with at least 10 years of service with the Company or a Subsidiary.
|
(a.)
|
Subject to the terms and conditions of this
Section 5
and
Section 6
hereof and the Statement of Management Objectives (attached as
Appendix A
) approved by the Committee and thereafter communicated to the Grantee (the “
Statement of Management Objectives
”), the Grantee’s right to receive cash in settlement of the Award shall become Vested with respect to [_____], in each case as set forth in the Statement of Management Objectives and, except as provided in
Sections
5(b)
and
5(c)
, only if the Grantee remains in the continuous employ of the Company through the last day of the Performance Period. The Vested portion of the Award will be determined on the date following the end of the Performance Period on which the Committee determines the level of attainment of the Management Objectives for the Performance Period. Any portion of the Award that does not so Vest will be forfeited, including, except as provided in
Section 5(b)
or
Section 5(c)
below, if the Grantee ceases to be continuously employed by the Company or a Subsidiary prior to the end of the Performance Period. For purposes of this Agreement, “continuously employed” (or substantially similar terms) means the absence of any termination of the Grantee’s employment with the Company
|
(b.)
|
Notwithstanding
Section 5(a)
above, the Award shall Vest upon the occurrence of any of the following events at a time when the Award has not been forfeited (to the extent the Award has not previously Vested) in the following manner:
|
(i)
|
If the Grantee should die prior to the end of the Performance Period while the Grantee is continuously employed by the Company or any of its Subsidiaries, then (notwithstanding anything in the Statement of Management Objectives to the contrary) the Performance Period will be deemed to have ended on the date of death, and the Grantee shall Vest in a portion of the Award equal to the product of (A) the portion of the Award that would Vest under
Section 5(a)
on the basis of achievement of the applicable Management Objectives at the level determined appropriate by the Committee in its discretion after consideration of the relative achievement of such Management Objectives as of the date of death, multiplied by (B) a fraction (in no case greater than 1) the numerator of which is the number of calendar days from the first day of the Performance Period through the date of such death and the denominator of which is the total number of calendar days in the original Performance Period. The portion of the Award that Vests in accordance with this
Section 5(b)(i)
will be paid as provided for in
Section 6
of this Agreement. Any portion of the Award that does not so Vest upon the Grantee’s death will be forfeited.
|
(ii)
|
If the Grantee should Retire or become Disabled prior to the end of the Performance Period while the Grantee is continuously employed by the Company or any of its Subsidiaries, then (notwithstanding anything in the Statement of Management Objectives to the contrary) the Grantee shall Vest in the portion of the Award in which the Grantee would have Vested (based on the achievement of the Management Objectives over the entire Performance Period) in accordance with the terms and conditions of
Section 5(a)
if the Grantee had remained in the continuous employ of the Company or a Subsidiary from the first day of the Performance Period until the end of the Performance Period. The portion of the Award that Vests in accordance with this
Section 5(b)(ii)
will be paid as provided for in
Section 6
of this Agreement. Any portion of the Award that does not so Vest following the Grantee’s Retirement or Disability will be forfeited.
|
(iii)
|
In the event of a Change in Control that occurs prior to the end of the Performance Period, the Award shall Vest in accordance with
Section 5(c)
below.
|
(c.)
|
(i) Notwithstanding
Section 5(a)
above, if at any time before the end of the Performance Period or forfeiture of the Award, and while the Grantee is continuously employed by the Company or a Subsidiary, a Change in Control occurs, then the Award will Vest (except to the extent that a Replacement Award is provided to the Grantee in accordance with
Section 5(c)(ii)
to continue, replace or assume the Award covered by this Agreement (the “
Replaced Award
”)) as follows: the Grantee shall Vest in a portion of the Award equal to the product of (A) the target Award multiplied by (B) a fraction (in no case greater than 1) the numerator of which is the number of calendar days from the first day of the Performance Period through the date of such Change in Control and the denominator of which is the total number of calendar days in the
|
(d.)
|
For purposes of this Agreement, the following definitions apply:
|
(i)
|
[_____] each have the meaning set forth in the Statement of Management Objectives.
|
(ii)
|
“
Cause
” shall mean any of the following: (A) a material breach by the Grantee of any agreement then in effect between the Grantee and the Successor; (B) the Grantee’s conviction of or plea of “guilty” or “no contest” to a felony under the laws of the United States or any state thereof; (C) any material violation or breach by the Grantee of the Company's Code of Business Conduct and Ethics as in effect immediately prior to the Change in Control, as determined by the Board (or the board of directors of the Successor); or (D) the Grantee’s willful and continued failure to substantially perform the duties associated with the Grantee’s position (other than any such failure resulting from the Grantee’s incapacity due to physical or mental illness), which failure has not been cured within thirty (30) days after a written demand for substantial performance is delivered to the Grantee by the Board (or the board of directors of the Successor), which demand specifically identifies the manner in which the Board (or the board of directors of the Successor) believes that the Grantee has not substantially performed his duties.
|
(iii)
|
“
Disabled
” (or similar terms) shall mean (x) the Grantee is unable to engage in any substantial gainful activity due to medically determinable physical or mental impairment expected to result in death or to last for a continuous period of not less than 12 months, or (y) due to any medically determinable physical or mental impairment expected to result in death or last for a continuous period not less than 12 months, the Grantee has received income replacement benefits for a period of not less than three months under an accident and health plan sponsored by the Company.
|
(iv)
|
“
Good Reason
” shall mean (A) a material and permanent diminution in the Grantee’s duties or responsibilities; (B) a material reduction in the aggregate value of base salary and bonus opportunity provided to the Grantee by the Successor; or (C) a permanent reassignment of the Grantee to another primary office more than 50 miles from the current office location. The Grantee must notify the Successor of the Grantee’s intention to invoke termination for Good Reason within 90 days after the Grantee has knowledge of such event and provide the Successor 30 days’ opportunity for cure, or such event shall not constitute Good Reason. The Grantee may not invoke termination for Good Reason if Cause exists at the time of such termination.
|
(v)
|
“
Management Objectives
” means the goals established by the Committee for the Performance Period with respect to [_____], as applicable, as described in the Statement of Management Objectives. No adjustment of the Management Objectives shall be permitted in respect of any Qualified Performance-Based Award granted to the Grantee if at the Date of Grant he or she is a Covered Employee if such adjustment would result in the Award failing to qualify as a Qualified Performance-Based Award.
|
(vi)
|
“
Performance Period
” means the [_____].
|
(vii)
|
“
Retirement
” (or similar terms) shall mean termination of employment with the Company or a Subsidiary, other than by the Company or a Subsidiary for Cause, after the attainment of age 60 with at least 10 years of service with the Company or a Subsidiary.
|
(a.)
|
General
. Subject to
Section 5
and
Section 6(b)
, payment for the Award, after and to the extent it has Vested, shall be made in the form of cash no later than January 31 of the calendar year following the calendar year in which the Award becomes Vested pursuant to
Section 5
hereof.
|
(b.)
|
Other Payment Events
. Notwithstanding
Section 6(a)
, if a Change in Control or the Grantee’s death occurs prior to the end of the Performance Period, to the extent that the Award is Vested on the dates set forth below, payment with respect to the Award will be made as follows:
|
(i)
|
Change in Control
. Upon a Change in Control, the Grantee is entitled to receive payment for the Vested portion of the Award in cash within 30 days of the date of the Change in Control.
|
(ii)
|
Death
. Within 60 days following the date of the Grantee’s death, the Grantee is entitled to receive payment for the Vested portion of the Award in cash.
|
(c.)
|
Except to the extent provided by Section 409A of the Code and permitted by the Committee, no cash may be paid to the Grantee pursuant to this Agreement at a time earlier than otherwise expressly provided in this Agreement.
|
(d.)
|
The Company’s obligations to the Grantee with respect to the Award will be satisfied in full upon the payment of cash corresponding to such Award.
|
(e.)
|
The obligations of the Company under this Agreement will be merely that of an unfunded and unsecured promise of the Company to deliver cash in the future, and the rights of the Grantee will be no greater than that of an unsecured general creditor. No assets of the Company will be held or set aside as security for the obligations of the Company under this Agreement.
|
1.
|
I have reviewed this
quarterly
report on Form
10-Q
of Shiloh Industries, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statement for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ Ramzi Hermiz
|
Ramzi Hermiz
President and Chief Executive Officer
|
1.
|
I have reviewed this
quarterly
report on Form
10-Q
of Shiloh Industries, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statement for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ W. Jay Potter
|
|
W. Jay Potter
Senior Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
|
/s/ Ramzi Hermiz
|
|
Ramzi Hermiz
President and Chief Executive Officer
|
|
/s/ W. Jay Potter
|
W. Jay Potter
Senior Vice President and Chief Financial Officer
|