SHILOH INDUSTRIES INC (Form: 10-Q, Received: 06/01/2017 13:57:54)

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 April 30, 2017



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

880 Steel Drive, Valley City, Ohio 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 )

______________________________________________________

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. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x 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	¨	Emerging Growth Company	¨

If an emerging growth company, indicate by check mark if the registrant has elected no 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 ¨ No x

Number of shares of Common Stock outstanding as of May 30, 2017 was 17,873,792 .

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INDEX



			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	5
		Condensed Consolidated Statements of Cash Flows	6
		Notes to Condensed Consolidated Financial Statements	7
	Forward-Looking Statements		21
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
	Item 3. Qualitative and Quantitative Disclosures About Market Risk		34
	Item 4. Controls and Procedures		36
PART II. OTHER INFORMATION
	Item 1. Legal Procee d ings		37
	Item 1A. Risk Factors		37
	Item 6. Exhibits		37

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PART I— FINANCIAL INFORMATION


Item 1.	Condensed Consolidated Financial Statements

SHILOH INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands)

(Unaudited)



	April 30, 2017			October 31, 2016
	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

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

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SHILOH INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share data)

(Unaudited)



	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

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

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SHILOH INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollar amounts in thousands)

(Unaudited)



				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

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

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SHILOH INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)

(Unaudited)



	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

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

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SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Note 1—Basis of Presentation

The condensed consolidated financial statements have been prepared by Shiloh Industries, Inc. and its subsidiaries (the "Company"), without audit, 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 the Company believes 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 the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2016 .

Revenues and operating results for the three and six months ended April 30, 2017 are not necessarily indicative of the results to be expected for the full year.

Revision of Prior Period Financial Statements

In the fourth quarter of fiscal 2016, the Company became aware of immaterial errors in certain balance sheet accounts at one of its manufacturing facilities. An assessment concluded that the errors were not material, individually or in the aggregate, to any prior period consolidated financial statements. As such, in accordance with ASC 250 (SAB No. 108, Considering Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements ), the prior period consolidated financial statements have been revised (the "Revision") in the applicable consolidated financial statements. The Company concluded a revision of prior period consolidated financial statements was appropriate the next time they were reported, since the correction of errors would have been material if recorded in fiscal year 2016. Periods not presented herein will be revised, as applicable, in future filings. Although management has determined that the errors, individually and in the aggregate, were not material to prior periods, the financial statements for the three and six months ended April 30, 2016, included herein, have been revised to correct for the impact of these items. Unless otherwise indicated, the condensed consolidated financial information as of and for the three and six months ended April 30, 2017 presented in this Quarterly Report on Form 10-Q reflects these revisions.

The following tables summarize the effects of the Revision on the condensed consolidated statements of operations:



	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

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	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)

The following table summarizes the effects of the Revision on the condensed consolidated statements of cash flows:



	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		)

Note 2—New Accounting Standards

In March 2017, the Financial Accounting Standards Board ("FASB") issued ASU 2017-07, "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost," which requires the presentation of the service cost component of net benefit cost to be in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. All other components of net benefit cost should be presented separately from the service cost component and outside of a subtotal of earnings from operations, or separately disclosed. The standard is effective for annual and interim periods beginning after December 15, 2017 and must be adopted retrospectively. Early adoption is permitted as of the beginning of an annual period. The amendment allows for a practical expedient that permits an employer to use the amounts disclosed in its pension and other post-retirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The Company will need to disclose that the practical expedient was used. The Company is currently evaluating the impact it may have on its consolidated financial statements, together with evaluating the adoption date.

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In January 2017, the FASB issued ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which eliminates the need to determine the fair value of individual assets and liabilities of a reporting unit to measure a goodwill impairment. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value. The revised guidance will be applied prospectively, and is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted for any impairment tests performed after January 1, 2017. The Company will prospectively apply the guidance.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers," which clarifies existing accounting literature relating to how and when a company recognizes revenue. Under ASU 2014-09, a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. The FASB, through the issuance of ASU No. 2015-14, " Revenue from Contracts with Customers, " approved a one year delay of the effective date and the new standard now is effective for reporting periods beginning after December 15, 2017 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. ASUs 2016-10 and 2016-12 provide further clarification on the implementation guidance on principal versus agent considerations. ASU 2016-11 rescinds certain SEC guidance from the FASB ASC in response to announcements made by the SEC at the Emerging Issues Task Force's March 3, 2016 meeting. 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. The Company is planning a bottom up approach to analyze the standard's impact on its revenues by looking at historical policies and practices and identifying the differences from applying the new standard to its revenue stream. The Company has not selected a transition date or method nor has it determined the effect of the standard to its consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern," which the intent is to define the Company's responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. This ASU will be effective for the Company November 1, 2017 and will prospectively apply the guidance.

In February 2016, the FASB issued ASU 2016-02, "Leases" which requires a lessee to recognize the assets and liabilities that arise from leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from the previous guidance within ASC Topic 840, Leases. For operating leases, a lessee is required to do the following: (1) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position, (2) recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis and (3) classify all cash payments within operating activities in the statement of cash flows. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. ASU 2016-02 is effective for public entities for fiscal years and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, which includes a number of optional practical expedients that entities may elect to apply. The Company is currently evaluating the requirements of ASU 2016-02 and has not yet determined its impact on the Company's consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities." ASU 2016-01 to amend 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"). ASU 2016-01 is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The application of the amendments will result in a cumulative-effect adjustment to the Company's condensed consolidated balance sheet as of the effective date. The Company is currently evaluating the impact that ASU 2016-01 will have on its statement of financial position or financial statement disclosures.

In July 2015, the FASB issued ASU 2015-11, "Inventory." ASU 2015-11 simplifies the measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. ASU 2015-11 is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company does not expect ASU 2015-11 will have a material impact on its statement of financial position or financial statement disclosures.

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Note 3—Acquisitions

Radar Industries, Inc.

On September 30, 2014, the Company, through a wholly-owned subsidiary, consummated the transactions contemplated by the Asset Purchase Agreement, dated September 30, 2014, with Radar Industries, Inc., and Radar Mexican Investments, LLC. As of April 30, 2017 , $1,157 of funds remained in escrow, subject to certain claims.

Note 4—Asset Impairment and Restructuring Charges

The Company recorded an asset impairment charge of $41 during the first six months of 2017 related to restructuring initiatives and recorded asset impairments of $273 during the first six months of fiscal 2016 related to the sale of a building.

Note 5—Marketable Securities

On March 11, 2014, the Company entered into a manufacturing agreement with Velocys, plc. As part of the agreement, the Company invested $2,000 , which is comprised of Velocys stock with a market value of $1,527 on the date of acquisition and a premium paid of $473 , which was being amortized. The agreement was terminated on March 30, 2017. The Company re-measures available-for-sale securities at fair value and records the unrealized gain or loss in other comprehensive income (loss) until realized. A cumulative mark-to-market unfavorable adjustment of $83 , net of tax, and a cumulative mark-to-market favorable adjustment of $31 , net of tax, was recorded as income (loss) to other comprehensive income for the three and six months ended April 30, 2017 , respectively. A cumulative mark-to-market favorable adjustment of $21 and a cumulative mark-to-market unfavorable adjustment of $120 , net of tax, was recorded as income (loss) to other comprehensive income for the three and six months ended April 30, 2016 , respectively.

Note 6—Related Party Receivables

The Company had sales to MTD Products Inc. and its affiliates of $1,620 and $3,218 for the three and six months ended April 30, 2017 , respectively, and $2,052 and $2,085 for the three and six months ended April 30, 2016 , respectively. At April 30, 2017 and October 31, 2016 , the Company had related party receivable balances of $1,575 and $1,235 , respectively, due from MTD Products Inc. and its affiliates.

Note 7—Inventories

Inventories consist of the following:



	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

Total cost of inventory is net of reserves to reduce certain inventory from cost to net realizable value by an allowance for excess and obsolete inventories based on management’s review of on-hand inventories compared to historical and estimated future sales and usage. Such reserves aggregated $3,930 and $2,946 at April 30, 2017 and October 31, 2016 , respectively.

Note 8—Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist of the following:



		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

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The Company invested in manufacturing equipment for one of its facilities. During the fourth quarter of fiscal 2016, the Company determined that a need no longer existed for this type of equipment and is currently recorded as a current asset held for sale. The Company is actively working with the supplier to identify a buyer.

(1) Customer reimbursements for the development of molds, dies and tools (collectively, "tooling") related to new program awards that go into production over the next twelve months.

Note 9—Property, Plant and Equipment

Property, plant and equipment consist of the following:



	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

Depreciation expense was $9,818 and $9,046 for the three months ended April 30, 2017 and 2016 , respectively, and $18,971 and $17,794 for the six months ended April 30, 2017 and April 30, 2016, respectively.

Capital Leases:



	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

Total obligations under capital leases and future minimum rental payments to be made under capital leases at April 30, 2017 are as follows:



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

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Note 10—Goodwill and Intangible Assets

Goodwill:

The changes in the carrying amount of goodwill for the six months ended April 30, 2017 are as follows:



Balance October 31, 2016		$	27,490
	Foreign currency translation	67
Balance April 30, 2017		$	27,557

Intangible Assets

The changes in the carrying amount of finite-lived intangible assets for the six months ended April 30, 2017 are as follows:



		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

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:



	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

Total amortization expense was $564 and $1,129 for the three and six months ended April 30, 2017 , respectively, and $565 and $1,129 three and six months ended April 30, 2016 . Amortization expense related to intangible assets for the fiscal years ending is estimated to be as follows:



Twelve Months Ending April 30,
2018	$	2,191
2019	1,920
2020	1,709
2021	1,701
2022	1,701
Thereafter	6,929
	$	16,151

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Note 11—Financing Arrangements

Debt consists of the following:



	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

At April 30, 2017 , the Company had total debt, excluding capital leases, of $240,236 , consisting of a revolving line of credit under the Credit Agreement of floating rate debt of $239,400 and fixed rate debt of $836 . The weighted average interest rate of all debt was 4.77% and 4.79% for the six months ended April 30, 2017 and April 30, 2016 , respectively.

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

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

On April 29, 2015, the Company executed a Fourth Amendment that maintained the commitment period to September 29, 2019 and allowed for an incremental increase of $25,000 (or if certain ratios are met, $100,000 ) in the original revolving commitment of $360,000 , subject to the Company's 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 the Company's pro forma compliance with financial covenants. On April 30, 2017, the second committed reduction of $7,500 decreased the existing revolver commitments to $347,500 , subject to the Company's proforma compliance with financial covenants.

Borrowings under the Credit Agreement bear interest, at the Company's 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 1.50% to 4.00% and of 0.50% to 3.00% on base rate loans depending on the Company's leverage ratio.

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amounts outstanding under the Credit Agreement may be accelerated and become immediately due and payable. The Company was in compliance with the financial covenants as of April 30, 2017 and October 31, 2016 .

After considering letters of credit of $6,054 that the Company has issued, unused commitments under the Credit Agreement were $102,046 at April 30, 2017 .

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 its domestic subsidiaries and 65% of the stock of foreign subsidiaries.

Other Debt:

On August 1, 2016 , the Company entered into a finance agreement with an insurance broker for various insurance policies that bears interest at a fixed rate of 1.96% and requires monthly payments of $95 through May 2017 . As of April 30, 2017 , $95 of principal remained outstanding under this agreement and was classified as current debt in the Company’s condensed consolidated balance sheets.

On September 2, 2013, the Company entered into an equipment security note that bears interest at a fixed rate of 2.47% and requires monthly payments of $44 through September 2018. As of April 30, 2017 , $741 remained outstanding under this agreement and $520 was classified as current debt and $221 was classified as long-term debt in the Company’s condensed consolidated balance sheets.

The Company maintains capital leases for equipment used in its manufacturing facilities with lease terms expiring between 2018 and 2021. As of April 30, 2017 , the present value of minimum lease payments under its capital leases amounted to $4,051 .

Derivatives:

On February 25, 2014, the Company 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 the Company’s 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 the Company’s future interest payments at 2.74% plus the applicable rate (defined above), on an amount of the Company’s 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 maturity of February 29, 2020, August 31, 2020 and February 28, 2021, respectively. On the date the interest swap was entered into, the Company designated the interest rate swap as a hedge of the variability of cash flows to be paid relative to its variable rate monies borrowed. Any ineffectiveness in the hedging relationship is recognized immediately into earnings. The Company determined the mark-to-market adjustment for the interest rate swap to be gains of $225 and $1,344 , net of tax, for the three and six months ended April 30, 2017 , respectively, and a gain of $10 and a loss of $470 , net of tax, for the three and six months ended April 30, 2016, respectively which is reflected in other comprehensive lincome. The base notional amounts of $25,000 each or $75,000 total that commenced during 2015 and fiscal 2016 resulted in realized losses of $368 and $786 of interest expense related to the interest rate swap settlements for the three and six months ended April 30, 2017 , respectively and $332 and $666 for the three and six months ended April 30, 2016 , respectively.

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



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

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Note 12—Pension and Other Post-Retirement Benefit Matters

U.S. Plans

The components of net periodic benefit cost (credit) for the three and six months ended April 30, 2017 and 2016 are as follows:



	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

The Company was not required and therefore did not contribute to its U.S. pension plans during the three and six months ended April 30, 2017 and as required, made one contribution of $950 to pension plans during the six months ended April 30, 2016 . No further contributions for the remainder of fiscal 2017 are required.

Non-U.S. Plans

For the Company's Swedish operations, the majority of the pension obligations are covered by insurance policies with insurance companies. For the Company's Polish operations, the pension obligations for the fiscal year ended 2017 are expected to be $965 based on actuarial reports. The Polish operations recognized $39 and $77 of expense for the three and six months ended April 30, 2017 and $27 and $52 for the three and six months ended April 30, 2016 , respectively.

Note 13—Stock Incentive Compensation (amounts in thousands except number of shares and per share data)

Stock Incentive Compensation falls under the scope of FASB ASC Topic 718 "Compensation – Stock Compensation" and affects the stock awards that have been granted and requires the Company to expense share-based payment ("SBP") awards with compensation cost for SBP transactions measured at fair value. For stock options, the Company has elected to 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. Forfeitures have been estimated based upon the Company’s historical experience. For restricted stock and restricted stock units, the Company is computing fair value based on a twenty day Exponential Moving Average ("EMA") as of the close of business the Friday preceding the award date.

2016 Equity and Incentive Compensation Plan

On March 9, 2016, stockholders approved and adopted the 2016 Equity and Incentive Compensation Plan ("2016 Plan") which replaced the Amended and Restated 1993 Key Employee Stock Incentive Program. The 2016 Plan authorizes the Compensation Committee of the Board of Directors of the Company to grant to officers and other key employees, including directors, of the Company and its subsidiaries (i) option rights, (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, 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 option and / or appreciation rights is limited to 500,000 shares during any calendar year. Also, an

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individual's award of restricted shares, restricted share units and performance based awards is limited to 350,000 shares during any calendar year.

The following table summarizes the Company’s Incentive Plan activity for the six months ended April 30, 2017 and 2016 :



	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

(1) 20-day EMA effective with commencement of the 2016 Plan on March 9, 2016.

The Company recorded stock compensation expense related to stock options, restricted stock and restricted stock units during the three and six months ended April 30, 2017 and 2016 as follows:



	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

Stock Options

The exercise price of each stock option equals the market price of the Company's common stock on its 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 Company's stock options generally vest over three years, with a maximum term of ten years. Incentive stock options were not granted during the three and six months ended April 30, 2017 and 2016 .

Stock options were exercised during the three and six months ended April 30, 2017 . Options that have an exercise price greater than the market price are excluded from the intrinsic value computation. At April 30, 2017 , the exercise price of the Company's stock option grants were lower than the market value of the Company's stock. At April 30, 2016 , the exercise price of some of the Company's stock option grants were higher than the market value of the Company's stock. At April 30, 2017 and April 30, 2016 , the options outstanding and exercisable had an intrinsic value of $414 and $64 , respectively.

Restricted Stock Awards

The grant date fair value of each restricted stock award equals the fair value of the Company's common stock based on a 20 day exponential moving average as of the close of business on the Friday preceding the award 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 four years. As of April 30, 2017 , there was approximately $2,718 of total unrecognized compensation expense related to non-vested restricted stock that is expected to be recognized over the next three fiscal years.

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Restricted Stock Units

The grant date fair value of each restricted stock unit equals the fair value of the Company's common stock based on a 20 day exponential moving average as of the close of business on the Friday preceding the award 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 April 30, 2017 , there was approximately $246 of total unrecognized compensation expense related to these restricted stock units that is expected to be recognized over the next three fiscal years.

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 2016 Plan are included in the diluted earnings per share calculation to the extent they are dilutive. For the six months ended April 30, 2017 and 2016 , approximately 7,000 and 481,000 stock awards, respectively, were excluded from the computation of diluted earnings per share because they were 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) per share:



(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	)

(a) Due to a loss for the for the six months ended April 30, 2016, no restricted share awards and units are included because the effect would be anti-dilutive.

Note 14—Other Fair Value of Financial Instruments

The methods used by the Company may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its 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 April 30, 2017 and April 30, 2016 are set forth in the table below:



	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

The Company calculates the fair value of its interest rate swap contracts, using quoted interest rate curves, to calculate forward values, and then discounts 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 the Company’s counterparties.

The Company calculates the fair value of its marketable securities by using the closing stock price on the last business day of the quarter.

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Note 15—Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss in stockholders' equity by component for the three months ended April 30, 2017 is as follows:



		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	)

Changes in accumulated other comprehensive loss in stockholders' equity by component for the six months ended April 30, 2017 is as follows:



		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	)

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

Note 16—Business Segment Information

For the six months ended April 30, 2017 , the Company conducted its business and reported its information as one operating segment - Automotive and Commercial Vehicles. The Chief Operating Decision Maker has been identified as the Senior Leadership Team, which includes all Vice Presidents plus the Chief Executive Officer of the Company as this team has the final authority over performance assessment and resource allocation decisions. In determining that one operating segment is appropriate, the Company considered the nature of the business activities, the existence of managers responsible for the operating activities and information presented to the Board of Directors for its consideration and advice. Customers and suppliers are substantially the same in the automotive and commercial vehicle industry.

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Revenues of foreign geographic regions are attributed to external customers based upon the location of the entity recording the sale. These foreign revenues represent 18.1% for both the three and six months ended April 30, 2017 and 17.0% and 17.1% three and six months ended April 30, 2016 , respectively.



	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

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

Long-lived assets consist primarily of net property, plant and equipment, goodwill and intangibles.



	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

Note 17—Income Taxes

The Company is required to adjust its effective tax rate each quarter based upon its estimated annual effective tax rate. The Company must also record the tax impact of certain discrete, unusual or infrequently occurring items, including changes in judgment about valuation allowance and effects of changes in tax laws or rates, in the interim period in which they occur. In addition, jurisdictions with a projected loss for the year or a year-to-date loss where no tax benefits can be recognized are excluded from the estimated annual effective tax rate.

The provision for income taxes for the three months ended April 30, 2017 was an expense of $2,323 on income before taxes of $6,552 for an effective tax rate of 35.5% . The provision for income taxes for the three months ended April 30, 2016 was an expense of $364 on income before taxes of $4,573 for an effective tax rate of 8.0% .

The effective tax rate for the three months ended April 30, 2017 and 2016 varies from the statutory rate primarily due to income taxes on foreign losses which are taxed at rates different from the U.S. statutory rate, certain foreign losses without tax benefits, and other permanent items.

The provision for income taxes for the six months ended April 30, 2017 was an expense of $2,247 on income before taxes of $4,458 for an effective tax rate of 50.4% . The provision for income taxes for the six months ended April 30, 2016 was a benefit of $1,547 on loss before taxes of $2,465 for an effective tax rate of 62.8% .

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The effective tax rate for the six months ended April 30, 2017 and 2016 was higher than the statutory rate primarily due to income taxes on foreign earnings which are taxed at rates different from the U.S. statutory rate, certain foreign losses without tax benefits, and changes in tax laws.

Note 18—Commitments and Contingencies

Litigation:

A securities class action lawsuit was filed on September 21, 2015 in the United States District Court for the Southern District of New York against the Company and certain of its officers (the President and Chief Executive Officer and Vice President of Finance and Treasurer). As amended, the lawsuit claims in part that the Company issued inaccurate information to investors about, among other things, the Company’s earnings and income and its internal controls over financial reporting for fiscal 2014 and the first and second fiscal quarters of 2015 in violation of the Securities Exchange Act of 1934. The amended complaint seeks an award of damages in an unspecified amount on behalf of a putative class consisting of persons who purchased the Company's common stock between January 12, 2015 and September 14, 2015, inclusive. The Company and such officers filed a Motion to Dismiss this lawsuit with the United States District Court for the Southern District of New York on April 18, 2016. The District Court rendered an opinion and order granting the Company's motion to dismiss the lawsuit on March 23, 2017. On April 6, 2017, the plaintiffs filed a motion for reconsideration of the dismissal order. The Company, in opposition to the plaintiff's motion, filed a motion for consideration of the dismissal on April 20, 2017 and the plaintiffs filed a reply motion in opposition for reconsideration on April 27, 2017.

A shareholder derivative lawsuit was filed on April 1, 2016 in the Court of Common Pleas, Medina County, Ohio against the Company's President and Chief Executive Officer and Vice President of Finance and Treasurer and members of the Company’s Board of Directors. The lawsuit claims in part that the defendants breached their fiduciary duties owed to the Company by failing to exercise appropriate oversight over the Company's accounting controls, leading to the accounting issues and the restatement announced in September 2015. The complaint seeks a judgment against the individual defendants and in favor of the Company for money damages, plus miscellaneous non-monetary relief. On May 2, 2016, the Court entered a stipulated order staying this case pending the outcome of the Motion to Dismiss in the securities class action lawsuit described in the previous paragraph.

In addition, from time to time, the Company is involved in legal proceedings, claims or investigations that are incidental to the conduct of its business. The Company vigorously defends itself against such claims. In future periods, the Company 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 its assessment of the merits of the particular claims, the Company does not expect that its legal proceedings or claims will have a material impact on its future consolidated financial condition, results of operations or cash flows.

Note 19—Subsequent Events

On May 22, 2017, the Company completed the divestiture of its joint venture in China through Shiloh Holdings Hong Kong Limited, a company organized and existing under the laws of Hong Kong ("Shiloh HK"), whereby Shiloh HK owned a 55% equity interest. Pursuant to an Equity Transfer Agreement, the Company received cash proceeds of $1,170 from Suzhou Sanji Foundry Equipment Co., Ltd., a company incorporated and existing under the laws of the People’s Republic of China. As a result of such payment, Shiloh HK no longer holds any equity interests in the joint venture.

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FORWARD-LOOKING STATEMENTS

Certain statements made by Shiloh in this Quarterly Report on Form 10-Q regarding the Company's operating performance, events or developments that the Company believes or expects 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 the Company's expectations of future operating 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. Other factors besides those listed here could also materially affect the Company’s business.


•	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.

See "Part I, Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2016 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 filing this Quarterly report on Form 10-Q.

The Company undertakes 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 the Company files 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

The Company is a global innovative solutions provider to the automotive, commercial vehicle and other industrial markets with a strategic focus on designing, engineering and manufacturing lightweight technologies that improve performance and benefit the environment. Shiloh offers the broadest portfolio of lightweighting solutions in the industry through their BlankLight® , CastLight® and StampLight® brands and is 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. Shiloh designs and manufactures components in body, chassis 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. Additionally, the Company provides a variety of intermediate steel processing services, such as oiling, leveling, cutting-to-length, multi-blanking, slitting, edge trimming of hot and cold-rolled steel coils and inventory control services for automotive and steel industry customers. The Company has over 3,600 dedicated employees with operations, sales and technical centers throughout Asia, Europe and North America.

Recent Trends and General Economic Conditions Affecting the Automotive Industry

The Company's business and operating results are directly affected by the relative strength of the North American and European automotive industries, which are driven by macro-economic factors such as gross domestic product growth, consumer income and confidence levels, fluctuating commodity, currency and gasoline prices, automobile discounts and incentive offers and perceptions about global economic stability. The automotive industry remains susceptible to these factors that impact consumer spending habits and could adversely impact consumer demand for vehicles.

The Company's products are included in many models of vehicles manufactured by nearly all OEMs that produce vehicles in Europe and North America. The Company’s revenues were dependent upon the production of automobiles and light trucks in both Europe and North America. According to industry statistics (published by IHS Automotive in May 2017), Europe and North America production volumes for the three and six months ended April 30, 2017 and 2016 were as follows:



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	%

Europe:

Production in Europe continues to improve, although mixed at times. Production in our second fiscal quarter was down slightly compared to the prior year but still up overall for the first six months of 2017. The United Kingdom's decision to withdraw from the European Union along with political developments in other European countries has cast an element of uncertainty around continued economic improvement in the region.

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North America:

North America, and specifically in the US, continues to shows signs of improvements in the overal economy, including labor force expansion, housing starts, rising interest rates and automotive sales. The impact the new administration will have on the economy going forward is still uncertain. Vehicle production continues to improve overall, tempered periodically by platform changeovers and dealership inventory adjustments.

The Company operates 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. Customers continue to demand periodic cost reductions that require the Company to assess, redefine and improve operations, products, and manufacturing capabilities to maintain and improve profitability. Management continues to develop and execute initiatives designed to meet challenges of the industry and to achieve its strategy for sustainable global profitable growth.

Capacity utilization levels are very important to profitability because of the capital-intensive nature of the Company’s operations. The Company continues to adapt its capacity to meet customer demand, both expanding capabilities in growth areas as well as reallocating capacity between manufacturing facilities as needs arise. The Company employs new technologies to differentiate its products from its competitors and to achieve higher quality and productivity. The Company believes that it has sufficient capacity to meet its current and expected manufacturing needs.

Most of the steel purchased for the Company’s BlankLight ^® and StampLight® brands is purchased through the customers’ steel buying programs. Under these programs, the customer negotiates the price for steel with the steel suppliers. The Company pays for the steel based on these negotiated prices and passes on those costs to the customer. Although the Company takes ownership of the steel, the customers are responsible for all steel price fluctuations under these programs. The Company also purchases steel directly from domestic primary steel producers and steel service centers. Current demand for construction and oil industry related steel products and stable automotive production have helped the market rebound from historic lows with steel pricing stabilizing. The Company has seen recent gradual downward pricing pressure since the rise, but this is likely related to historic seasonal pricing weakness as domestic summer shutdown periods are approaching. The Company refers to the “net steel impact” as the combination of the change in steel prices that are reflected in the price of its products, the change in the cost to procure steel from the source, and the change in our recovery of offal. The Company's strategy is to be economically neutral to steel pricing by having these factors offset each other. As the price of steel has risen, so have the scrap metal markets as they are highly correlated. The Company blanks and processes steel for some of its customers on a toll processing basis. Under these arrangements, the Company charges a tolling fee for the operations that it performs without acquiring ownership of the steel and being burdened with the attendant costs of ownership and risk of loss. Revenues from operations involving directly owned steel include a component of raw material cost whereas toll processing revenues do not.

For the Company's aluminum and magnesium die casting operations, CastLight® brands, the cost of aluminum and magnesium may be handled in one of two ways. The primary method is to secure quarterly aluminum and magnesium purchase commitments based on customer releases and then pass the quarterly price changes to those customers utilizing published metal indices. The second method is to adjust prices monthly based on a referenced metal index plus additional material cost spreads agreed to by the Company and its customers.

Critical Accounting Policies

Preparation of the Company’s 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 condensed consolidated financial statements and in the accompanying notes. The Company believes its estimates and assumptions are reasonable; however, actual results and the timing of the recognition of such amounts could differ from those estimates. The Company has identified the following items as critical accounting policies and estimates utilized by management in the preparation of the Company’s following 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 the Company’s 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. The Company makes frequent comparisons of actual experience and expected experience in order to mitigate the likelihood that material adjustments will be required.

Revenue Recognition. The Company recognizes revenue from the sales of products when there is evidence of a sales agreement, the delivery of goods has occurred, the sales price is fixed or determinable and collectability of revenue is reasonably assured. The Company records revenues upon shipment of product to customers and transfer of title under standard commercial

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terms. Price adjustments, including those arising from resolution of quality issues, price and quantity discrepancies, surcharges for fuel and/or steel and other commercial issues, are recognized in the period when management believes that such amounts become probable, based on management’s estimates. The Company enters into tooling contracts with customers in the development of molds, dies and tools (collectively, "tooling") to be sold to such customers. The Company primarily records tooling revenues and costs net in cost of sales at the time of completion and final billing to the customer. These billings are recorded as progress billings (a reduction of the associated tooling costs) until the appropriate revenue recognition criteria have been met. The tooling contracts are separate arrangements between the Company and customer and are recorded on a gross or net basis in accordance with current applicable revenue recognition accounting literature.

Allowance for Doubtful Accounts. The Company evaluates the collectability of accounts receivable based on several factors. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, a specific allowance for doubtful accounts is recorded against amounts due to reduce the net recognized receivable to the amount the Company reasonably believes will be collected. Additionally, a general allowance for doubtful accounts is estimated based on historical experience of write-offs and the current financial condition of customers. The financial condition of the Company’s customers is dependent on, among other things, the general economic environment, which may substantially change, thereby affecting the recoverability of amounts due to the Company from its customers.

The Company carefully assesses its risk with each of its customers and considers compliance with terms and conditions, aging of the customer accounts, intelligence learned through contact with customer representatives and right of offset of its net account receivable / account payable position with customers, if applicable, in establishing the allowance.

Inventory Reserves. Inventories are valued at the lower of cost or market. Cost is determined on the first-in, first-out basis. Where appropriate, standard cost systems are used to determine cost and the standards are adjusted as necessary to ensure they approximate actual costs. Estimates of lower of cost or market value of inventory are based upon current economic conditions, historical sales quantities and patterns, and in some cases, the specific risk of loss on specifically identified inventories.

The Company values inventories on a regular basis to identify inventories on hand that may be obsolete or in excess of current future projected market demand. For inventory deemed to be obsolete, the Company provides a reserve for the full value of the inventory, net of estimated realizable value. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates expected future demand. Additional inventory reserves may be required if actual market conditions differ from management’s expectations.

The Company monitors purchases of inventory to optimize its supply chain, thereby reducing the economic risk of holding excessive levels of inventory that could result in long holding periods or in unsalable inventory leading to losses in conversion.

Pre-production and development costs. The Company enters into contractual agreements with certain customers for tooling. All such tooling contracts relate to parts that the Company will supply to customers under supply agreements. Tooling costs are capitalized in prepaid expenses and other assets determined by the fact that tooling contracts are separate from standard production contracts. The classification in prepaid or other assets for tooling costs is based upon the period of reimbursement from the customer as either current or non-current.

Income Taxes. The Company utilizes the asset and liability method in accounting for income taxes. Income tax expense includes U.S. and international income taxes minus tax credits and other incentives that will reduce tax expense in the year they are claimed. Deferred taxes are recognized at currently enacted tax rates for temporary differences between the financial accounting and income tax basis of assets and liabilities and operating losses and tax credit carryforwards. Valuation allowances are recorded to reduce net deferred tax assets to the amount that is more likely than not to be realized. The Company assesses both positive and negative evidence when measuring the need for a valuation allowance. Evidence typically assessed includes the operating results for the most recent three-year period and, to a lesser extent because of inherent uncertainty, the expectations of future profitability, available tax planning strategies, the time period over which the temporary differences will reverse and taxable income in prior carryback years if carryback is permitted under the tax law. The calculation of the Company’s tax liabilities also involves dealing with uncertainties in the application of complex tax laws and regulations. The Company recognizes liabilities for uncertain income tax positions based on the Company’s estimate of whether, and the extent to which, additional taxes will be required. The Company reports interest and penalties related to uncertain income tax positions as income taxes.

Business Combinations. The Company includes the results of operations of the businesses that it acquires as of the respective dates of acquisition. The Company allocates the fair value of the purchase price of its acquisitions to the tangible and intangible assets acquired, and liabilities assumed, based on their estimated fair values. The excess of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill.

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Impairment of Long-lived Assets. In accordance with ASC 360, "Property, Plant, and Equipment" , the Company assesses long-lived assets held and used (such as property, plant and equipment and other assets) for impairment annually and whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of an asset group to be held and used is measured by a comparison of the carrying amount of an asset group to the estimated undiscounted future cash flows expected to be generated by the group of assets. If the carrying amount of an asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the group of assets exceeds the fair value of the group of assets. When long-lived assets are considered held for sale, they are recorded at the lower of carrying amount or fair value less costs to sell, and depreciation ceases. The Company recorded an impairment charge of $41 related to restructuring initiatives at a focus plant during the six months ended April 30, 2017. See Notes to the Condensed Consolidated Financial Statements, Note 4, for a discussion of the impairment charges recorded in the six months ended April 30, 2017 and 2016 , respectively. The Company continues to assess impairment to long-lived assets based on expected orders from the Company’s customers and current business conditions.

Intangible Assets. Intangible assets with definitive lives are amortized over their estimated useful lives. The Company amortizes its acquired intangible assets with definitive lives on a straight-line basis over periods ranging from three months to 15 years. See Note 10 to the condensed consolidated financial statements for a description of the current intangible assets and their estimated amortization expense.

The Company performs analysis of indefinite-lived intangible assets which are included as a component of the annual impairment of long-lived assets. An impairment analysis of definite-lived intangible assets is performed when indicators of potential impairment exist.

Goodwill. Goodwill, which represents the excess cost over the fair value of the net assets of businesses acquired, was approximately $27,557 as of April 30, 2017 , or 4.5% of its total assets, and approximately $27,490 as of October 31, 2016 , or 4.4% of its total assets.

In accordance with ASC 350, "Intangibles-Goodwill and Other," the Company assesses goodwill for impairment on an annual basis. Such assessment can be done on a qualitative or quantitative basis. To qualitatively assess the likelihood of goodwill being impaired, the Company considers the following factors at the reporting unit level: the excess of fair value over carrying value as of the last impairment test, the length of time since the last fair value measurement, the carrying value, market and industry metrics, actual performance compared to forecasted performance, and its current outlook on the business. If the qualitative assessment indicated it is more likely than not that goodwill is impaired, the Company will perform quantitative impairment testing at the reporting unit level.

If a quantitative fair value measurement is used, the fair value of goodwill is compared to its carrying value and an impairment charge is recorded if the carrying value exceeds the fair value. If the carrying value exceeds the fair value, then a possible impairment of goodwill may exist and further evaluation is required. Fair values are based on the cash flow projected in the strategic plans and long-range planning forecasts, discounted at a risk-adjusted rate of return. Revenue growth rates included in the plans are generally based on industry specific data and known awarded business. The projected profit margins assumptions included in the plans are based in the current cost structure and anticipated productivity improvements. If different assumptions were used in the plans, the related cash flows used in measuring fair value could be different and impairment of goodwill might be required to be recorded.

Group Insurance and Workers’ Compensation Accruals . The Company is primarily self-insured for group insurance and workers’ compensation claims in the United States and reviews these accruals on a monthly basis to adjust the balances as determined necessary. The Company is fully insured for workers' compensation at one of its locations. For the self insured plans, the Company reviews historical claims data and lag analysis as the primary indicators of the accruals.

Additionally, the Company reviews specific large insurance claims to determine whether there is a need for additional accrual on a case-by-case basis. Changes in the claim lag periods and the specific occurrences could materially impact the required accrual balance period-to-period. The Company carries excess insurance coverage for group insurance and workers’ compensation claims exceeding a range of $160-170 and $115-500 per plan year, respectively, dependent upon the location where the claim is incurred. At April 30, 2017 and October 31, 2016 , the amount accrued for group insurance and workers’ compensation claims was $4,207 and $5,114 , respectively. The self-insurance reserves established are a result of safety statistics, changes in employment levels, number of open and active workers’ compensation cases, and group insurance plan design features. The Company does not self-insure for any other types of losses.

Share-Based Payments. The Company records compensation expense for the fair value of nonvested stock option awards and restricted stock awards over the remaining vesting period. The Company has elected to use the simplified method to calculate

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the expected term of the stock options outstanding at five to six years and has utilized historical weighted average volatility. The Company determines the volatility and risk-free rate assumptions used in computing the fair value using the Black-Scholes option-pricing model, in consultation with an outside third party. The expected term for the restricted stock award is between three months and four years.

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. In addition, the Company does not estimate a forfeiture rate at the time of grant instead the Company elected to recognize share-based compensation expense when actual forfeitures occur.

The restricted stock and restricted stock units are valued based upon a 20-day Exponential Moving Average as of the Friday prior to the grant of an award. In addition, the Company does not estimate a forfeiture rate at the time of grant instead the Company elected to recognize share-based compensation expense when actual forfeitures occur.

U.S. Pension and Other Post-retirement Costs and Liabilities . The Company has recorded significant pension and other post-retirement benefit liabilities that are developed from actuarial valuations for its U.S. operations. The pension plans were frozen in November of 2006 and therefore contributions are not allowed. The determination of the Company’s 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. The Company determines these assumptions in consultation with, and after input from, its 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 its U.S. operations, the Company uses the Principal Pension Discount Yield Curve ("Principal Curve") as the basis for determining the discount rate for reporting pension and retiree medical liabilities. The Principal Curve has several advantages to other methods, including: transparency of construction, lower statistical errors, and continuous forward rates for all years. At October 31, 2016 , the resulting discount rate from the use of the Principal Curve was 3.70% , a decrease of 0.50% from a year earlier that contributed to a increase of the benefit obligation of approximately $51 . A change of 25 basis points in the discount rate at October 31, 2016 would increase expense on an annual basis by approximately $10 or decrease expense on an annual basis by approximately $14.

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 pension assets by approximately $156.

The Company’s investment policy for assets of the plans is to maintain an allocation generally of 0% to 70% in equity securities, 0% 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. The Company determines 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. The Company’s 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, 2016 , the actual return on pension plans’ assets for all of the Company’s plans approximated 3.12%, which is lower than the expected rate of return on plan assets of 7.50% 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. Based on current market investment performance, historically the Company has conservatively contributed to the defined benefit plans and therefore contributions for fiscal 2017 are not required until second quarter of 2018, and that pension expense will increase in fiscal 2017.

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Non-U.S. Pension. For the Company's Swedish operations, the majority of the pension obligations are covered by insurance policies with insurance companies. Pension commitments in the Company's Polish operations at October 31, 2016 were not material. The liability for these obligations comprise the present value of future obligations and is calculated on an actuarial basis.

Derivative Instruments and Hedging Activities. The Company records derivative instruments in the condensed consolidated balance sheet as either an asset or liability and as a component of other comprehensive loss and measured at fair value. Changes in derivative instruments' fair value are recognized currently in earnings, unless the derivative instrument has been designated as a cash flow hedge and specific cash flow hedge accounting criteria are met. Under the cash flow hedge accounting, unrealized gains and losses are reflected in stockholder's equity as accumulated other comprehensive loss until the forecasted transaction occurs. If the cash flow hedge is deemed ineffective, the derivative's gains or losses are then recognized in the condensed consolidated statement of operation.

Foreign Currency Translation . Two of the Company's Mexican subsidiaries (Shiloh De Mexico S.A. DE C.V. and Shiloh International, S.A. DE C.V.), its Netherlands holding company, its Swedish holding company, and all U.S. subsidiaries have the functional currency of the U.S. dollar. All other entities have their respective local currency as their functional currency. The translation from the applicable foreign currencies to U.S. dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate for the period. The resulting translation adjustments are recorded as a component of Other Comprehensive Income. The Company engages in foreign currency denominated transactions with customers and suppliers, as well as between subsidiaries with different functional currencies. Gains and losses resulting from foreign currency transactions are recognized in net income (loss) in the condensed consolidated statements of operation.

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Results of Operations

Three Months Ended April 30, 2017 Compared to Three Months Ended April 30, 2016

REVENUES. Sales for the second quarter of fiscal 2017 were $273,031 compared to sales of $284,264 in the second quarter of fiscal 2016 , a decrease of $11,233 , or 4.0% . Foreign currency translation negatively impacted revenue by $2,495. In addition, volume changes in North American and European automotive, light truck and commercial vehicle negatively impacted revenue by $5,855 as well as a change in the contractual relationship of certain customer sales from owned steel to consigned steel of $2,883.

GROSS PROFIT. Gross profit for the second quarter of fiscal 2017 was $33,216 , an increase of $6,935 , compared to gross profit of $26,281 in the second quarter of fiscal 2016 . Gross profit as a percentage of sales was 12.2% for the second quarter of 2017 and 9.2% for the second quarter of 2016, an improvement of 300 basis points. Product mix shift and scrap pricing favorably impacted gross profit by $10,487 and $3,541, respectively. In addition, gross profit was favorably impacted by a decrease in labor and benefits of $4,605 and repairs, maintenance and other of $876 offset by an increase in depreciation from recent investments and utilities $1,341.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses support the growth in sales opportunities, new technologies and new product launches. Expenses were $21,695 and $16,992 in the second quarter of fiscal 2017 and 2016 , respectively. As a percentage of sales, these expenses were 7.9% of sales for the second quarter of fiscal 2017 and 6.0% of sales for the second quarter of fiscal 2016. The increase reflects the Company's continued investments in human capital of $3,773 and expenses related to cost saving initiatives of $1,364 offset by a decrease of $434 in other administrative expenses.

AMORTIZATION OF INTANGIBLE ASSETS. Amortization of intangible assets expense of $564 for the second quarter of 2017 was consistent with amortization of intangible assets expense of $565 in the second quarter of 2016 .

INTEREST EXPENSE. Interest expense for the second quarter of fiscal 2017 was $4,200 , compared to interest expense of $4,520 during the second quarter of fiscal 2016 . The decrease in interest expense was the result of lower average borrowed funds and lower borrowing rates which were offset by an increase in amortization of deferred financing fees associated with the Credit Agreement. Borrowed funds averaged $241,354 during the second quarter of fiscal 2017 and the weighted average interest rate was 4.59% . In the second quarter of fiscal 2016 , borrowed funds averaged $272,974 and the weighted average interest rate of debt was 4.94% .

OTHER EXPENSE / INCOME. Other expense, net was $205 for the second quarter of fiscal 2017 and other income, net was $365 for the second quarter of fiscal 2016 . Other expense, net reflects the result of currency transaction gains and losses realized by the Company's Asian, European and Mexican subsidiaries.

PROVISION FOR INCOME TAXES. The provision for income taxes in the second quarter of fiscal 2017 was an expense of $2,323 on a income before taxes of $6,552 for an effective tax rate of 35.5% . The provision for income taxes in the second quarter of fiscal 2016 was an expense of $364 on income before taxes of $4,573 for an effective tax rate of 8.0% . The effective tax rate for the three months ended April 30, 2017 and 2016 varies from statutory rate primarily due to income taxes on foreign earnings which are taxed at rates different from the U.S. statutory rate, certain foreign losses without tax benefits, and other permanent items.

NET INCOME. Net income for the second quarter of fiscal 2017 was $4,229 , or $0.24 per share, diluted compared to net income for the second quarter of fiscal 2016 of $4,209 , or $0.24 per share, diluted.

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Results of Operations

Six Months Ended April 30, 2017 Compared to the Six Months Ended April 30, 2016

REVENUES. Sales for the first six months of fiscal 2017 were $520,969 compared to first six months of fiscal 2016 sales of $535,319 , a decrease of $14,350 . Foreign currency translation negatively impacted revenue by $4,357. In addition, volume changes in North American and European automotive, light truck and commercial vehicle negatively impacted revenue by $3,175 as well as a change in the contractual relationship of certain customer sales from owned steel to consigned steel of $6,818.

GROSS PROFIT. Gross profit for the first six months of fiscal 2017 was $57,016 compared to gross profit of $42,170 in the first six months of fiscal 2016 , an increase of $14,846 . Gross profit as a percentage of sales was 10.9% in the first six months of fiscal 2017 and 7.9% in the first six months of fiscal 2016 , an improvement of 300 basis points. Product mix shift and scrap pricing favorably impacted gross profit by $17,996 and $6,609, respectively. In addition, gross profit was favorably impacted by a decrease in labor and benefits and maintenance and repairs of $6,599 offset by an increase in depreciation from recent investments and other manufacturing of $2,008.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses support the growth in sales opportunities, new technologies and new product launches. Expenses were $41,883 and $34,336 in the first six months of fiscal 2017 and 2016 , respectively, an increase of $7,547 . As a percentage of sales, these expenses were 8.0% of sales in the first six months of fiscal 2017 and 6.4% of sales in the first six months of fiscal 2016 . The increase reflects the Company's continued investments in human capital of $5,964 and expenses related to cost saving initiatives of $2,329 offset by a decrease of $746 in other administrative expenses.

AMORTIZATION OF INTANGIBLE ASSETS. Amortization of intangible assets expense of $1,129 for the first six months of 2017 was consistent with amortization of intangible assets expense of $1,129 for the first six months of 2016 .

ASSET IMPAIRMENT CHARGES. Asset impairments of $41 were recorded during the first six months of fiscal 2017 related to restructuring initiatives and assets impairments of $273 were record during the first six months of fiscal 2016 related to the sale of a building.

INTEREST EXPENSE. Interest expense for the first six months of fiscal 2017 was $9,012 , compared to interest expense of $8,872 during the first six months of fiscal 2016 . The increase in interest expense was the result of higher average rates and amortization of increased deferred financing fees associated with the Credit Agreement. Borrowed funds averaged $247,217 during the first six months of fiscal 2017 and the weighted average interest rate was 4.84% . In the first six months of fiscal 2016 , borrowed funds averaged $282,300 and the weighted average interest rate of debt was 4.79% .

OTHER EXPENSE. Other expense, net was $495 for the first six months of fiscal 2017 and other expense, net was $31 in the first six months of fiscal 2016 . Both are the result of currency transaction gains and losses realized by the Company's Asian, European and Mexican subsidiaries.

PROVISION / BENEFIT FOR INCOME TAXES. The provision for income taxes for the first six months of fiscal 2017 was an expense of $2,247 on income before taxes of $4,458 for an effective tax rate of 50.4% . The provision for income taxes for the first six months of fiscal 2016 was a benefit of $1,547 on loss before income taxes of $2,465 for an effective tax rate of 62.8% . The effective tax rate for the six months ended April 30, 2017 and 2016 was higher than statutory rate primarily due to income taxes on foreign earnings which are taxed at rates different from the U.S. statutory rate, certain foreign losses without tax benefits, and changes in tax laws.

NET INCOME / LOSS. Net loss for the first six months of fiscal 2017 was $2,211 , or $0.12 per share, diluted. Net loss for the first six months of fiscal 2016 was $918 or $0.05 per share, diluted.

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Liquidity and Capital Resources

Cash Flows and Working Capital:

At April 30, 2017 , total debt was $244,287 and total equity was $ 139,616 , resulting in a capitalization rate of 63.6% debt, 36.4% equity. Current assets were $288,313 and current liabilities were $200,350 , resulting in positive working capital of $87,963 .

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



	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

Net Cash Provided by Operating Activities:



	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 flow from operations before changes in operating assets and liabilities were $24,763 and $19,945 for the six months ended April 30, 2017 and 2016, respectively. The increase of $4,818 was mainly driven by higher earnings in the first six months of 2017 compared to the first six months of 2016.

Cash inflow and outflow from changes in operating assets and liabilities:


•	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.

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•	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.

Net Cash Used For Investing Activities:

Net cash used in investing activities for the six months ended April 30, 2017 and 2016 was $17,341 and $9,026 , respectively, and consisted of capital expenditures. The expenditures are attributed to projects for new awards and product launches.

Net Cash Used For Financing Activities:

Net cash used in financing activities was $14,258 and $33,060 during the six months ended April 30, 2017 and 2016, respectively, for funding working capital and to pay down debt. As of April 30, 2017 , the Company's long-term indebtedness was $242,808 .

Revolving Credit Facility:

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

On April 29, 2015, the Company executed the Fourth Amendment to the Credit Amendment that maintained the commitment period to September 29, 2019 and allowed for an incremental increase of $25,000 (or if certain ratios are met, $100,000 ) in the original revolving commitment of $360,000 , subject to the Company's 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 the Company's pro forma compliance with financial covenants. On April 30, 2017, the second committed reduction of $7,500 decreased the existing revolver commitments to $347,500, subject to the Company's proforma compliance with financial covenants.

Borrowings under the Credit Agreement bear interest, at the Company's 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 provides for an interest rate margin on LIBOR loans of 1.50% to 4.0% and of 0.50% to 3.0% on base rate loans depending on the Company's leverage ratio.

The Credit Agreement contains customary restrictive and financial covenants, including covenants regarding the Company’s outstanding indebtedness and maximum leverage and interest coverage ratios. 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 and become immediately due and payable. The Company was in compliance with the financial covenants as of April 30, 2017 , and October 31, 2016 .

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After considering letters of credit of $6,054 that the Company has issued, unused commitments under the Credit Agreement were $102,046 at April 30, 2017 .

The Company continues to closely monitor the business conditions affecting the automotive industry. In addition, the Company closely monitors its working capital position to ensure adequate funds for operations. The Company anticipates that funds from operations will be adequate to meet the obligations under the Credit Agreement through maturity of the Credit Agreement in September 2019, as well as scheduled payments for the equipment security note, capital lease and repayment of the other debt totaling $4,887 over the next five years.

Other Debt:

On September 2, 2013, the Company entered into an equipment security note that bears interest at a fixed rate of 2.47% and requires monthly payments of $44 through September 2018. As of April 30, 2017 , $741 remained outstanding under this agreement and $520 was classified as current debt and $221 was classified as long term debt in the Company’s condensed consolidated balance sheets.

The Company maintains capital leases for equipment used in its manufacturing facilities with lease terms expiring between 2018 and 2020. As of April 30, 2017 , the present value of minimum lease payments under its capital leases amounted to $4,051 .

Derivatives:

On February 25, 2014, the Company 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 the Company’s 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 the Company’s future interest payments at 2.74% plus the applicable rate (defined above), on an amount of the Company’s 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 maturity of February 29, 2020, August 31, 2020 and February 28, 2021, respectively. On the date the interest swap was entered into, the Company designated the interest rate swap as a hedge of the variability of cash flows to be paid relative to its variable rate monies borrowed. Any ineffectiveness in the hedging relationship is recognized immediately into earnings. The Company determined the mark-to-market adjustment for the interest rate swap to be gains of $225 and $1,344 , net of tax, for the three and six months ended April 30, 2017 , respectively, and a gain of $10 and a loss of $470 which is reflected in other comprehensive income. The base notional amounts of $25,000 each or $75,000 total that commenced during 2015 and fiscal 2016 resulted in realized losses of $368 and $786 of interest expense related to the interest rate swap settlements for the three and six months ended April 30, 2017 , respectively and $332 and $666 for the three and six months ended April 30, 2016 , respectively.

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



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

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Other

In March 2017, the Company filed a shelf registration statement on Form S-3 with the SEC. The shelf registration statement allows the Company to sell from time to time up to $175 million of common stock, preferred stock, debt securities, or warrants comprised of any combination of these securities, for its own account in one or more offerings. The shelf registration statement is intended to provide the Company flexibility to conduct sales of its registered securities, subject to market conditions and the future capital needs of the Company. The terms of any offering under the shelf registration statement will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to the completion of any such offering.

Effect of Inflation, Deflation

Inflation generally affects the Company by increasing the interest expense of floating rate indebtedness and by increasing the cost of labor, equipment and raw materials. The level of inflation has not had a material effect on the Company's condensed consolidated financial results for the past three years.

In periods of decreasing prices, deflation occurs and may also affect the Company's results of operations. With respect to steel purchases, the Company's purchases of steel through customers' steel buying programs protects recovery of the cost of steel through the selling price of the Company's products. For non-steel buying programs, the Company aligns the cost of steel purchases with the related selling price of the product. For the Company's aluminum and magnesium die casting business, the cost of the materials is handled in one of two ways. The primary method is to secure quarterly aluminum and magnesium purchase commitments based on customer releases and then pass the quarterly price changes to those customers utilizing published metal indexes. The second method is to adjust prices monthly, based on a referenced metal index plus additional material cost spreads agreed to by the Company and its customers.

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Item 3. Qualitative and Quantitative Market Risk Discussion

Market risk is the potential loss arising from adverse changes in market rates and prices. The Company is exposed to market risk throughout the normal course of its business operations due to its purchases of metals, its sales of scrap steel, its ongoing investing and financing activities, and its exposure to foreign currency exchange rates. As such, the Company has established policies and procedures to govern its management of market risks.

Commodity Pricing Risk

Steel is the primary raw material used by the Company and a majority of the purchased steel is acquired through various OEM steel buying programs. Buying through the customer steel buying programs mitigates the impact of price fluctuations associated with the procurement of steel. The remainder of its steel purchasing requirements is met through contracts with various steel suppliers. At times, the Company may be unable to either avoid increases in steel prices or pass through any price increases to its customers. The Company refers to the "net steel impact" as the combination of the change in steel prices that are reflected in the price of its products, the change in the cost to procure steel from the steel sources, and the change in the Company's recovery of offal. The Company's strategy is to be economically neutral to steel pricing by having these factors offset each other. Although the Company strives to achieve a neutral net steel impact, we may not always be successful in achieving that goal, in part due to timing difference. The timing of a change in the price of steel may occur in different periods and if a change occurs, that change may have a disproportionate effect, within any fiscal period, on the Company's product pricing. Depending upon when a steel price change or offal price change occurs, that change may have a disproportionate effect, within any particular fiscal period, on its product pricing, its steel costs and the results of its sales of offal. Net imbalances in any one particular fiscal period may be reversed in a subsequent fiscal period, although the Company cannot provide assurances that, or when, these reversals will occur. Over the past year, the Company has been impacted by the price recovered on the sale of its offal due to the significant reduction in the North American scrap metal market pricing.

Interest Rate Risk

At April 30, 2017 , the Company had total debt, excluding capital leases, of $240,236 , consisting of a revolving line of credit of floating rate debt of $239,400 ( 99.7% ) and fixed rate debt of $836 ( 0.3% ). Assuming no changes in the monthly average revolver debt levels of $241,354 for the quarter ended April 30, 2017 , the Company estimates that a hypothetical change of 100 basis points in the LIBOR and base rate would impact on interest expense by approximately $2,394 in additional expense.

During 2014, the Company entered into an interest rate swap with an aggregate notional amount of $75,000 designated as a cash flow hedge of a portion of the Company's Credit Agreement to manage interest rate exposure on the Company’s floating rate LIBOR based debt. The first base notional amount, $25,000 , commenced on March 1, 2015, the second base notional amount, $25,000 , commenced on September 1, 2015 and the final notional amount, $25,000 , commenced on March 1, 2016 . The Company recognized $368 and $786 of interest expense related to the interest rate swap for the three and six months ended April 30, 2017 .

The following table discloses the fair value and balance sheet location of the Company's derivative instrument:



		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)

The following table discloses the effect of the Company's derivative instrument on the condensed consolidated statement of operations and condensed consolidated statement of comprehensive income for the six months ended April 30, 2017 :



		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

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		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

Currency Exchange Rate Risk

The translated values of revenue and expense from the Company’s international operations are subject to fluctuations due to changes in currency exchange rates. Consequently, the Company's results of operations may be affected by exposure to changes in foreign currency exchange rates and economic conditions in the regions in which it sells or distributes products.

The Company derived 81.9% of its sales in the United States and 18.1% internationally. Of these international sales, no single foreign currency represented more than 10% of sales. To minimize foreign currency risk, the Company generally maintains natural hedges within its non-U.S. activities, including the efficient alignment of transaction settlements in the same currency and near term accounting cycles.

In addition, to the transaction-related gains and losses that are reflected within the results of operations, the Company is subject to foreign currency translation risk, as the financial statements for its subsidiaries are measured and recorded in the respective subsidiary's functional currency and translated into U.S. dollars for consolidated financial reporting purposes. The resulting translation adjustments are recorded net of tax impact in the condensed consolidated statement of other comprehensive income.

Inflation

Although the Company has not experienced a material inflationary impact, the potential for a rise in inflationary pressures could impact certain commodities, such as steel, aluminum and magnesium. Additionally, because the Company purchases various types of equipment, raw materials, and component parts from its suppliers, they may be adversely impacted by their inability to adequately mitigate inflationary, industry, or economic pressures. The overall condition of its supply base may possibly lead to delivery delays, production issues, or delivery of non-conforming products by its suppliers in the future. As such, the Company continues to monitor its vendor base for the best sources of supply and the Company continues to work with those vendors and customers to mitigate the impact of inflationary pressures.

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Item 4.	Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934, as amended, 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 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 the Company's management, including the PEO, PFO and PAO, of the effectiveness of the design and operation of the Company's disclosure controls and procedures, as defined in Rule 13a-15(e) or Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended. The Company's PEO, PFO and PAO concluded that the Company's disclosure controls and procedures were not effective as of April 30, 2017 due to the material weakness described below.

Previously Disclosed Material Weakness

Management previously reported a material weakness in the Company’s internal control over financial reporting in the Annual Report on Form 10-K for the year ended October 31, 2016. Management concluded, based on an independent review, the key financial controls were ineffective and the financial presentation lacked integrity based on a lack of timely and precise reconciliations of account balances and unsupported journal entries. Management further concluded that the material weakness in financial reporting was isolated to one of its manufacturing facilities.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility that a material misstatement of the Company's annual or interim financial statements may not be prevented or detected on a timely basis.

Company management initiated a plan to remediate the deficiencies described above to enhance its internal control over financial reporting. With detailed oversight, management implemented the following corrective actions prior to and during the second quarter of fiscal 2017:


•	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.

Management will continue to evaluate the Company’s system of internal controls to determine if additional controls should be designed and implemented to address the material weakness identified above.

The Company is committed to maintaining a strong internal control environment and believes its remediation efforts represent significant improvement in controls. The control environment and identified key controls in effect will be reevaluated by Internal Audit and remediation steps are expected to continue throughout the third quarter of fiscal 2017.

Changes in Internal Control Over Financial Reporting

Except as described above in connection with the Company's corrective actions, there were no other changes in the Company's internal control over financial reporting during the second quarter of fiscal 2017 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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Part II. OTHER INFORMATION

Item 1. Legal Proceedings

Note 18, Commitments and Contingencies, that is included in Part I of this report, is incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes in the Company's risk factors disclosed in Item 1A of its Annual Report on Form 10-K for the year ended October 31, 2016 .


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

* Reflects management contract or other compensatory arrangement required to be filed as an exhibit pursuant to Item 15(b) of this Report.

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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.



	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)

Date: June 1, 2017

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EXHIBIT INDEX

Shiloh Industries, Inc.

Form 10-Q for the Quarterly Period Ended April 30, 2017



		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

* Reflects management contract or other compensatory arrangement required to be filed as an exhibit pursuant to Item 15(b) of this Report.

Exhibit 10.1

AGREEMENT ON TERMS AND CONDITIONS OF STOCK AWARD

(Director Restricted Stock Award)

By checking the box next to “ I have read the documents ” and clicking the “ I ACCEPT ” button, you are acknowledging and agreeing to all of the terms, conditions and restrictions set forth in this AGREEMENT ON TERMS AND CONDITIONS OF STOCK AWARD (this “ Agreement ”), which is made as of the Award Date (as such term is used on your Computershare [_____] page), by and between Shiloh Industries, Inc., a Delaware corporation (the “ Company ”), and you (the “ Grantee ”).

1. Certain Definitions . Capitalized terms used, but not otherwise defined, in this Agreement will have the meanings given to such terms in the Company’s 2016 Equity and Incentive Compensation Plan (the “ Plan ”).

2. Grant of Restricted Shares . Subject to and upon the terms, conditions and restrictions set forth in this Agreement and in the Plan, the Company has granted to the Grantee as of the Award Date (the “ Date of Grant ”) an amount of shares of Company common stock listed next to the “Total Granted” term set forth on Grantee’s Computershare [_____] page (the “ Restricted Shares ”) in accordance with the terms and conditions of this Agreement.

3. Restrictions on Transfer of Restricted Shares . Subject to Section 15 of the Plan, the Restricted Shares shall not be transferable prior to Vesting (as defined below) pursuant to Section 4 hereof other than by will or pursuant to the laws of descent and distribution. Any purported transfer or encumbrance in violation of the provisions of this Section 3 shall be void, and the other party to any such purported transaction shall not obtain any rights to or interest in such Restricted Shares.

4. Vesting of Restricted Shares .

(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

Grantee in accordance with Section 4(c)(ii) to continue, replace or assume the Restricted Shares covered by this Agreement (the “ Replaced Award ”).

(ii) For purposes of this Agreement, a “ Replacement Award ” means an award (A) of the same type (e.g., time-based restricted shares) as the Replaced Award, (B) that has a value at least equal to the value of the Replaced Award, (C) that relates to publicly traded equity securities of the Company or its successor in the Change in Control or another entity that is affiliated with the Company or its successor following the Change in Control, (D) if the Grantee holding the Replaced Award is subject to U.S. federal income tax under the Code, the tax consequences of which to such Grantee under the Code are not less favorable to such Grantee than the tax consequences of the Replaced Award, and (E) the other terms and conditions of which are not less favorable to the Grantee holding the Replaced Award than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change in Control). A Replacement Award may be granted only to the extent it does not result in the Replaced Award or Replacement Award failing to comply with or be exempt from Section 409A of the Code. Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the two preceding sentences are satisfied. The determination of whether the conditions of this Section 4(c)(ii) are satisfied will be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion.

(iii) If, after receiving a Replacement Award, the Grantee experiences an involuntary termination of Board service (or service on the Board of any of the Company’s successors) within a period of two years after the Change in Control and during the remaining vesting period for the Replacement Award, then the Replacement Award will become Vested.


(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.

5. Rights as a Shareholder . The Grantee shall have all the rights of a shareholder with respect to the Restricted Shares, including the right to vote the Restricted Shares and receive all dividends paid thereon; provided , however , that any additional Common Shares or other securities that the Grantee may become entitled to receive pursuant to a stock dividend or other distribution shall be subject to the same restrictions as the Restricted Shares covered by this Agreement.

6. Retention of Stock Certificates by Company . The Restricted Shares will be issued either (a) in certificate form or (b) in book entry form, registered in the name of the Grantee, with legends or notations as applicable, referring to the terms, conditions, and restrictions set forth in this Agreement. Certificates representing the Restricted Shares, if any, will be held in custody by the Company together with a stock power endorsed in blank by the Grantee with respect thereto, until those Restricted Shares have Vested in accordance with Section 4 .

7. Adjustments . The number of Restricted Shares subject to this Agreement and the other terms and conditions of the grant evidenced by this Agreement are subject to adjustment as provided in Section 11 of the Plan.

8. Taxes . The Grantee will be solely responsible for the payment of all taxes that arise with respect to the granting or Vesting of the Restricted Shares.

9. Compliance With Law . The Company shall make reasonable efforts to comply with all applicable federal and state securities laws; provided , however , notwithstanding any other provision of the Plan and this Agreement, the Company shall not be obligated to issue any Common Shares pursuant to this Agreement if the issuance thereof would result in a violation of any such law.

10. Compliance With Section 409A of the Code . To the extent applicable, it is intended that this Agreement and the Plan comply with or be exempt from the provisions of Section 409A of the Code. This Agreement and the Plan shall be administered in a manner consistent with this intent, and any provision that would cause this Agreement or the Plan to fail to satisfy Section 409A of the Code shall have no force or effect until amended to comply with Section 409A of the Code (which amendment may be retroactive to the extent permitted by Section 409A of the Code and may be made by the Company without the consent of the Grantee).

11. Interpretation . Any reference in this Agreement to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service. Except as expressly provided in this Agreement, capitalized terms used herein will have the meaning ascribed to such terms in the Plan.

12. No Right to Future Awards or Board Membership . The grant of the Restricted Shares under this Agreement to the Grantee is a voluntary, discretionary award being made on a one-time basis and it does not constitute a commitment to make any future awards. Nothing contained in this Agreement shall confer upon the Grantee any right to continued service as a member of the Board.

13. Amendments . Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided , however , that (a) no amendment shall adversely affect the rights of the Grantee under this Agreement without the Grantee’s written consent, and (b) the Grantee’s consent shall not be required to an amendment that is deemed necessary by the Company to ensure compliance with Section 409A of the Code or Section 10D of the Exchange Act.

14. Severability . In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.

15. Relation to Plan . This Agreement is subject to the terms and conditions of the Plan. In the event of any inconsistency between the provisions of this Agreement and the Plan, the Plan shall govern. The Committee acting pursuant to the Plan, as constituted from time to time, shall, except as expressly provided otherwise herein or in the Plan, have the right to determine any questions which arise in connection with this Agreement.

16. Electronic Delivery . The Company may, in its sole discretion, deliver any documents related to the Restricted Shares and the Grantee’s participation in the Plan, or future awards that may be granted under the Plan, by electronic means or request the Grantee’s consent to participate in the Plan by electronic means. The Grantee hereby consents to receive such documents by electronic delivery and, if requested, agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

17. Governing Law . This Agreement shall be governed by and construed with the internal substantive laws of the State of Delaware, without giving effect to any principle of law that would result in the application of the law of any other jurisdiction.

18. Successors and Assigns . Without limiting Section 3 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Grantee, and the successors and assigns of the Company.

19. Acknowledgement . The Grantee acknowledges that the Grantee (a) has received a copy of the Plan, (b) has had an opportunity to review the terms of this Agreement and the Plan, (c) understands the terms and conditions of this Agreement and the Plan and (d) agrees to such terms and conditions.

20. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same agreement.

Exhibit 10.2

AGREEMENT ON TERMS AND CONDITIONS OF RSU AWARD

(Director Restricted Stock Unit Award)

By checking the box next to “ I have read the documents ” and clicking the “ I ACCEPT ” button, you are acknowledging and agreeing to all of the terms, conditions and restrictions set forth in this AGREEMENT ON TERMS AND CONDITIONS OF RSU AWARD (this “ Agreement ”), which is made as of the Award Date (as such term is used on your Computershare [_____] page), by and between Shiloh Industries, Inc., a Delaware corporation (the “ Company ”), and you (the “ Grantee ”).

2. Grant of RSUs . Subject to and upon the terms, conditions and restrictions set forth in this Agreement and in the Plan, the Company has granted to the Grantee as of the Award Date (the “ Date of Grant ”) an amount of Restricted Stock Units listed next to the “Total Granted” term set forth on Grantee’s Computershare [_____] page (“ RSUs ”). Each RSU shall represent the right of the Grantee to receive one Common Share subject to and upon the terms and conditions of this Agreement.

3. Restrictions on Transfer of RSUs . Subject to Section 15 of the Plan, neither the RSUs evidenced hereby nor any interest therein or in the Common Shares underlying such RSUs shall be transferable prior to payment to the Grantee pursuant to Section 5 hereof other than by will or pursuant to the laws of descent and distribution.

4. Vesting of RSUs .

(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

Section 4(c)(ii) to continue, replace or assume the RSUs covered by this Agreement (the “ Replaced Award ”).

(ii) For purposes of this Agreement, a “ Replacement Award ” means an award (A) of the same type (e.g., time-based restricted stock units) as the Replaced Award, (B) that has a value at least equal to the value of the Replaced Award, (C) that relates to publicly traded equity securities of the Company or its successor in the Change in Control or another entity that is affiliated with the Company or its successor following the Change in Control, (D) if the Grantee holding the Replaced Award is subject to U.S. federal income tax under the Code, the tax consequences of which to such Grantee under the Code are not less favorable to such Grantee than the tax consequences of the Replaced Award, and (E) the other terms and conditions of which are not less favorable to the Grantee holding the Replaced Award than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change in Control). A Replacement Award may be granted only to the extent it does not result in the Replaced Award or Replacement Award failing to comply with or be exempt from Section 409A of the Code. Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the two preceding sentences are satisfied. The determination of whether the conditions of this Section 4(c)(ii) are satisfied will be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion.


(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.

5. Form and Time of Payment of RSUs .


(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.

6. Dividend Equivalents; Other Rights .


(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.

7. Adjustments . The number of Common Shares issuable for each RSU and the other terms and conditions of the grant evidenced by this Agreement are subject to adjustment as provided in Section 11 of the Plan.

8. Taxes . The Grantee will be solely responsible for the payment of all taxes that arise with respect to the granting and payment of the RSUs, including the payment of any Common Shares.

12. No Right to Future Awards or Board Membership . The grant of the RSUs under this Agreement to the Grantee is a voluntary, discretionary award being made on a one-time basis and it does not constitute a commitment to make any future awards. Nothing contained in this Agreement shall confer upon the Grantee any right to continued service as a member of the Board.

16. Electronic Delivery . The Company may, in its sole discretion, deliver any documents related to the RSUs and the Grantee’s participation in the Plan, or future awards that may be granted under the Plan, by electronic means or request the Grantee’s consent to participate in the Plan by electronic means. The Grantee hereby consents to receive such documents by electronic delivery and, if requested, agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

17. Nature of Grant . The Grantee hereby acknowledges that:


(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.

18. Data Privacy . The Grantee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Grantee’s personal data as described in this document by and among, as applicable, the Grantee’s employer (the “Employer”), the Company and its Subsidiaries and affiliates, for the exclusive purpose of implementing, administering and managing the Grantee’s participation in the Plan .

The Grantee understands that the Company and the Employer may hold certain personal information about the Grantee, including, but not limited to, the Grantee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all RSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Grantee’s favor, for the purpose of implementing, administering and managing the Plan (“Data”).

The Grantee understands that Data will be transferred to Computershare, or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. The Grantee understands that the recipients of the Data may be located in the United States or elsewhere, including outside the European Economic Area (if applicable), and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Grantee’s country. The Grantee understands that the Grantee may request a list with the names and addresses of any potential recipients of the Data by contacting the Grantee’s local human resources representative. The Grantee authorizes the Company, Computershare and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Grantee’s participation in the Plan. The Grantee understands that Data will be held only as long as is necessary to implement, administer and manage the Grantee’s participation in the Plan. The Grantee

understands that the Grantee may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Grantee’s local human resources representative. The Grantee understands, however, that refusing or withdrawing the Grantee’s consent may affect the Grantee’s ability to participate in the Plan. For more information on the consequences of the Grantee’s refusal to consent or withdrawal of consent, Grantee understands that the Grantee may contact the Grantee’s local human resources representative.

French translation:

Vous acceptez formellement et sans réserve la collecte, l’utilisation et le transfert, sous un format électronique ou sous un autre format, de vos données personnelles, dans les conditions décrites dans ce document par et entre, le cas échéant, votre employeur (“l’Employeur”), Shiloh Industries, Inc. et ses Filiales et entités affiliées, dans le but exclusif de mettre en place, d’administrer et de gérer votre participation au Plan.

Vous reconnaissez que Shiloh Industries, Inc. et l'Employeur peuvent détenir certaines informations personnelles à votre sujet, dont notamment vos noms, adresses, numéros de téléphone, date de naissance, numéro de sécurité sociale ou assimilé, rémunérations, nationalités, descriptifs de postes, toute participation ou fonction que vous détenez ou exercez dans Shiloh Industries, Inc., les détails de toutes les RSUs ou de tous autres droits attribués, annulés, exercés, acquis, potentiels ou émis en votre faveur, pour les besoins de la mise en place, de l'administration et de la gestion du Plan (les "Informations").

Vous reconnaissez que les Informations seront transmises à Computershare, ou à tout autre prestataire de services afférents à des plans en actions qui pourra être retenu par Shiloh Industries, Inc. à l'avenir, qui assiste Shiloh Industries, Inc. s'agissant de la mise en place, de l'administration et de la gestion du Plan. Vous reconnaissez que les destinataires des Informations peuvent être situés aux Etats-Unis ou ailleurs, en ce compris en dehors de l'Espace Economique Européen (le cas échéant), et que le droit applicable dans la juridiction du destinataire des Informations (par exemple les Etats-Unis) en matière de protection des données personnelles peut être différent du droit applicable en la matière dans votre juridiction. Vous reconnaissez que vous pouvez demander une liste des noms et adresses de tout destinataire potentiel des Informations en contactant votre responsable des ressources humaines local. Vous autorisez Shiloh Industries, Inc., Computershare et tout autre destinataire potentiel des Informations qui assisterait Shiloh Industries, Inc. (actuellement ou à l'avenir) s'agissant de la mise en place, de l'administration et de la gestion du Plan, à recevoir, détenir, utiliser, conserver et transférer les Informations, sous un format électronique ou sous un autre format, dans le but exclusif de mettre en place, d'administrer et de gérer votre participation au Plan. Vous reconnaissez que les Informations peuvent être conservées aussi longtemps que nécessaire afin de mettre en place, d’administrer et de gérer votre participation au Plan. Vous reconnaissez que vous pouvez, à tout moment, voir les Informations, demander toute information complémentaire au sujet du stockage et du traitement des Informations, exiger toute modification nécessaire des Informations, ou refuser ou retirer les consentements qui précèdent, en tout état de cause gratuitement, en contactant votre responsable des ressources humaines local. Vous reconnaissez toutefois que le fait de refuser ou de retirer les consentements qui précèdent est susceptible d'avoir des conséquences quant à votre capacité à participer au Plan. Afin d'obtenir plus d'informations sur les consequences liées au fait de refuser ou de retirer les consentements qui précèdent, vous reconnaissez pouvoir contacter votre responsable des ressources humaines local.

19. Governing Law . This Agreement shall be governed by and construed with the internal substantive laws of the State of Delaware, without giving effect to any principle of law that would result in the application of the law of any other jurisdiction.

20. Successors and Assigns . Without limiting Section 3 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Grantee, and the successors and assigns of the Company.

21. Acknowledgement . The Grantee acknowledges that the Grantee (a) has received a copy of the Plan, (b) has had an opportunity to review the terms of this Agreement and the Plan, (c) understands the terms and conditions of this Agreement and the Plan and (d) agrees to such terms and conditions.

22. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same agreement.

Exhibit 10.3

AGREEMENT ON TERMS AND CONDITIONS OF STOCK AWARD

(Employee Restricted Stock Award)

4. Vesting of Restricted Shares .

(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") .

(ii) For purposes of this Agreement, a “Replacement Award” means an award (A) of the same type (e.g., time-based restricted shares) as the Replaced Award, (B) that has a value at least equal to the value of the Replaced Award, (C) that relates to publicly traded equity securities of the Company or its successor in the Change in Control or another entity that is affiliated with the Company or its successor following the Change in Control, (D) if the Grantee holding the Replaced Award is subject to U.S. federal income tax under the Code, the tax consequences of which to such Grantee under the Code are not less favorable to such Grantee than the tax consequences of the Replaced Award, and (E) the other terms and conditions of which are not less favorable to the Grantee holding the Replaced Award than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change in Control). A Replacement Award may be granted only to the extent it does not result in the Replaced Award or Replacement Award failing to comply with or be exempt from Section 409A of the Code. Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the two preceding sentences are satisfied. The determination of whether the conditions of this Section 4(c)(ii) are satisfied will be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion.

after the Change in Control and during the remaining vesting period for the Replacement Award, the Replacement Award shall immediately Vest.


(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.

8. Withholding Taxes . To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with the issuance or Vesting of the Restricted Shares, or any other payment to the Grantee or any other payment or vesting event under this Agreement, and the amounts available to the Company for such withholding are insufficient, the Grantee shall pay such taxes or make arrangements satisfactory to the Company for payment of such taxes. The Grantee may elect that all or any part of such withholding requirement be satisfied by retention by the Company of a portion of the Restricted Shares or by delivering to the Company other Common Shares held by the Grantee. If such election is made, the shares so retained or delivered shall be credited against such withholding requirement at the market value of such Common Shares on the date of such delivery. In no event will the market value of the Common Shares to be withheld and/or delivered pursuant to this Section 8 to satisfy applicable withholding taxes exceed the minimum amount of taxes required to be withheld.

12. No Right to Future Awards or Employment . The grant of the Restricted Shares under this Agreement to the Grantee is a voluntary, discretionary award being made on a one-time basis and it does not constitute a commitment to make any future awards. The grant of the Restricted Shares and any payments made hereunder will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law. Nothing contained in this Agreement shall confer upon the Grantee any right to be employed or remain employed by the Company or any of its Subsidiaries, nor limit or affect in any manner the right of the Company or any of its Subsidiaries to terminate the employment or adjust the compensation of the Grantee.

13. Relation to Other Benefits . Any economic or other benefit to the Grantee under this Agreement or the Plan shall not be taken into account in determining any benefits to which the Grantee may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company or any of its Subsidiaries and shall not affect the amount of any life insurance coverage available to any beneficiary under any life insurance plan covering employees of the Company or any of its Subsidiaries.

14. Amendments . Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided , however , that (a) no amendment shall adversely affect the rights of the Grantee under this Agreement without the Grantee’s written consent, and (b) the Grantee’s consent shall not be required to an amendment that is deemed necessary by the Company to ensure compliance with Section 409A of the Code or Section 10D of the Exchange Act.

15. Severability . In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.

17. Electronic Delivery . The Company may, in its sole discretion, deliver any documents related to the Restricted Shares and the Grantee’s participation in the Plan, or future awards that may be granted under the Plan, by electronic means or request the Grantee’s consent to participate in the Plan by electronic means. The Grantee hereby consents to receive such documents by electronic delivery and, if requested, agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

18. Governing Law . This Agreement shall be governed by and construed with the internal substantive laws of the State of Delaware, without giving effect to any principle of law that would result in the application of the law of any other jurisdiction.

19. Successors and Assigns . Without limiting Section 3 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Grantee, and the successors and assigns of the Company.

20. Acknowledgement . The Grantee acknowledges that the Grantee (a) has received a copy of the Plan, (b) has had an opportunity to review the terms of this Agreement and the Plan, (c) understands the terms and conditions of this Agreement and the Plan and (d) agrees to such terms and conditions.

21. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same agreement.

Exhibit 10.4

AGREEMENT ON TERMS AND CONDITIONS OF CASH INCENTIVE AWARD

(Employee Cash Incentive Award)

By checking the box next to “ I have read the documents ” and clicking the “ I ACCEPT ” button, you are acknowledging and agreeing to all of the terms, conditions and restrictions set forth in this AGREEMENT ON TERMS AND CONDITIONS OF CASH INCENTIVE AWARD (this “ Agreement ”), which is made as of the Award Date (as such term is used on your Computershare [_____] page), by and between Shiloh Industries, Inc., a Delaware corporation (the “ Company ”), and you (the “ Grantee ”).

2. Grant of Award . Subject to and upon the terms, conditions and restrictions set forth in this Agreement and in the Plan, the Company has granted to the Grantee as of the Award Date (the “ Date of Grant ”), (a) a target Cash Incentive Award equal to the amount of cash listed next to the “ [_______] ” term set forth on Grantee’s Computershare [_____] page, a percentage of which may be earned based on [_____] (the “ Award ”).

3. Payment of Award . The Award will become payable in accordance with the provisions of Section 6 of this Agreement to the extent the Grantee’s right to receive payment for the Award becomes nonforfeitable (“ Vest ,” “ Vesting ” or “ Vested ”) in accordance with Section 5 of this Agreement.

4. Restrictions on Transfer of Award . Subject to Section 15 of the Plan, neither the Award evidenced hereby nor any interest therein shall be transferable prior to payment to the Grantee pursuant to Section 6 hereof other than by will or pursuant to the laws of descent and distribution.

5. Vesting of Award .

(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

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 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

Performance Period. The portion of the Award that Vests in accordance with this Section 5(c)(i) will be paid as provided for in Section 6 of this Agreement.

(ii) For purposes of this Agreement, a “ Replacement Award ” means an award (A) of the same type ( e.g. , a performance-based cash incentive award) as the Replaced Award, (B) that has a value at least equal to the value of the Replaced Award, (C) if the Grantee holding the Replaced Award is subject to U.S. federal income tax under the Code, the tax consequences of which to such Grantee under the Code are not less favorable to such Grantee than the tax consequences of the Replaced Award, and (D) the other terms and conditions of which are not less favorable to the Grantee holding the Replaced Award than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change in Control). A Replacement Award may be granted only to the extent it does not result in the Replaced Award or Replacement Award failing to comply with or be exempt from Section 409A of the Code. Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the two preceding sentences are satisfied. The determination of whether the conditions of this Section 5(c)(ii) are satisfied will be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion.

(iii) If, after receiving a Replacement Award, the Grantee experiences a termination of employment with the Company or a Subsidiary (or any of their successors) (as applicable, the “ Successor ”) by reason of a termination by the Successor without Cause or by the Grantee for Good Reason, in each case within a period of two years after the Change in Control and during the remaining performance period for the Replacement Award, then (notwithstanding anything in the Statement of Management Objectives to the contrary) the Grantee shall Vest in a portion of the Replacement Award equal to the product of (A) the portion of the Replacement Award in which the Grantee would have Vested (based on actual achievement of the applicable management objectives over the entire applicable performance period) had the Grantee remained in the continuous employ of the Successor until the end of the applicable performance period, 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 termination of employment and the denominator of which is the total number of calendar days in the performance period. The portion of the Award that Vests in accordance with this Section 5(c)(iii) will be paid as provided for in Section 6 of this Agreement.

(iv) If a Replacement Award is provided, notwithstanding anything in this Agreement to the contrary, any portion of the outstanding Award that at the time of the Change in Control is not subject to a “substantial risk of forfeiture” (within the meaning of Section 409A of the Code) will be deemed to be Vested at the time of such Change in Control and will be paid as provided for in Section 6 of this Agreement.


(d.)	For purposes of this Agreement, the following definitions apply:


(i)	[_____] each have the meaning set forth in the Statement of Management Objectives.

(ii)

(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)

(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.

6. Form and Time of Payment of Award .


(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.

7. Adjustments . The Award, the amount of cash payable pursuant to the Award, and the other terms and conditions of the grant evidenced by this Agreement are subject to adjustment as provided in Section 11 of the Plan.

8. Withholding Taxes . To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with any payment or vesting event under this Agreement, and the amounts available to the Company for such withholding are insufficient, it shall be a condition to the obligation of the Company to make any such payment that the Grantee make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld.

9. Compliance With Law . The Company shall make reasonable efforts to comply with all applicable federal and state laws.

10. Compliance With Section 409A of the Code . To the extent applicable, it is intended that this Agreement and the Plan comply with or be exempt from the provisions of Section 409A of the Code. This Agreement and the Plan shall be administered in a manner consistent with this intent, and any provision that would cause this Agreement or the Plan to fail to satisfy Section 409A of the Code shall have no force or effect until amended to comply with or be exempt from Section 409A of the Code (which amendment may be retroactive to the extent permitted by Section 409A of the Code and may be made by the Company without the consent of the Grantee).

12. No Right to Future Awards or Employment . The grant of the Award under this Agreement to the Grantee is a voluntary, discretionary award being made on a one-time basis and it does not constitute a commitment to make any future awards. The grant of the Award and any payments made hereunder will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law. Nothing contained in this Agreement shall confer upon the Grantee any right to be employed or remain employed by the Company or any of its Subsidiaries, nor limit or affect in any manner the right of the Company or any of its Subsidiaries to terminate the employment or adjust the compensation of the Grantee.

16. Relation to Plan . This Agreement is subject to the terms and conditions of the Plan. In the event of any inconsistency between the provisions of this Agreement and the Plan, the Plan shall govern. The Committee acting pursuant to the Plan, as constituted from time to time, shall, except as expressly provided otherwise herein or in the Plan, have the right to determine any questions which arise in connection with this Agreement. Notwithstanding anything in this Agreement to the contrary, Grantee acknowledges and agrees that this Agreement and the Award described herein (and any settlement thereof) are subject to the terms and conditions of the Company’s clawback policy (if any) as may be in effect from time to time specifically to implement Section 10D of the Exchange Act and any applicable rules or regulations promulgated thereunder (including applicable rules and regulations of any national securities exchange on which the Common Shares may be traded) (the “ Compensation Recovery Policy ”), and that relevant sections

of this Agreement shall be deemed superseded by and subject to the terms and conditions of the Compensation Recovery Policy from and after the effective date thereof.

17. Electronic Delivery . The Company may, in its sole discretion, deliver any documents related to the Award and the Grantee’s participation in the Plan, or future awards that may be granted under the Plan, by electronic means or request the Grantee’s consent to participate in the Plan by electronic means. The Grantee hereby consents to receive such documents by electronic delivery and, if requested, agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

19. Successors and Assigns . Without limiting Section 4 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Grantee, and the successors and assigns of the Company.

21. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same agreement.

22. Country-Specific Special Terms and Conditions . Notwithstanding any provisions in this Agreement, the Award shall also be subject to the special terms and conditions set forth in Appendix B to this Agreement for the Grantee’s country of residence. Moreover, if a Grantee relocates to one of the countries included on Appendix B , the special terms and conditions for such country will apply to the Grantee, to the extent the Company determines that the application of such terms and conditions are necessary or advisable in order to comply with local law or facilitate the administration of the Plan. Appendix B constitutes part of this Agreement.

Appendix A

[_____________]

Appendix B

[_____________]

EXHIBIT 31.1

PRINCIPAL EXECUTIVE OFFICER'S CERTIFICATION PURSUANT

TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ramzi Hermiz, certify that:


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

Date: June 1, 2017

EXHIBIT 31.2

PRINCIPAL FINANCIAL OFFICER'S CERTIFICATION PURSUANT

TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, W. Jay Potter, certify that:


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

Date: June 1, 2017

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Shiloh Industries, Inc. (the "Company") on Form 10-Q for the three months ended April 30, 2017 , as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer's knowledge:


(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.

Dated: June 1, 2017

/s/ Ramzi Hermiz

Ramzi Hermiz

President and Chief Executive Officer

/s/ W. Jay Potter

W. Jay Potter

Senior Vice President and Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.