x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
51-0347683
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
Large Accelerated Filer
|
¨
|
Accelerated filer
|
x
|
Non-accelerated filer
|
¨
|
Smaller Reporting Company
|
¨
|
Emerging Growth Company
|
¨
|
|
|
|
Page
|
|
|||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|||
|
|||
|
|||
|
Item 4.
Controls and Procedures
|
||
|
|||
|
Item 1.
Legal Proceedings
|
||
|
Item 1A.
Risk Factors
|
||
|
Item 6.
Exhibits
|
Item 1.
|
Condensed Consolidated Financial Statements
|
|
July 31,
2018 |
|
October 31,
2017 |
||||
|
|
||||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
17,276
|
|
|
$
|
8,736
|
|
Accounts receivable, net
|
193,135
|
|
|
188,664
|
|
||
Related-party accounts receivable
|
395
|
|
|
759
|
|
||
Prepaid income taxes
|
9,905
|
|
|
338
|
|
||
Inventories, net
|
75,115
|
|
|
61,812
|
|
||
Prepaid expenses and other assets
|
45,615
|
|
|
34,212
|
|
||
Total current assets
|
341,441
|
|
|
294,521
|
|
||
Property, plant and equipment, net
|
313,806
|
|
|
266,891
|
|
||
Goodwill
|
28,175
|
|
|
27,859
|
|
||
Intangible assets, net
|
15,480
|
|
|
15,025
|
|
||
Deferred income taxes
|
5,749
|
|
|
6,338
|
|
||
Other assets
|
10,572
|
|
|
7,949
|
|
||
Total assets
|
$
|
715,223
|
|
|
$
|
618,583
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current debt
|
$
|
818
|
|
|
$
|
2,027
|
|
Accounts payable
|
173,162
|
|
|
166,059
|
|
||
Other accrued expenses
|
64,686
|
|
|
46,171
|
|
||
Accrued income taxes
|
952
|
|
|
1,628
|
|
||
Total current liabilities
|
239,618
|
|
|
215,885
|
|
||
Long-term debt
|
237,331
|
|
|
181,065
|
|
||
Long-term benefit liabilities
|
20,674
|
|
|
21,106
|
|
||
Deferred income taxes
|
6,000
|
|
|
9,166
|
|
||
Other liabilities
|
2,518
|
|
|
3,040
|
|
||
Total liabilities
|
506,141
|
|
|
430,262
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $.01 per share; 5,000,000 shares authorized; no shares issued and outstanding at July 31, 2018 and October 31, 2017, respectively
|
—
|
|
|
—
|
|
||
Common stock, par value $.01 per share; 50,000,000 shares authorized; 23,404,906 and 23,121,957 shares issued and outstanding at July 31, 2018 and October 31, 2017, respectively
|
234
|
|
|
231
|
|
||
Paid-in capital
|
113,946
|
|
|
112,351
|
|
||
Retained earnings
|
144,269
|
|
|
117,976
|
|
||
Accumulated other comprehensive loss, net
|
(49,367
|
)
|
|
(42,237
|
)
|
||
Total stockholders’ equity
|
209,082
|
|
|
188,321
|
|
||
Total liabilities and stockholders’ equity
|
$
|
715,223
|
|
|
$
|
618,583
|
|
|
Three Months Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net revenues
|
$
|
294,883
|
|
|
$
|
256,847
|
|
|
$
|
839,889
|
|
|
$
|
777,816
|
|
Cost of sales
|
262,003
|
|
|
227,683
|
|
|
747,616
|
|
|
691,044
|
|
||||
Gross profit
|
32,880
|
|
|
29,164
|
|
|
92,273
|
|
|
86,772
|
|
||||
Selling, general & administrative expenses
|
22,773
|
|
|
21,233
|
|
|
66,159
|
|
|
63,080
|
|
||||
Amortization of intangible assets
|
607
|
|
|
565
|
|
|
1,767
|
|
|
1,694
|
|
||||
Asset impairment, net
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
||||
Restructuring
|
1,965
|
|
|
—
|
|
|
4,962
|
|
|
—
|
|
||||
Operating income
|
7,535
|
|
|
7,366
|
|
|
19,385
|
|
|
21,957
|
|
||||
Interest expense
|
3,209
|
|
|
3,785
|
|
|
8,194
|
|
|
12,797
|
|
||||
Interest income
|
(1
|
)
|
|
(1
|
)
|
|
(9
|
)
|
|
(3
|
)
|
||||
Other expense, net
|
289
|
|
|
1,125
|
|
|
1,119
|
|
|
2,248
|
|
||||
Income before income taxes
|
4,038
|
|
|
2,457
|
|
|
10,081
|
|
|
6,915
|
|
||||
Provision (benefit) for income taxes
|
(7,014
|
)
|
|
4,439
|
|
|
(9,854
|
)
|
|
6,686
|
|
||||
Net income (loss)
|
$
|
11,052
|
|
|
$
|
(1,982
|
)
|
|
$
|
19,935
|
|
|
$
|
229
|
|
Income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share
|
$
|
0.47
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.86
|
|
|
$
|
0.01
|
|
Basic weighted average number of common shares
|
23,278
|
|
|
18,559
|
|
|
23,202
|
|
|
18,048
|
|
||||
Diluted earnings (loss) per share
|
$
|
0.47
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.85
|
|
|
$
|
0.01
|
|
Diluted weighted average number of common shares
|
23,453
|
|
|
18,559
|
|
|
23,341
|
|
|
18,073
|
|
|
|
|
|
Three Months Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income (loss)
|
$
|
11,052
|
|
|
$
|
(1,982
|
)
|
|
$
|
19,935
|
|
|
$
|
229
|
|
|||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|||||||||||
|
Defined benefit pension plans & other post-retirement benefits
|
|
|
|
|
|
|
|
||||||||||
|
|
|
Amortization of net actuarial loss
|
328
|
|
|
380
|
|
|
984
|
|
|
1,080
|
|
||||
|
|
|
Cumulative effect of adoption of ASU 2018-02 reclassified to retained earnings
|
(6,138
|
)
|
|
—
|
|
|
(6,138
|
)
|
|
—
|
|
||||
|
|
|
Income tax provision
|
(76
|
)
|
|
(140
|
)
|
|
(258
|
)
|
|
(420
|
)
|
||||
|
|
Total defined benefit pension plans & other post-retirement benefits, net of tax
|
(5,886
|
)
|
|
240
|
|
|
(5,412
|
)
|
|
660
|
|
|||||
|
Marketable securities
|
|
|
|
|
|
|
|
||||||||||
|
|
|
Unrealized gain (loss) on marketable securities
|
(22
|
)
|
|
(20
|
)
|
|
(151
|
)
|
|
28
|
|
||||
|
|
|
Cumulative effect of adoption of ASU 2018-02 reclassified to retained earnings
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
||||
|
|
|
Income tax benefit (provision)
|
4
|
|
|
7
|
|
|
38
|
|
|
(10
|
)
|
||||
|
|
|
Reclassification of other-than-temporary impairment losses on marketable securities included in net income (loss)
|
122
|
|
|
435
|
|
|
122
|
|
|
435
|
|
||||
|
|
Total marketable securities, net of tax
|
97
|
|
|
422
|
|
|
2
|
|
|
453
|
|
|||||
|
Derivatives and hedging
|
|
|
|
|
|
||||||||||||
|
|
|
Unrealized gain (loss) on interest rate swap agreements
|
171
|
|
|
(218
|
)
|
|
1,331
|
|
|
1,217
|
|
||||
|
|
|
Cumulative effect of adoption of ASU 2018-02 reclassified to retained earnings
|
(213
|
)
|
|
—
|
|
|
(213
|
)
|
|
—
|
|
||||
|
|
|
Income tax provision
|
(76
|
)
|
|
(42
|
)
|
|
(533
|
)
|
|
(919
|
)
|
||||
|
|
|
Reclassification adjustments for settlement of derivatives included in net income
|
153
|
|
|
329
|
|
|
648
|
|
|
1,115
|
|
||||
|
|
Change in fair value of derivative instruments, net of tax
|
35
|
|
|
69
|
|
|
1,233
|
|
|
1,413
|
|
|||||
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
||||||||||
|
|
|
Unrealized gain (loss) on foreign currency translation
|
(2,834
|
)
|
|
6,815
|
|
|
(2,953
|
)
|
|
8,740
|
|
||||
Comprehensive income, net
|
$
|
2,464
|
|
|
$
|
5,564
|
|
|
$
|
12,805
|
|
|
$
|
11,495
|
|
|
Nine Months Ended July 31,
|
||||||
|
2018
|
|
2017
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
19,935
|
|
|
$
|
229
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
33,775
|
|
|
30,946
|
|
||
Asset impairment, net
|
—
|
|
|
41
|
|
||
Restructuring
|
672
|
|
|
—
|
|
||
Amortization of deferred financing costs
|
935
|
|
|
2,495
|
|
||
Deferred income taxes
|
(2,251
|
)
|
|
7,202
|
|
||
Stock-based compensation expense
|
1,557
|
|
|
1,372
|
|
||
Loss on sale of assets
|
2,300
|
|
|
474
|
|
||
Other than temporary impairment on marketable securities
|
154
|
|
|
695
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
18,599
|
|
|
30,260
|
|
||
Inventories
|
(2,656
|
)
|
|
(698
|
)
|
||
Prepaids and other assets
|
(4,884
|
)
|
|
6,191
|
|
||
Payables and other liabilities
|
(6,989
|
)
|
|
(6,810
|
)
|
||
Accrued income taxes
|
(10,266
|
)
|
|
(2,879
|
)
|
||
Net cash provided by operating activities
|
50,881
|
|
|
69,518
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures
|
(38,668
|
)
|
|
(32,564
|
)
|
||
Sale of joint venture
|
—
|
|
|
1,170
|
|
||
Acquisitions, net of cash acquired
|
(62,481
|
)
|
|
—
|
|
||
Proceeds from sale of assets
|
2,696
|
|
|
7,515
|
|
||
Net cash used in investing activities
|
(98,453
|
)
|
|
(23,879
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Payment of capital leases
|
(667
|
)
|
|
(646
|
)
|
||
Proceeds from long-term borrowings
|
218,300
|
|
|
117,700
|
|
||
Repayments of long-term borrowings
|
(161,793
|
)
|
|
(196,984
|
)
|
||
Payment of deferred financing costs
|
(105
|
)
|
|
(221
|
)
|
||
Proceeds from exercise of stock options
|
41
|
|
|
78
|
|
||
Proceeds from the issuance of common stock
|
—
|
|
|
40,236
|
|
||
Net cash provided by (used in) financing activities
|
55,776
|
|
|
(39,837
|
)
|
||
Effect of foreign currency exchange rate fluctuations on cash
|
336
|
|
|
(227
|
)
|
||
Net increase in cash and cash equivalents
|
8,540
|
|
|
5,575
|
|
||
Cash and cash equivalents at beginning of period
|
8,736
|
|
|
8,696
|
|
||
Cash and cash equivalents at end of period
|
$
|
17,276
|
|
|
$
|
14,271
|
|
|
|
|
|
||||
Supplemental Cash Flow Information:
|
|
|
|
||||
Cash paid for interest
|
$
|
7,661
|
|
|
$
|
10,305
|
|
Cash paid for income taxes
|
$
|
2,779
|
|
|
$
|
1,538
|
|
|
|
|
|
||||
Non-cash Activities:
|
|
|
|
||||
Capital equipment included in accounts payable
|
$
|
2,201
|
|
|
$
|
3,554
|
|
Standard
|
Description
|
Effective Date
|
Effect on our financial statements and other significant matters
|
ASU 2018-09
Codification Improvements
|
These amendments provide clarifications and corrections to certain ASC subtopics including the following: Income Statement - Reporting Comprehensive Income – Overall (Topic 220-10), Debt - Modifications and Extinguishments (Topic 470-50), Distinguishing Liabilities from Equity – Overall (Topic 480-10), Compensation - Stock Compensation - Income Taxes (Topic 718-740), Business Combinations - Income Taxes (Topic 805-740), Derivatives and Hedging – Overall (Topic 815-10), and Fair Value Measurement – Overall (Topic 820-10).
|
The majority of the amendments will be effective November 1, 2019
|
We are currently evaluating and assessing the impact this guidance will have on the Company's condensed consolidated statements or financial statement disclosures.
|
ASU 2017-09
Compensation - Stock Compensation (Topic 718)
|
This amendment clarifies when a change to the terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance requires modification accounting if the fair value, vesting condition or the classification of the award is not the same immediately before and after a change to the terms and conditions of the award. The amendment should be adopted on a prospective basis.
|
November 1, 2018 with early adoption permitted.
|
We do not expect the adoption of these provisions to have a significant impact on the Company's condensed consolidated financial statements as it is not our practice to change either the terms or conditions of share-based payment awards once they are granted.
|
ASU 2014-09
Revenue from Contracts with Customers
|
The amendments require companies to recognize revenue when there is a transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. The amendments should be applied on either a full or modified retrospective basis, which clarifies existing accounting literature relating to how and when a company recognizes revenue. The Financial Accounting Standards Board ("FASB"), through the issuance of Accounting Standards Updated ("ASU") No. 2015-14, "Revenue from Contracts with Customers," approved a one year delay of the effective date and permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards. During fiscal 2016, the FASB issued ASUs 2016-10, 2016-11 and 2016-12. Finally, ASU 2016-20 makes minor corrections or minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities.
|
November 1, 2018.
|
We will be adopting the new revenue standards in the first quarter of 2019 utilizing the modified retrospective transition method. To assess the impact of the new standard, the Company is analyzing the standard's impact on customer contracts, comparing its historical accounting policies and practices to the requirements of the new standard, and identifying potential differences from application of the new standard's requirements. While the Company has not yet completed its evaluation of the effects of adoption, the Company does not expect the adoption of the new revenue standards to have a material impact on its consolidated financial statements.
|
ASU 2016-02 Leases
|
This amendment requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet and aligns many of the underlying principles of the new lessor model with those in Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers. The standard requires a modified retrospective transition for capital and operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does not require transition accounting for leases that expire prior to the date of initial adoption. In January 2018, the FASB issued an amendment to ASC Topic 842 which permits companies to elect an optional transition practical expedient to not evaluate existing land easements under the new standard if the land easements were not previously accounted for under existing lease guidance. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842 which clarifies certain areas within ASU 2016-02. ASU 2018-11 Targeted Improvements to Topic 842, Leases. This amendment provides entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.
|
November 1, 2019 with early adoption permitted.
|
We are in the process of evaluating the impact of adoption of this standard on our financial statements and disclosures. We are in the beginning stages of developing a project plan with key stakeholders throughout the organization and gathering and analyzing detailed information on existing lease arrangements. This includes evaluating the available practical expedients, calculating the lease asset and liability balances associated with individual contractual arrangements and assessing the disclosure requirements. In addition, we continue to monitor FASB amendments to ASC Topic 842.
|
ASU 2016-01
Recognition and Measurement of Financial Assets and Financial Liabilities
|
In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"), which was further amended in February and in March 2018 by ASU 2018-03, Technical Corrections and Improvements to Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities and ASU 2018-04, Investments - Debt Securities (Topic 320) and Regulated Operations (Topic 980):Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273 to clarify certain aspects of ASU 2016-01 and to update SEC interpretive guidance in connection with the provisions of ASU 2016-01. These ASUs provide guidance for the 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 OCI. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet in year of adoption.
|
November 1, 2018 with early adoption permitted.
|
We do not expect the adoption of these provisions to have a significant impact on the Company's condensed consolidated statement of financial position or financial statement disclosures.
|
Standard
|
Description
|
Adoption Date
|
Effect on our financial statements and other significant matters
|
ASU 2018-02
Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
|
This amendment allows a reclassification from accumulated other comprehensive income ("AOCI") to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the "TCJA"). The amendments eliminate the stranded tax effects resulting from the TCJA and will improve the usefulness of information reported to financial statement users.
|
May 1, 2018.
|
Please refer to Note 11 of the condensed consolidated financial statements for additional detail on this adoption.
|
ASU 2017-12 Derivatives and Hedging (Topic 815)
|
This amendment changes how an entity assesses effectiveness of derivative instruments, potentially resulting in less ineffectiveness and more derivatives qualifying for hedge accounting. Entities may early adopt the standard in any interim period, with the effect of adoption being applied to existing hedging relationships as of the beginning of the fiscal year of adoption.
|
November 1, 2017.
|
The early adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements. Please refer to Note 12 of the condensed consolidated financial statements for additional detail on this adoption.
|
ASU 2017-07
Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
|
This amendment 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 amendments should be adopted on a retrospective basis.
|
November 1, 2017.
|
Prior to the adoption of ASU 2017-07, pension costs were reported as cost of sales and selling, general and administrative expenses on the Company's condensed consolidated statements of operations. As a result of the early adoption of ASU 2017-07, we reclassified $327 and $955 from cost of sales and selling, general and administrative expenses to other expense, net on the condensed consolidated statements of operations for the three and nine months ended July 31, 2017, respectively.
|
ASU 2017-01
Business Combinations (Topic 805): Clarifying the Definition of a Business
|
The definition of a business affects many areas of accounting, including acquisitions, disposals, goodwill impairment and consolidation. When substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the asset acquired would not represent a business. To be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to create outputs. The new guidance provides a framework to evaluate when an input and a substantive process are present.
|
November 1, 2017.
|
The adoption of this framework did not have a significant impact on the Company's condensed consolidated statement of financial position or financial statement disclosures.
|
ASU 2015-11
Inventory
|
This amendment simplifies the measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. The amendment should be applied on a prospective basis.
|
November 1, 2017.
|
The adoption of these provisions did not have a significant impact on the Company's condensed consolidated statement of financial position or financial statement disclosures.
|
Cash and cash equivalents
|
|
$
|
2,792
|
|
Accounts receivable
|
|
22,719
|
|
|
Inventory
|
|
10,603
|
|
|
Other assets, net
|
|
2,026
|
|
|
Property, plant and equipment
|
|
54,034
|
|
|
Goodwill
|
|
408
|
|
|
Intangible assets
|
|
2,328
|
|
|
Accounts payable and accrued expenses
|
|
(29,637
|
)
|
|
Net assets acquired
|
|
$
|
65,273
|
|
|
July 31, 2018
|
|
October 31, 2017
|
||||
Raw materials
|
$
|
29,074
|
|
|
$
|
23,389
|
|
Work-in-process
|
22,823
|
|
|
18,653
|
|
||
Finished goods
|
23,218
|
|
|
19,770
|
|
||
Total inventory
|
$
|
75,115
|
|
|
$
|
61,812
|
|
|
July 31,
2018 |
|
October 31,
2017 |
||||
Land and improvements
|
$
|
10,955
|
|
|
$
|
11,416
|
|
Buildings and improvements
|
126,501
|
|
|
124,406
|
|
||
Machinery and equipment
|
558,745
|
|
|
504,785
|
|
||
Furniture and fixtures
|
23,570
|
|
|
22,209
|
|
||
Construction in progress
|
35,901
|
|
|
40,356
|
|
||
Total, at cost
|
755,672
|
|
|
703,172
|
|
||
Less: Accumulated depreciation
|
441,866
|
|
|
436,281
|
|
||
Property, plant and equipment, net
|
$
|
313,806
|
|
|
$
|
266,891
|
|
|
July 31,
2018 |
|
October 31,
2017 |
||||
Leased Property:
|
|
|
|
||||
Machinery and equipment
|
$
|
6,877
|
|
|
$
|
7,099
|
|
Less: Accumulated depreciation
|
2,901
|
|
|
2,420
|
|
||
Leased property, net
|
$
|
3,976
|
|
|
$
|
4,679
|
|
Twelve Months Ended July 31,
|
|
||
2019
|
$
|
730
|
|
2020
|
383
|
|
|
2021
|
1,848
|
|
|
|
2,961
|
|
|
Plus amount representing interest ranging from 3.05% to 3.77%
|
258
|
|
|
Future minimum rental payments
|
$
|
3,219
|
|
Balance October 31, 2017
|
|
$
|
27,859
|
|
|
|
Acquisitions
|
|
408
|
|
|
|
Foreign currency translation
|
|
(92
|
)
|
|
Balance July 31, 2018
|
|
$
|
28,175
|
|
|
|
Customer Relationships
|
|
Developed Technology
|
|
Non-Compete
|
|
Trade Name
|
|
Trademark
|
|
Total
|
||||||||||||
Balance October 31, 2017
|
$
|
11,648
|
|
|
$
|
1,997
|
|
|
$
|
31
|
|
|
$
|
1,254
|
|
|
$
|
95
|
|
|
$
|
15,025
|
|
|
|
Acquisitions
|
—
|
|
|
2,328
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,328
|
|
||||||
|
Amortization expense
|
(999
|
)
|
|
(651
|
)
|
|
(12
|
)
|
|
(93
|
)
|
|
(12
|
)
|
|
(1,767
|
)
|
||||||
|
Foreign currency translation
|
(3
|
)
|
|
(103
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(106
|
)
|
||||||
Balance July 31, 2018
|
$
|
10,646
|
|
|
$
|
3,571
|
|
|
$
|
19
|
|
|
$
|
1,161
|
|
|
$
|
83
|
|
|
$
|
15,480
|
|
|
|
Weighted Average Useful Life (years)
|
|
Gross Carrying Value Net of Foreign Currency
|
|
Accumulated Amortization
|
|
Net
|
||||||
|
Customer relationships
|
13.2
|
|
$
|
17,566
|
|
|
$
|
(6,920
|
)
|
|
$
|
10,646
|
|
|
Developed technology
|
9.1
|
|
7,232
|
|
|
(3,661
|
)
|
|
3,571
|
|
|||
|
Non-compete
|
2.3
|
|
824
|
|
|
(805
|
)
|
|
19
|
|
|||
|
Trade Name
|
14.8
|
|
1,875
|
|
|
(714
|
)
|
|
1,161
|
|
|||
|
Trademark
|
10.0
|
|
166
|
|
|
(83
|
)
|
|
83
|
|
|||
|
|
|
|
$
|
27,663
|
|
|
$
|
(12,183
|
)
|
|
$
|
15,480
|
|
|
July 31,
2018 |
|
October 31, 2017
|
||||
Credit Agreement—interest rate of 3.98% at July 31, 2018 and 3.88% at October 31, 2017
|
$
|
235,100
|
|
|
$
|
178,200
|
|
Equipment security note
|
88
|
|
|
482
|
|
||
Capital lease obligations
|
2,961
|
|
|
3,760
|
|
||
Insurance broker financing agreement
|
—
|
|
|
650
|
|
||
Total debt
|
238,149
|
|
|
183,092
|
|
||
Less: Current debt
|
818
|
|
|
2,027
|
|
||
Total long-term debt
|
$
|
237,331
|
|
|
$
|
181,065
|
|
Twelve Months Ending July 31,
|
|
Credit Agreement
|
|
Equipment Security Note
|
|
Capital Lease Obligations
|
|
Total
|
||||||||
2019
|
|
$
|
—
|
|
|
$
|
88
|
|
|
$
|
730
|
|
|
$
|
818
|
|
2020
|
|
—
|
|
|
—
|
|
|
383
|
|
|
383
|
|
||||
2021
|
|
—
|
|
|
—
|
|
|
1,848
|
|
|
1,848
|
|
||||
2022
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2023
|
|
235,100
|
|
|
—
|
|
|
—
|
|
|
235,100
|
|
||||
Total
|
|
$
|
235,100
|
|
|
$
|
88
|
|
|
$
|
2,961
|
|
|
$
|
238,149
|
|
|
Pension Benefits
|
|
Other Post-Retirement
Benefits
|
||||||||||||
|
Three Months Ended July 31,
|
|
Three Months Ended July 31,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Interest cost
|
$
|
791
|
|
|
$
|
821
|
|
|
$
|
3
|
|
|
$
|
3
|
|
Expected return on plan assets
|
(839
|
)
|
|
(864
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of net actuarial loss
|
328
|
|
|
377
|
|
|
1
|
|
|
2
|
|
||||
Net periodic cost
|
$
|
280
|
|
|
$
|
334
|
|
|
$
|
4
|
|
|
$
|
5
|
|
|
Pension Benefits
|
|
Other Post-Retirement
Benefits
|
||||||||||||
|
Nine Months Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Interest cost
|
$
|
2,375
|
|
|
$
|
2,462
|
|
|
$
|
8
|
|
|
$
|
9
|
|
Expected return on plan assets
|
(2,519
|
)
|
|
(2,592
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of net actuarial loss
|
984
|
|
|
1,131
|
|
|
5
|
|
|
8
|
|
||||
Net periodic cost
|
$
|
840
|
|
|
$
|
1,001
|
|
|
$
|
13
|
|
|
$
|
17
|
|
|
|
|
Pension and Post Retirement Plan Liability
|
|
Marketable Securities Adjustment (1)
|
|
Interest Rate Swap Adjustment (2)
|
|
Foreign Currency Translation Adjustment
|
|
Accumulated Other Comprehensive Loss
|
||||||||||
Balance at April 30, 2018
|
|
$
|
(27,373
|
)
|
|
$
|
(97
|
)
|
|
$
|
(121
|
)
|
|
$
|
(13,188
|
)
|
|
$
|
(40,779
|
)
|
|
|
Other comprehensive income (loss), net of tax
|
|
—
|
|
|
(18
|
)
|
|
95
|
|
|
(2,834
|
)
|
|
(2,757
|
)
|
|||||
|
Amounts reclassified from accumulated other comprehensive loss, net of tax
|
|
252
|
|
|
122
|
|
|
153
|
|
|
—
|
|
|
527
|
|
|||||
|
Net current-period other comprehensive income (loss)
|
|
252
|
|
|
104
|
|
|
248
|
|
|
(2,834
|
)
|
|
(2,230
|
)
|
|||||
|
Reclassification to retained earnings (3)
|
|
(6,138
|
)
|
|
(7
|
)
|
|
(213
|
)
|
|
—
|
|
|
(6,358
|
)
|
|||||
Balance at July 31, 2018
|
|
$
|
(33,259
|
)
|
|
$
|
—
|
|
|
$
|
(86
|
)
|
|
$
|
(16,022
|
)
|
|
$
|
(49,367
|
)
|
|
|
|
Pension and Post Retirement Plan Liability
|
|
Marketable Securities Adjustment (1)
|
|
Interest Rate Swap Adjustment (2)
|
|
Foreign Currency Translation Adjustment
|
|
Accumulated Other Comprehensive Loss
|
||||||||||
Balance at October 31, 2017
|
|
$
|
(27,847
|
)
|
|
$
|
(2
|
)
|
|
$
|
(1,319
|
)
|
|
$
|
(13,069
|
)
|
|
$
|
(42,237
|
)
|
|
|
Other comprehensive income (loss), net of tax
|
|
—
|
|
|
(113
|
)
|
|
798
|
|
|
(2,953
|
)
|
|
(2,268
|
)
|
|||||
|
Amounts reclassified from accumulated other comprehensive loss, net of tax
|
|
726
|
|
|
122
|
|
|
648
|
|
|
—
|
|
|
1,496
|
|
|||||
|
Net current-period other comprehensive income (loss)
|
|
726
|
|
|
9
|
|
|
1,446
|
|
|
(2,953
|
)
|
|
(772
|
)
|
|||||
|
Reclassification to retained earnings (3)
|
|
(6,138
|
)
|
|
(7
|
)
|
|
(213
|
)
|
|
—
|
|
|
(6,358
|
)
|
|||||
Balance at July 31, 2018
|
|
$
|
(33,259
|
)
|
|
$
|
—
|
|
|
$
|
(86
|
)
|
|
$
|
(16,022
|
)
|
|
$
|
(49,367
|
)
|
|
|
Asset (Liability) Derivatives
|
||||||
|
|
Balance Sheet Location
|
July 31, 2018
|
October 31, 2017
|
||||
Net Investment Hedging Instruments:
|
|
|
|
|||||
|
Cross-currency interest rate swap contract
|
Other assets
|
$
|
2,441
|
|
$
|
—
|
|
Cash Flow Hedging Instruments:
|
|
|
|
|||||
|
Interest rate swap contracts
|
Other liabilities
|
$
|
(109
|
)
|
$
|
(2,088
|
)
|
|
Location
|
Three Months Ended July 31, 2018
|
Nine Months Ended
July 31, 2018 |
||||
|
Interest expense
|
$
|
3,209
|
|
$
|
8,194
|
|
|
Effect of hedging on interest expense
|
$
|
(274
|
)
|
$
|
27
|
|
|
Location
|
Three Months Ended July 31, 2017
|
Nine Months Ended
July 31, 2017 |
||||
|
Interest expense
|
$
|
3,785
|
|
$
|
12,797
|
|
|
Effect of hedging on interest expense
|
$
|
329
|
|
$
|
1,115
|
|
|
|
Stock Options
|
|
Restricted Stock
|
|
Restricted Stock Units
|
|||||||||||||||||||
Outstanding at:
|
|
Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Life
|
|
Restricted Shares
|
|
20-day EMA
|
|
Weighted Average Remaining Contractual Life
|
|
Restricted Share Units
|
|
20-day EMA
|
|
Weighted Average Remaining Contractual Life
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
November 1, 2016
|
|
90
|
|
|
$9.67
|
|
3.04
|
|
376
|
|
|
$6.11
|
|
1.83
|
|
22
|
|
|
$4.17
|
|
1.78
|
||||
Granted
|
|
—
|
|
|
—
|
|
|
|
|
246
|
|
|
7.93
|
|
|
|
|
29
|
|
|
8.62
|
|
|
|
|
Options exercised or restricted stock vested
|
|
(8
|
)
|
|
9.79
|
|
|
|
|
(159
|
)
|
|
5.71
|
|
|
|
|
(14
|
)
|
|
4.17
|
|
|
|
|
Forfeited or expired
|
|
(24
|
)
|
|
13.38
|
|
|
|
|
(5
|
)
|
|
9.20
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
July 31, 2017
|
|
58
|
|
|
$8.16
|
|
2.78
|
|
459
|
|
|
$7.19
|
|
1.78
|
|
37
|
|
|
$7.67
|
|
2.10
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
November 1, 2017
|
|
58
|
|
|
$8.16
|
|
2.53
|
|
441
|
|
|
$7.07
|
|
1.60
|
|
36
|
|
|
$7.69
|
|
1.82
|
||||
Granted
|
|
—
|
|
|
—
|
|
|
|
|
296
|
|
|
8.12
|
|
|
|
|
18
|
|
|
7.90
|
|
|
|
|
Options exercised or restricted stock vested
|
|
(12
|
)
|
|
3.26
|
|
|
|
|
(200
|
)
|
|
7.51
|
|
|
|
|
(15
|
)
|
|
8.30
|
|
|
|
|
Forfeited or expired
|
|
(3
|
)
|
|
12.04
|
|
|
|
|
(41
|
)
|
|
7.08
|
|
|
|
|
(12
|
)
|
|
6.18
|
|
|
|
|
July 31, 2018
|
|
43
|
|
|
$9.33
|
|
1.83
|
|
496
|
|
|
$7.52
|
|
1.95
|
|
26
|
|
|
$8.17
|
|
1.72
|
|
|
Three Months Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Restricted stock
|
|
$
|
488
|
|
|
$
|
505
|
|
|
$
|
1,465
|
|
|
$
|
1,286
|
|
Restricted stock units
|
|
27
|
|
|
33
|
|
|
92
|
|
|
86
|
|
||||
Total
|
|
$
|
515
|
|
|
$
|
538
|
|
|
$
|
1,557
|
|
|
$
|
1,372
|
|
|
Three Months Ended July 31, 2018
|
|
Nine Months Ended
July 31, 2018 |
||||
Professional and legal costs
|
$
|
58
|
|
|
$
|
1,170
|
|
Employee costs
|
1,352
|
|
|
2,931
|
|
||
Other
|
555
|
|
|
861
|
|
||
|
$
|
1,965
|
|
|
$
|
4,962
|
|
|
Balance as of October 31, 2017
|
|
Restructuring Expense
|
|
Payments
|
|
Balance as of July 31, 2018
|
||||||||
Employee costs
|
$
|
65
|
|
|
$
|
2,931
|
|
|
$
|
1,990
|
|
|
$
|
1,006
|
|
Legal and professional costs
|
270
|
|
|
1,170
|
|
|
1,440
|
|
|
—
|
|
||||
Other
|
—
|
|
|
861
|
|
|
861
|
|
|
—
|
|
||||
|
$
|
335
|
|
|
$
|
4,962
|
|
|
$
|
4,291
|
|
|
$
|
1,006
|
|
|
Three Months Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income (loss) available to common stockholders
|
$
|
11,052
|
|
|
$
|
(1,982
|
)
|
|
$
|
19,935
|
|
|
$
|
229
|
|
Basic weighted average shares
|
23,278
|
|
|
18,559
|
|
|
23,202
|
|
|
18,048
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Restricted share units and stock options (1)
|
175
|
|
|
—
|
|
|
139
|
|
|
25
|
|
||||
Diluted weighted average shares
|
23,453
|
|
|
18,559
|
|
|
23,341
|
|
|
18,073
|
|
||||
Basic income (loss) per share
|
$
|
0.47
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.86
|
|
|
$
|
0.01
|
|
Diluted income (loss) per share
|
$
|
0.47
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.85
|
|
|
$
|
0.01
|
|
|
|
Net Revenues
|
|
Net Revenues
|
||||||||||||
|
|
Three Months Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
Geographic Region:
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
United States
|
|
$
|
210,840
|
|
|
$
|
207,187
|
|
|
$
|
613,858
|
|
|
$
|
633,950
|
|
Europe
|
|
$
|
73,678
|
|
|
$
|
41,808
|
|
|
196,023
|
|
|
119,980
|
|
||
Rest of World
|
|
$
|
10,365
|
|
|
$
|
7,852
|
|
|
30,008
|
|
|
23,886
|
|
||
Total Company
|
|
$
|
294,883
|
|
|
$
|
256,847
|
|
|
$
|
839,889
|
|
|
$
|
777,816
|
|
|
|
Foreign Currency Gain (Loss)
|
|
Foreign Currency Gain (Loss)
|
||||||||||||
|
|
Three Months Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
Geographic Region:
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Europe
|
|
$
|
99
|
|
|
$
|
(143
|
)
|
|
$
|
(219
|
)
|
|
$
|
(175
|
)
|
Rest of World
|
|
$
|
182
|
|
|
$
|
314
|
|
|
$
|
226
|
|
|
$
|
(90
|
)
|
|
Long-Lived Assets
|
||||||
Geographic Region:
|
July 31, 2018
|
|
October 31, 2017
|
||||
United States
|
$
|
228,066
|
|
|
$
|
235,663
|
|
Europe
|
102,430
|
|
|
53,569
|
|
||
Rest of World
|
26,965
|
|
|
20,543
|
|
||
Total Company
|
$
|
357,461
|
|
|
$
|
309,775
|
|
•
|
our ability to accomplish our strategic objectives;
|
•
|
our 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;
|
•
|
our ability to realize cost savings expected to offset price concessions;
|
•
|
our ability to successfully integrate acquired businesses, including businesses located outside of the United States;
|
•
|
risks associated with doing business internationally, including economic, political and social instability, foreign currency exposure and the lack of acceptance of our products;
|
•
|
inefficiencies related to production and product launches that are greater than anticipated;
|
•
|
changes in technology and technological risks;
|
•
|
work stoppages and strikes at our facilities and that of our customers or suppliers;
|
•
|
our dependence on the automotive and heavy truck industries, which are highly cyclical;
|
•
|
the dependence of the automotive industry on consumer spending, which is subject to the impact of domestic and international economic conditions affecting car and light truck production;
|
•
|
regulations and policies regarding international trade;
|
•
|
financial and business downturns of our customers or vendors, including any production cutbacks or bankruptcies;
|
•
|
increases in the price of, or limitations on the availability of aluminum, magnesium or steel, our primary raw materials, or decreases in the price of scrap steel;
|
•
|
the successful launch and consumer acceptance of new vehicles for which we supply parts;
|
•
|
the impact on financial statements of any known or unknown accounting errors or irregularities; and the magnitude of any adjustments in restated financial statements of our operating results;
|
•
|
the occurrence of any event or condition that may be deemed a material adverse effect under our outstanding indebtedness or a decrease in customer demand which could cause a covenant default under our outstanding indebtedness;
|
•
|
changes to tariffs or trade agreements, or the imposition of new tariffs or trade restrictions imposed on steel or aluminum materials which we use, including changes related to tariffs on automotive imports;
|
•
|
pension plan funding requirements; and
|
•
|
other factors besides those listed here could also materially affect our business.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Production Volumes
|
Three Months Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
|
(Number of Vehicles in Thousands)
|
|
(Number of Vehicles in Thousands)
|
||||||||
Europe
|
5,778
|
|
|
5,619
|
|
|
17,365
|
|
|
16,763
|
|
North America
|
4,146
|
|
|
4,171
|
|
|
12,554
|
|
|
12,816
|
|
Total
|
9,924
|
|
|
9,790
|
|
|
29,919
|
|
|
29,579
|
|
|
|
|
|
|
|
|
|
||||
Europe:
|
|
|
|
|
|
|
|
||||
Increase from prior year
|
159
|
|
|
|
|
602
|
|
|
|
||
% Increase from prior year
|
2.8
|
%
|
|
|
|
3.6
|
%
|
|
|
||
North America
|
|
|
|
|
|
|
|
||||
Decrease from prior year
|
(25
|
)
|
|
|
|
(262
|
)
|
|
|
||
% Decrease from prior year
|
(0.6
|
)%
|
|
|
|
(2.0
|
)%
|
|
|
||
Total
|
|
|
|
|
|
|
|
||||
Increase from prior year
|
134
|
|
|
|
|
340
|
|
|
|
||
% Increase from prior year
|
1.4
|
%
|
|
|
|
1.1
|
%
|
|
|
|
Nine Months Ended July 31,
|
|
2018 vs. 2017
|
||||||||
|
2018
|
|
2017
|
|
change
|
||||||
Net cash provided by operating activities
|
$
|
50,881
|
|
|
$
|
69,518
|
|
|
$
|
(19,309
|
)
|
Net cash used in investing activities
|
$
|
(98,453
|
)
|
|
$
|
(23,879
|
)
|
|
$
|
(74,574
|
)
|
Net cash provided by (used in) financing activities
|
$
|
55,776
|
|
|
$
|
(39,837
|
)
|
|
$
|
95,613
|
|
|
Nine Months Ended July 31,
|
||||||
|
2018
|
|
2017
|
||||
Operational cash flow before changes in operating assets and liabilities
|
$
|
57,077
|
|
|
$
|
43,454
|
|
|
|
|
|
||||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
18,599
|
|
|
30,260
|
|
||
Inventories
|
(2,656
|
)
|
|
(698
|
)
|
||
Prepaids and other assets
|
(4,884
|
)
|
|
6,191
|
|
||
Payables and other liabilities
|
(6,989
|
)
|
|
(6,810
|
)
|
||
Accrued income taxes
|
(10,266
|
)
|
|
(2,879
|
)
|
||
Total change in operating assets and liabilities
|
$
|
(6,196
|
)
|
|
$
|
26,064
|
|
|
|
|
|
||||
Net cash provided by operating activities
|
$
|
50,881
|
|
|
$
|
69,518
|
|
•
|
Cash outflows from changes in operating assets and liabilities was
$6,196
for the
nine months ended July 31,
2018
and cash inflows was
$26,064
for the
nine months ended July 31,
2017
and was impacted by working capital initiatives and deferred tax changes related to the TCJA.
|
•
|
Cash inflows from changes in accounts receivable for the
nine months ended July 31,
2018
and
2017
, were
$18,599
and
$30,260
, respectively. The cash inflows were due to continuing efforts in collecting receivables and sales volume changes.
|
•
|
Cash outflows from changes in inventory for the
nine months ended July 31,
2018
and
2017
were
$2,656
and
$698
, respectively. The increase was primarily driven by a change in customer mix and delivery.
|
•
|
Cash outflows from changes in prepaids and other assets for the
nine months ended July 31,
2018
was
$4,884
and cash inflows from changes in prepaids and other assets for the
nine months ended July 31,
2017
was
$6,191
resulting from investments and the timing of invoicing customer reimbursed tooling awards.
|
•
|
Cash outflows from changes in payables and other liabilities for the
nine months ended July 31,
2018
and 2017 was
$6,989
and
$6,810
, respectively, resulting from the matching of terms with our customers and vendors, offset partially by the timing of payments related to capital expenditures and customer funded tooling.
|
•
|
Cash outflows from changes in accrued income taxes for the
nine months ended July 31,
2018
was
$10,266
and
$2,879
from changes in accrued income taxes for the nine months ended
July 31, 2017
. The changes were primarily because of the changes in the tax provision (benefit) and the effect of the TCJA.
|
Item 4.
|
Controls and Procedures
|
Item 6.
|
Exhibits
|
|
|
Incorporated By Reference
|
|
|
||
Exhibit #
|
Exhibit Description
|
Form
|
File Number
|
Date of First Filing
|
Exhibit Number
|
Filed Herewith
|
Employment Agreement by and between the Company and Lillian Etzkorn dated as of April 26, 2018.
|
|
|
|
|
X
|
|
Principal Executive Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
Principal Financial Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
|
|
X
|
|
|
|
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
X
|
|
|
|
|
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
X
|
|
|
|
|
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
X
|
|
|
|
|
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
X
|
|
|
|
|
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
X
|
|
S
HILOH
I
NDUSTRIES
, I
NC
.
|
|
|
|
|
|
By:
|
/s/ Lillian Etzkorn
|
|
|
Lillian Etzkorn
|
|
|
Senior Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)
|
1.
|
Effectiveness
|
2.
|
Employment
|
3.
|
Compensation
|
4.
|
Benefits and Reimbursements
|
5.
|
Termination
|
(a)
|
the unpaid portion of Executive’s then-current Base Salary accrued through the date of termination of Executive’s employment, within 30 days of Executive’s termination of employment;
|
(b)
|
unpaid reimbursements of expenses that are reimbursable pursuant to
Sections
4.4
and
4.5
but have not been reimbursed by the Company as of the termination of Executive’s employment, within 30 days of Executive’s termination of employment;
|
(c)
|
to the extent provided by the Company’s vacation policy or to the extent required by applicable law, payment for accrued but unused days of vacation, within 30 days of Executive’s termination of employment; and
|
(d)
|
such employee benefits, if any, as to which Executive may be entitled pursuant to the terms of the employee benefit and compensation plans of the Company (the payments described in clauses (a) through (d) hereof being referred to as the “
Accrued Rights
”).
|
(a)
|
For purposes of this Agreement, “
Cause
” shall mean: (i) being charged with or indicted for, or a plea of guilty or nolo contendere to a felony or a crime involving dishonesty, fraud, or moral turpitude; (ii) conduct by Executive that brings the Company or any subsidiary or affiliate of the Company into public disgrace or disrepute, (iii) gross negligence or misconduct by Executive with respect to the Company or any subsidiary or affiliate of the Company, (iv) Executive’s insubordination or failure to follow the lawful directions of the CEO, which is not cured within three days after written notice thereof to Executive, (v) Executive’s violation of
Section 6
of this Agreement or the provisions of the IP Agreement, (vi) Executive’s breach of a material employment policy of the Company, which is not cured within 10 days after written notice thereof to Executive, or (vii) any other breach by Executive of this Agreement or any other written agreement with the Company or any subsidiary or affiliate which is material and which is not cured within 30 days after written notice thereof to Executive. The existence of Cause shall be determined in good faith by the Company.
|
(b)
|
For purposes of this Agreement, “
Good Reason
” shall mean the occurrence of any of the following without Executive’s consent: (i) a material adverse change in Executive’s title, duties or responsibilities; (ii) a material reduction in Executive’s Base Salary other than an across-the-board reduction that affects other executives similarly situated to Executive; and (iii) any relocation of Executive’s principal office by more than 75 miles from the Company’s Plymouth, Michigan location (this does not apply to customary business travel throughout the U.S. and abroad associated with Executive’s
|
6.
|
Competitive Activity; Confidentiality; Non-Solicitation.
|
(a)
|
Covenants During Employment
. While employed by the Company, Executive will not compete with the Company anywhere in the world. In accordance with this restriction, but without limiting its terms, while employed by the Company, Executive will not:
|
(b)
|
Covenants Following Termination
. For a period of one year following the termination of Executive’s employment, Executive will not:
|
(c)
|
Indirect Competition
. For the purposes of
Sections
6.2(a)
and
6.2(b)
inclusive, but without limitation thereof, Executive will be in violation thereof if Executive engages in any or all of the activities set forth therein directly as an individual on Executive’s own account, or indirectly as a partner, joint venturer, employee, agent, salesperson, consultant, officer and/or director of any firm, association, partnership, corporation or other entity, or as a stockholder of any corporation in which Executive or Executive’s spouse, child or parent owns, directly or indirectly, individually or in the aggregate, more than 1% of the outstanding stock.
|
(d)
|
If it shall be judicially determined that Executive has violated this
Section 6.2
, then the period applicable to each obligation that Executive shall have been determined to have violated shall automatically be extended by a period of time equal in length to the period during which such violation(s) occurred.
|
(a)
|
Executive will keep in strict confidence, and will not, directly or indirectly, at any time, during or after Executive’s employment with the Company, disclose, furnish, disseminate, make available or, except in the course of performing Executive’s duties of employment, use any trade secrets or confidential business and technical information of the Company or its customers or vendors, without limitation as to when or how Executive may have acquired such information. Such confidential information shall include, without limitation, the Company’s unique selling, manufacturing and servicing methods and business techniques, training, service and business manuals, promotional materials, training courses and other training and instructional materials, vendor and product information, customer and prospective customer lists, other customer and prospective customer information and other business information. Executive specifically acknowledges that all such confidential information, whether reduced to writing, maintained on any form of electronic media, or maintained in the mind or memory of Executive and whether compiled by the Company, and/or Executive, derives independent economic value from not being readily known to or ascertainable by proper means by others who can obtain economic value from its disclosure or use, that reasonable efforts have been made by the Company to maintain the secrecy of such information, that such information is the sole property of the Company and that any retention and use of such information by Executive during Executive’s employment with the Company (except in the course of performing Executive’s duties and obligations to the Company) or after the termination of
|
(b)
|
Executive agrees that upon termination of Executive’s employment with the Company, for any reason, Executive shall return to the Company, in good condition, all property of the Company, including without limitation, the originals and all copies of any materials which contain, reflect, summarize, describe, analyze or refer or relate to any items of information listed in
Section 6.5(a)
of this Agreement. In the event that such items are not so returned, the Company will have the right to charge Executive for all reasonable damages, costs, attorneys’ fees and other expenses incurred in searching for, taking, removing and/or recovering such property.
|
(a)
|
“
Company’s Business
” means the business of designing, engineering, manufacturing, marketing or selling lightweighting, noise and vibration solutions for automotive, commercial vehicle and other industrial markets or any other product, material or process sold or produced by the Company during the course of Executive’s employment with the Company, including any product, material or process which may
|
(b)
|
“
Restricted Territory
” means: (i) North America (including any territory of the United States); and (ii) all of the specific customer accounts, whether within or outside of the geographic area described in (i) above, with which Executive had any contact or for which Executive had any responsibility (either direct or supervisory) at the termination of Executive’s employment and at any time during the two-year period prior to such termination.
|
(a)
|
Notwithstanding the foregoing, nothing in this Agreement prevents the Executive from disclosing information as may be required by applicable law, or pursuant to the valid order of a court or an authorized government agency, provided that, where permitted by applicable law, Executive agrees to give the Company advance notice of any anticipated disclosure of confidential information and will cooperate with the Company in seeking confidentiality protections. Moreover, nothing in this Agreement prohibits Executive from reporting possible violations of federal law or regulation to any governmental agency or entity or making other disclosures that are protected under the whistleblower provisions of applicable law and Executive does not need the Company’s prior authorization to make any such reports or disclosures and is not required to notify the Company that Executive has made such reports or disclosures.
|
(b)
|
The Company also gives Executive notice that: (i) Executive will not be held criminally or civilly liable under any federal or state trade secret law for any disclosure of a trade secret that is made: (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney and solely for the purpose of reporting or investigating a suspected violation of law; or (B) in a complaint or other document that is filed under seal in a lawsuit or other proceeding; and (ii) if Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Executive may disclose the Company’s trade secrets to Executive’s attorney and use the trade secret information in the court proceeding if Executive (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.
|
7.
|
General Terms.
|
(a)
|
The Parties intend that any amounts payable under this Agreement, and the Company’s and Executive’s exercise of authority or discretion hereunder either comply with or
|
(b)
|
Notwithstanding any provisions of this Agreement to the contrary, if Executive is a “specified employee” (within the meaning of Section 409A and determined pursuant to policies adopted by the Company) at the time of Executive’s separation from service and if any portion of the payments or benefits to be received by Executive upon separation from service would be considered deferred compensation under Section 409A, amounts that would otherwise be payable pursuant to this Agreement and benefits that would otherwise be provided pursuant to this Agreement, in each case, during the six-month period immediately following Executive’s separation from service will instead be paid or made available on the earlier of (i) the first day of the seventh month following the date of Executive’s separation from service and (ii) Executive’s death.
|
(c)
|
To the extent any reimbursement or in-kind benefit provided under this Agreement is nonqualified deferred compensation within the meaning of Section 409A (i) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year; (ii) the reimbursement of an eligible expense must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred; and (iii) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.
|
(d)
|
Each payment under this Agreement is intended to be a “separate payment” and not of a series of payments for purposes of Section 409A.
|
(e)
|
A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits subject to Section 409A upon or following a termination of employment unless such termination is also a “separation from service” (within the meaning of Section 409A), and notwithstanding anything contained herein the contrary, the date on which such separation from service takes place shall be the termination date.
|
1.
|
I have reviewed this
quarterly
report on Form
10-Q
of Shiloh Industries, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statement for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ Ramzi Hermiz
|
Ramzi Hermiz
President and Chief Executive Officer
|
1.
|
I have reviewed this
quarterly
report on Form
10-Q
of Shiloh Industries, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statement for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Lillian Etzkorn
|
|
Lillian Etzkorn
Senior Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
|
/s/ Ramzi Hermiz
|
|
Ramzi Hermiz
President and Chief Executive Officer
|
|
/s/ Lillian Etzkorn
|
|
Lillian Etzkorn
Senior Vice President and Chief Financial Officer
|