General

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

COVID-19

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

    Many of our customers suspended manufacturing operations, particularly in
North America, Europe and Asia, on a temporary basis due to market conditions
and matters associated with COVID-19. In response to these COVID-19 related
conditions and to protect the health and safety of our employees globally, we
began closing production at our Asian facilities in February 2020 and our
European and North American facilities in March 2020. Our facilities in Asia
reopened in March 2020 while production remained suspended at the majority of
our European and North American global facilities for all of April 2020 and most
of May 2020. As of the beginning of June all of our facilities in Europe and
North America reopened. Due to these significant disruptions, our profitability
has been significantly impacted during the second and third quarters of 2020.
In response to the COVID-19 pandemic, we took several proactive steps to
preserve cash, maximize our financial flexibility and protect our employees in
order to efficiently manage through the COVID-19 pandemic:
•We maximized our liquidity position by borrowing on our Revolving Credit
Facility;
•We aggressively reduced operating costs, capital expenditures and working
capital, including eliminating discretionary spending and adjusting production
activity;
•We temporarily reduced salaried employee costs 20% to 25% throughout the
organization via salary reductions;
•We pursued any opportunities or relief offered under government incentive
programs in the countries we are located;
•We temporarily reduced the compensation of the Board of Directors by 50%;
•We reduced hourly factory worker costs via furloughs during part of March and
all of April;
•We delayed planned pension funding and deferred other retirement plan
contributions;
•We instituted mandatory vacations during March or April; and
•We developed safety protocols that were implemented at all global facilities to
promote safe reopening of our manufacturing facilities.

Recent Developments

Bankruptcy Proceedings and Going Concern



On August 30, 2020, the Company and its U.S. subsidiaries (collectively with the
Company, the "Debtors") each filed a voluntary petition for relief (the
"Bankruptcy Petitions," and the cases commenced thereby, the "Chapter 11 Cases")
under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"),
in the United States Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court") under the caption In re Shiloh Industries, Inc. et al. The
Company's foreign
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subsidiaries were not included in the Chapter 11 Cases and continue to operate
their businesses without supervision from the Bankruptcy Court, and are not
subject to the requirements of the Bankruptcy Code.

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


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

Stock and Asset Purchase Agreement



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

DIP Financing



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

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

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



Retention Bonus Plan

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

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


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Economic Conditions Affecting the Automotive Industry



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

    Our operating results are driven by our ability to manage our overall global
manufacturing footprint to ensure proper placement and workforce levels in line
with the decrease in industry volumes. In addition, our ability to adapt to key
industry trends, such as shifts in consumer preferences to other vehicles and
other economic and social factors, increasing technologically sophisticated
content, increasing environmental standards and extended product life of
automotive parts, also play a critical role in our success. Other factors that
are critical to our success include managing changes in the prices of our
principal raw materials, negotiation of price increases and cost reduction
initiatives. The impact of COVID-19 has not had a significant impact on our
supply chain for our principal raw materials.

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

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










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    Our products are included in many models of vehicles manufactured by nearly
all OEMs that produce vehicles in Asia, Europe and North America. Our revenues
are dependent upon the production of automobiles, light trucks and commercial
vehicles in these markets. According to industry statistics, Asia, Europe and
North America production volumes for the three months and nine months ended
July 31, 2020 and 2019 were as follows:
Automotive Production Volumes               Three Months Ended July 31,                                                    Nine Months Ended July 31,
                                            2020                     2019                     2020                       2019
                                         (Number of Vehicles in Thousands)                                              (Number of Vehicles in Thousands)
Asia                                            5,840                  5,442                     16,168                  18,273
Europe                                          3,453                  5,587                     11,502                  16,452
North America                                   2,533                  4,132                      8,768                  12,313
Total                                          11,826                 15,161                     36,438                  47,038

Asia
Increase (decrease) from prior year               398                                            (2,105)
% Increase (decrease) from prior
year                                              7.3  %                                          (11.5) %

Europe


Decrease from prior year                       (2,134)                                           (4,950)
% Decrease from prior year                      (38.2) %                                          (30.1) %
North America
Decrease from prior year                       (1,599)                                           (3,545)
% Decrease from prior year                      (38.7) %                                          (28.8) %

Total


Decrease from prior year                       (3,335)                                          (10,600)
% Decrease from prior year                      (22.0) %                                          (22.5) %



Asia Market:

    The Asia Pacific automotive market production volumes increased during the
third quarter of 2020. The decline in production volumes for the first nine
months was due mainly to the lingering effects of the COVID-19 outbreak.
Automotive production in most of China was stopped during the month of February
and returned to partial capacity starting in March and returned to more normal
levels in the month of April. During the third quarter the volumes recovered
from the pandemic disruptions and increased over last year by 7.3%.

Europe Market:



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

North America Market:



    The significant decline in North America production volumes was mainly due
to the COVID-19 outbreak. Automotive production was for the most part shut-down
during the last half of March and all of April and May. With the disruptions and
stoppages of manufacturing through a significant portion of the quarter the
volumes were down 38.7%. The lingering impact of COVID-19 may continue to
negatively impact North America revenue volumes anticipated in the remainder of
fiscal 2020 and beyond. High levels of consumer debt, recessionary pressures,
and uncertainty due to COVID-19 could constrict future demand for new vehicles.

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Critical Accounting Estimates

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

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

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

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

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



    Intangible Assets. Intangible assets with finite lives are amortized over
their estimated useful lives. We amortize our acquired intangible assets with
finite lives on a straight-line basis over periods ranging from three months to
15 years. Refer to Note 7, "Goodwill and Intangible Assets," to the condensed
consolidated financial statements for a description of the current intangible
assets and their estimated amortization expense.

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

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

    We performed a quantitative goodwill impairment assessment by comparing the
fair value of a reporting unit to its carrying amount, including goodwill as of
April 30, 2020. The carrying amount exceeded the fair value, so we impaired the
goodwill balance, which is further discussed in Note 7, "Goodwill and Intangible
Assets".
    Share-based Payments. We record compensation expense for the fair value of
nonvested stock option awards, restricted stock awards and restricted stock
units over the vesting period. We use the simplified method to calculate the
expected term of the stock options outstanding at five to six years and have
utilized historical weighted average volatility. We determine the volatility and
risk-free rate assumptions used in computing the fair value using the
Black-Scholes option-pricing model. The expected term for the restricted stock
award is between three months and four years. In addition, we do not estimate a
forfeiture rate at the time of grant, instead, we elected to adjust share-based
compensation expense when actual forfeitures occur.
    The Black-Scholes option valuation model requires the input of highly
subjective assumptions, including the expected life of the stock-based award and
stock price volatility. The assumptions used are management's best estimates,
but the estimates involve inherent uncertainties and the application of
management judgment. As a result, if other assumptions had been used, the
recorded stock-based compensation expense could have been materially different
from that depicted in the financial statements.

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

U.S. Pension and Other Post-Retirement Costs and Liabilities. We have
recorded pension and other post-retirement benefit liabilities that are
developed from actuarial valuations for our U.S. operations. The pension plans
were frozen in November of 2006. The determination of our pension liabilities
requires key assumptions regarding discount rates used to determine the present
value of future benefit payments and the expected return on plan assets. The
discount rate is also significant to the development of other post-retirement
liabilities. We determine these assumptions in consultation with, and after
input from our actuaries.

    The discount rate reflects the estimated rate at which the pension and other
post-retirement liabilities could be settled at the end of the year. For our
U.S. operations, we use the Principal Pension Discount Yield Curve ("Principal
Curve") as the basis for determining the discount rate for reporting pension and
retiree medical liabilities. A change of 25 basis points in the discount rate at
October 31, 2019 would increase expense on an annual basis by $19 or decrease
expense on an annual basis by $260.

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

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

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

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


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Results of Operations
Three Months Ended July 31, 2020 Compared to Three Months Ended July 31, 2019

REVENUES. Revenues for the third quarter of fiscal 2020 were $155,367 compared
to revenues of $263,445 in the third quarter of fiscal 2019, a decrease of
$108,078, or 41.0%. The decrease in third quarter sales was driven by
unprecedented industry disruptions related to the COVID-19 pandemic. Our plants
in Europe and North America were for the most part closed for the month of May.
In the month of June and July we slowly began shipping to our customers in
Europe and North America at rates lower than prior to the COVID-19 disruption.
Our Asia operation continued to recover from the pandemic disruptions and sales
were higher than the prior year third quarter.
GROSS PROFIT. Gross profit for the third quarter of fiscal 2020 was $7,032
compared to gross profit of $23,588 in the third quarter of fiscal 2019, a
decrease of $16,556. Gross profit as a percentage of sales was 4.5% for the
third quarter of 2020 and 9.0% for the third quarter of 2019. With most of our
plants being closed for the first month of the quarter, we took proactive
mitigating actions, including temporary reduction of salaries in the month of
May, reduction of discretionary spending, mandatory vacations, headcount
reduction and furloughs. These actions reduced our variable and fixed costs
significantly but not enough to completely mitigate the significant decline in
sales.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $25,165 and $18,105 in the third quarter of fiscal
2020 and 2019, respectively. As a percentage of sales, these expenses were 16.2%
of sales for the third quarter of fiscal 2020 and 6.9% of sales for the third
quarter of fiscal 2019. Selling, general and administrative expenses increased
significantly during the third quarter of 2020 due to approximately $8 million
in professional fees related to the Tenth Amendment to the Revolving Credit
Facility (the "Tenth Amendment"), due diligence, contingency planning, cash
management, and consulting for strategic activities. Additionally, we had higher
bad debt expense during the quarter of $1,993 due to the current liquidity
constraints and challenges of some of our customers. Partially offsetting the
professional fees were reductions of employee salaries for the month of May,
temporary reduction in board fees, reduction of discretionary spending,
mandatory vacations, headcount reduction and furloughs.

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



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

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

    INTEREST EXPENSE. Interest expense for the third quarter of fiscal 2020 was
$5,379 compared to interest expense of $4,633 in the third quarter of fiscal
2019. The interest expense increased because the Company drew down on the
revolving credit facility, which resulted in higher average borrowings during
the third quarter of 2020 related to managing operations during COVID-19.

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

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

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

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



    REVENUES. Revenues for the first nine months of fiscal 2020 were $556,781
compared to revenues of $795,748 in the first nine months of fiscal 2019, a
decrease of $238,967, or 30.0%. Unprecedented industry disruptions related to
the COVID-19 pandemic during the second and third quarter of 2020 impacted our
customer orders and operations in every region of the world. We closed certain
of our operating facilities during part of the second and third quarter in
response to our customers closing their facilities and ceasing orders. We began
closing production at our Asian facilities in February 2020 and our European and
North American facilities in March 2020. Our facilities in Asia reopened in
March 2020 while production remained suspended at the majority of our European
and North American global facilities for all of April and May 2020. As of the
beginning of June all of our facilities in Europe and North America reopened.

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

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $58,059 and $51,069 in the first nine months of
fiscal 2020 and 2019, respectively. As a percentage of sales, these expenses
were 10.4% of sales for the first nine months of fiscal 2020 and 6.4% of sales
for the first nine months of fiscal 2019. Selling, general and administrative
expenses increased significantly during the first nine months of fiscal 2020 due
to approximately $8 million in professional fees and higher bad debt expense due
to the current liquidity constraints and challenges of some of our customers.
The professional fees related to the Tenth Amendment, due diligence, contingency
planning, cash management, and consulting for strategic activities. Offsetting
the increases were temporary salary reductions for employees, temporary
reduction in board fees, reduction of discretionary spending, mandatory
vacations, headcount reduction and furloughs.

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

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

    RESTRUCTURING. Restructuring charges of $13,397 were recorded in the first
nine months of fiscal 2020 compared to $11,371 in the first nine months of
fiscal 2019. Our restructuring charges relate to our global strategic plan to
become a more efficient and focused footprint allowing us to operate with lower
fixed costs and capitalize on growth opportunities. These costs primarily
included employee, professional, legal and other costs. The costs increased in
the first nine months of fiscal 2020 as we terminated the relationship with our
principal restructuring advisor due to the uncertainty of COVID-19, which
resulted in recording the remaining contract costs in the period.
    INTEREST EXPENSE. Interest expense for the first nine months of fiscal 2020
was $14,362, compared to interest expense of $11,836 in the first nine months of
fiscal 2019. The interest expense increased because the Company drew down on the
revolving credit facility, which resulted in higher average borrowings during
the first nine months of 2020 related to managing operations during COVID-19.

OTHER (INCOME) EXPENSE, NET. Other (income) expense, net was $2,221 expense and
$959 income for the first nine months of fiscal 2020 and 2019, respectively.
Other (income) expense, net primarily reflects foreign currency transaction
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gains and losses and periodic pension gains and losses. Other (income) expense,
net reflects the gain on sale of a building in the first nine months of fiscal
2019.

    INCOME TAX PROVISION (BENEFIT). The income tax provision in the first nine
months of fiscal 2020 was $1,650 on a loss before taxes of $197,872 for an
effective tax rate of 0.8%. The income tax benefit in the first nine months of
fiscal 2019 was $2,612 on a loss before taxes of $8,907 for a negative effective
tax rate of 29.3%. The effective tax rate for the nine months ended July 31,
2020 and 2019 varied due to several jurisdictions being subject to valuation
allowances. During the first nine months of 2020 the Company established a
valuation allowance against the net operating losses of its two Swedish
affiliates.

NET LOSS. Net loss for the first nine months of fiscal 2020 was $199,522, or
$8.40 per share diluted compared to a net loss for the first nine months of
fiscal 2019 of $6,295, or $0.27 per share, diluted for the reasons discussed
above.

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

General:



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

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

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

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

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

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

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

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

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The DIP Credit Agreement requires delivery of, among other things, (a) a weekly
financial statement including the balance of cash and cash equivalents of the
Loan Parties, (b) a weekly "Budget Reconciliation Report," and (c) an updated
budget of projected receipts and expenditures of the Loan Parties for the
thirteen-week period following such delivery.

The DIP Credit Agreement provides for customary events of default, including
defaults resulting from non-payment of principal, interest or other amounts when
due, failure to perform or observe covenants, and the occurrence of certain
matters related to the Chapter 11 Cases. Pursuant to the DIP Credit Agreement,
the Loan Parties will act in good faith and use commercially reasonable efforts
to comply with the sale milestones as described below.

In addition, pursuant to the Interim DIP Order, the Company is subject to the
following sale milestones relating to the Chapter 11 Cases:
•within three business days following the Petition Date, the Debtors must file a
motion with the Bankruptcy Court seeking to establish bidding procedures
governing the sale of substantially all of the Debtors' assets (the "Bidding
Procedures Motion");
•by September 28, 2020 (subject to the availability of the Bankruptcy Court),
entry of an order by the Bankruptcy Court approving the Bidding Procedures
Motion;
•by October 26, 2020, deadline for interested parties to submit bids for the
purchase of the Debtors' assets;
•by October 29, 2020, deadline to hold an auction;
•by November 10, 2020 (subject to the availability of the Bankruptcy Court),
deadline for a Bankruptcy Court hearing to approve the sale(s) of substantially
all of the Debtors' assets (the "Sale Hearing"); and
•by December 15, 2020, deadline to consummate the sale(s) of substantially all
of the Debtors' assets.

Cash Flows and Working Capital:



    At July 31, 2020, total debt was $324,779 and total deficit was $(21,880),
resulting in a capitalization rate of 107.2% debt. Current assets were $258,279
and current liabilities were $159,756, excluding long-term debt, resulting in
positive working capital of $98,523. Including long-term debt in current
liabilities results in negative working capital of $224,377.

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


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

957 $ 73,049

Net Cash (Used In) Provided By Operating Activities:

Nine Months Ended July 31,


                                                                         2020                   2019

Operational cash flow before changes in operating assets and liabilities

                                                       $

(22,631) $ 29,633

Changes in operating assets and liabilities:


   Accounts receivable, net                                                31,054               30,213
   Inventories, net                                                         9,488                3,900
   Prepaids and other assets                                               (1,695)              (1,564)
   Payables and other liabilities                                         (55,496)             (30,965)
   Accrued income taxes                                                      (937)              (6,863)
   Total change in operating assets and liabilities               $

(17,586) $ (5,279)



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



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Cash inflows and outflows from changes in operating assets and liabilities:
•Cash inflows from changes in accounts receivable for the nine months ended July
31, 2020 and 2019, were $31,054 and $30,213, respectively. The cash inflows
increased slightly due to the timing of collection of the accounts receivable
balances in relation to the shutdowns and reopening of our plants during the
first nine months of 2020. The cash inflows in the nine months ended July 31,
2019 were due mainly to continuing efforts to collect receivables and sales
volume changes.
•Cash inflows from changes in inventory for the nine months ended July 31, 2020
were $9,488, and cash inflows from changes in inventory were $3,900 for the nine
months ended July 31, 2019. While our customers' plants were shut-down during
part of March and April due to COVID-19, we only built a minimal amount of
finished goods for some key products to ensure we could meet orders when our
customers reopened their plants in June and July. The cash inflows in the nine
months ended July 31, 2019 was primarily driven by operational performance, as
well as a change in customer mix and delivery.
•Cash outflows from changes in prepaids and other assets for the nine months
ended July 31, 2020 were $1,695, and cash outflows from changes in prepaids and
other assets for the nine months ended July 31, 2019 were $1,564. The difference
was primarily driven by the timing of invoicing customer-funded tooling in both
periods.
•Cash outflows from changes in payables and other liabilities for the nine
months ended July 31, 2020 were $55,496, and cash outflows from changes in
payables and other liabilities for the nine months ended July 31, 2019 were
$30,965. While our plants were shut-down during part of March through mid-June
2020 due to COVID-19, the amount of expenditures decreased significantly, and as
a result, our accounts payable declined considerably. The difference was also
partially driven by the timing of payments. The cash outflows in the nine months
ended July 31, 2019 was primarily driven by payment terms with our customers and
vendors, offset partially by the timing of payments related to capital
expenditures and customer funded tooling.
•Cash outflows from changes in accrued income taxes for the nine months ended
July 31, 2020 were $937, and cash outflows from changes in accrued income taxes
for the nine months ended July 31, 2019 were $6,863. The changes were primarily
driven by the timing of payments of income taxes in foreign jurisdictions.

Net Cash Used In Investing Activities:



    Net cash used in investing activities for the nine months ended July 31,
2020 and 2019 were $20,227 and $30,435, respectively. Capital expenditures were
$23,501 and $48,643 for the nine months ended July 31, 2020 and 2019,
respectively. Due to the negative impact of COVID-19, we cut capital
expenditures in the first nine months of 2020. Additionally, for the nine months
ended July 31, 2019, proceeds from the sale of assets generated $12,339,
primarily from the sale of the Pendergrass building and other equipment, as well
as cash inflows from derivative settlements of $5,855.

Net Cash Provided By Financing Activities:



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

Long-term debt and short-term borrowings:



    Refer to "Item 1. - Financial Statements - Notes to Condensed Consolidated
Financial Statements - Note 8 - Financing Arrangements and Note 21 - Subsequent
Events of this Quarterly Report on Form 10-Q for more information.

Contractual Obligations



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

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