<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1997 COMMISSION FILE NO. 0-21964
SHILOH INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 51-0347683
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
SUITE 350, 1013 CENTRE ROAD, WILMINGTON, DELAWARE 19805
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (302) 998-0592
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, PAR VALUE $0.01 PER SHARE
Indicate by checkmark whether the registrant: (1) has filed all reports
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirement for the past 90 days. Yes X No
--- ---
Indicate by checkmark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Annual Report on Form
10-K or any amendment to this Form 10-K. [ ]
Aggregate market value of Common Stock held by non-affiliates of the
registrant as of January 20, 1998 at a closing price of $18.25 per share as
reported by the Nasdaq National Market was approximately $72,689,111. Shares of
Common Stock held by each officer and director, their respective spouses, and by
each person who owns or may be deemed to own 10% or more of the outstanding
Common Stock have been excluded since such persons may be deemed to be
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
Number of shares of Common Stock outstanding as of January 20, 1998 was
13,038,763.
DOCUMENTS INCORPORATED BY REFERENCE
Parts of the following document are incorporated by reference to Part
III of this Annual Report on Form 10-K: the Proxy Statement for the Registrant's
1998 Annual Meeting of Stockholders (the "Proxy Statement").
<PAGE> 2
SHILOH INDUSTRIES, INC.
INDEX TO ANNUAL REPORT
ON FORM 10-K
<TABLE>
<CAPTION>
PAGE
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PART I
<S> <C> <C>
Item 1. Business 2
Item 2. Properties 5
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Securityholders 6
Item 4A. Executive Officers of the Company 6
PART II
Item 5. Market for Company's Common Equity and Related Stockholder 8
Matters
Item 6. Selected Financial Data 9
Item 7. Management's Discussion and Analysis of Financial Condition 10
and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 14
Item 8. Financial Statements and Supplementary Data 14
Item 9. Changes in and Disagreements with Accountants on Accounting 32
and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Company 32
Item 11. Executive Compensation 32
Item 12. Security Ownership of Certain Beneficial Owners and 32
Management
Item 13. Certain Relationships and Related Transactions 32
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 32
</TABLE>
<PAGE> 3
PART I
ITEM 1. BUSINESS.
GENERAL
Shiloh Industries, Inc. (the "Company") is a vertically integrated
steel processor that supplies high quality blanks, stampings and processed steel
to the automotive and other industries. The Company's products include steel
blanks used principally by domestic and foreign automotive manufacturers for
automobile fenders and hoods and heavy truck wheels and brake parts, as well as
steel stampings used principally by automobile component manufacturers. The
Company also designs, engineers and produces precision tools and dies for use in
its own blanking and stamping operations as well as for sale to other industrial
customers. In addition, the Company performs a variety of value-added
intermediate steel processing services, such as pickling hot rolled steel and
slitting, edge trimming, roller leveling and cutting to length hot and cold
rolled steel.
The Company's origins date back to 1950 when its predecessor, Shiloh
Tool & Die Mfg. Company, began to design and manufacture precision tools and
dies. As an outgrowth of its precision tool and die expertise, the Company
expanded into blanking and stamping operations in the early 1960's. In 1977, the
Company formed a joint venture with MTD Products Inc, a privately-held
manufacturer of outdoor power equipment and tools, dies and stampings for the
automotive industry ("MTD Products"), to develop additional steel processing
capabilities.
In April 1993, the Company was organized as a Delaware corporation to
serve as a holding company for seven operating subsidiaries. In June 1993, the
Company effected a reorganization whereby these seven operating subsidiaries
became direct or indirect subsidiaries of the Company (the "Reorganization"). In
July 1993, the Company completed an initial public offering of 3,782,500 shares
of its Common Stock.
On November 1, 1996, the Company acquired substantially all of the
assets of Greenfield Die & Manufacturing Corp. ("Greenfield"), for approximately
$22.6 million, which consisted of approximately $15.0 million in cash and
approximately $7.6 million in assumed debt that was repaid immediately
subsequent to closing. On January 3, 1997, the Company made an additional
payment of approximately $2.3 million required under the terms of the Greenfield
purchase agreement. Greenfield, headquartered in Canton, Michigan, a suburb of
Detroit, serves the automotive industry by providing a variety of value added
processes, including tool and die design and build, stamping, assembly, welding,
prototyping operations and mold design and build.
On August 29, 1997, the Company acquired substantially all of the
assets of C&H Design Company, d.b.a. C&H Die Technology ("C&H"), for
approximately $10.9 million, which consisted of approximately $7.7 million in
cash and approximately $3.2 million in assumed debt that was repaid immediately
subsequent to closing. C&H, headquartered in Utica, Michigan, primarily serves
the automotive industry by providing tool and die design and build. Today, after
giving effect to the acquisition of C&H, the Company operates through nine
facilities.
On November 25, 1997, the Company announced plans for the formation of
a joint venture with Bing Steel Management Inc. ("Bing") and Rouge Industries,
Inc. ("Rouge") to produce and market first operation steel blanks for the
automotive industry. The entity to be formed by the joint venture, Bing Blanking
LLC ("Bing LLC"), will be a Michigan limited liability company and will be
principally managed and operated by Bing. The Company and Rouge will hold
minority positions in Bing LLC and will provide technical assistance and Rouge
will provide flat rolled sheet steel. In addition, the Company commenced
construction of a blanking and stamping facility in Pendergrass, Georgia in
1997. It is anticipated that this facility will be completed in the second half
of 1998.
The Company's principal executive offices are located at Suite 350,
1013 Centre Road, Wilmington, Delaware 19805 and its telephone number is (302)
998-0592. Unless otherwise indicated, all references to the "Company" refer to
Shiloh Industries, Inc. and its direct and indirect subsidiaries.
MARKET OVERVIEW
The Company occupies the market niche between primary steel producers
and end-product manufacturers. Primary steel producers typically find it more
cost effective to focus on the sale of standard size and tolerance steel to
large volume purchasers and view the intermediate steel processor as part of
their customer base. End-product manufacturers seek to purchase steel free from
oxidation and scale, with closer tolerances, on shorter lead times and with more
reliable and more frequent delivery than the primary steel producers can provide
efficiently. Additionally, many end-product manufacturers are unwilling to
invest in the technology, equipment and labor required to further blank, stamp
or otherwise process steel for use in their manufacturing operations. By
outsourcing certain components, many end-product manufacturers are able to
significantly enhance the flexibility of their manufacturing operations in order
to accommodate the shorter production runs and changeover times required by
competitive pressures. These factors, together with the lower cost structure
typically found in the outside supplier, have caused many end-product
manufacturers to find it more beneficial, from a cost, quality and manufacturing
flexibility standpoint, to outsource to steel processors many of the component
parts which are utilized in the production of their end-products.
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Sales to the automotive and light truck industry have historically
represented a significant portion of the Company's sales. This is expected to
continue for the foreseeable future. Sales to automotive and heavy truck
manufacturers, and suppliers to those manufacturers, constituted 76.5%, 64% and
66% of the Company's revenues for the fiscal years ended October 31, 1997, 1996
and 1995, respectively.
STEEL PROCESSING PRODUCTS AND SERVICES
Blanking and Stamping. The Company produces precision stamped steel
components through its blanking and stamping operations. Blanking is a process
in which flat rolled steel is cut into precise two dimensional shapes by passing
steel through a press employing a blanking die. The Company's blanking presses
range in size from 200 tons to 3,000 tons, giving the Company the flexibility to
produce blanks from flat rolled steel ranging in thickness from .020 inches to
.500 inches. The Company's blanks are used principally by manufacturers in the
automobile, heavy truck, heating, ventilating and air conditioning and lawn and
garden industries to produce items such as automobile exterior parts including
fenders, hoods and side panels, and heavy truck wheel rims and brake components.
Stamping is a process in which steel is passed through dies in a
stamping press in order to form the steel into three dimensional parts. The
Company's stamping presses range in size from 150 tons to 1,500 tons, giving the
Company the flexibility to stamp flat rolled steel and steel blanks ranging in
thickness from .015 inches to .250 inches. The Company produces stamped parts
using precision single stage, progressive and transfer dies, which in most cases
are designed and manufactured by the Company. The Company produces stamped
components principally for use in the manufacture of seat components, window
assemblies and exhaust systems for automobiles and light trucks. In addition,
the Company's stamping and blanking operations provide value-added processes
such as welding, assembly, prototyping and mold design and build. These
processes are principally utilized in the automotive industry.
The Company also designs, engineers and produces precision tools and
dies. The Company produces tools and dies for use in its own blanking and
stamping operations as well as for sale to other industrial customers. The
Company maintains state-of-the-art technology to improve its tool and die
production capabilities, and has computerized most of the design and engineering
portions of its tool and die production process to reduce production time and
cost. All of the Company's tool and die manufacturing facilities are
electronically connected to certain major customers to expedite the delivery of
tool and die specifications.
Other Steel Processing. The Company processes flat rolled steel
principally for primary steel producers and manufacturers, including its own
operations, that require processed steel for end-product manufacturing purposes.
The Company either purchases or receives on a toll processing basis (i.e., the
Company does not acquire ownership of the steel) hot rolled and cold rolled
steel from primary steel producers located throughout the Midwest. See "-- Raw
Materials." This steel typically requires additional processing to meet the
requirements of the end-product manufacturers. The Company's intermediate
processing operations include pickling, slitting, edge trimming, roller
leveling, cutting to length and quality inspecting of flat rolled steel.
The first processing operation for hot rolled steel typically involves
pickling, a chemical process in which an acidic solution is applied to the steel
to remove the surface oxidation and scale which develops on the steel shortly
after it is hot rolled. During the pickling process, the steel is either coated
with oil to prevent oxidation or with a borax based solution to prevent
oxidation and facilitate the stamping process. The Company added a pickling
line, which became fully operational in 1996, thereby allowing the Company to
nearly double its capacity for cleaning, finishing and coating steel. After
pickling, the steel is ready for either delivery to the customer or additional
processing. Cold rolled steel does not require pickling.
Pickled steel and cold rolled steel often go through additional
processing operations by the Company to meet the requirements of end-product
manufacturers. Slitting is the cutting of coiled steel to precise widths. Edge
trimming removes a specified portion of the outside edges of the coiled steel to
produce a uniform width. Roller leveling flattens the steel by applying pressure
across the width of the steel to make the steel suitable for blanking and
stamping. Cutting to length produces steel cut to specified lengths ranging from
12 inches to 168 inches. In addition to cleaning, leveling and cutting steel,
the Company visually inspects steel to detect production flaws and utilizes
computers to provide both visual displays and documented records of the
thickness maintained throughout the entire coil of steel. To achieve high
quality and increased volume levels, and to be responsive to manufacturers'
just-in-time supply requirements, the Company has computerized most of its steel
processing operations and has combined several complementary processing lines
such as pickling, slitting and cutting to length at single facilities. The
Company also performs inspection and inventory control services for certain
customers.
FORMATION OF JOINT VENTURE; EXPANSION INTO MICHIGAN
In January 1996, the Company and Rouge formed a limited liability
company, Shiloh of Michigan, L.L.C. ("Shiloh of Michigan"), to create a joint
venture to produce engineered steel blanks, with the Company as an eighty
percent (80%) equity owner. As of the end of fiscal 1997, the Company's
investment in this joint venture totaled approximately $28.0 million. Shiloh of
Michigan commenced construction of a new manufacturing facility in Romulus,
Michigan in 1995. Construction of this facility was completed in 1996 and the
facility became operational in 1997.
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In November 1996, the Company completed its acquisition of Greenfield,
which is based in a suburb of Detroit, Michigan. In addition, in September 1997,
the Company completed its acquisition of C&H, which is based in Utica, Michigan.
See "-- General."
In November 1997, the Company, Rouge and Bing announced plans for the
formation of a Michigan limited liability company, Bing LLC, to create a joint
venture to produce and market first operation steel blanks for the automotive
industry. The Company will be a 19.75 percent equity owner in this entity.
Through Greenfield, C&H and its interests in Shiloh of Michigan and Bing LLC,
the Company has expanded its geographic presence in Michigan. This expansion is
consistent with the Company's long-term strategy of broadening its geographic
scope.
SALES AND MARKETING
The Company's steel processing products and services are marketed
directly by a sales force consisting of 19 salesmen who cover 14 states. Two of
the Company's salesmen focus on the Company's relationships with primary steel
producers. Each of the Company's salesmen is trained to market the Company's
entire line of steel processing products and services. The Company supplements
its sales efforts with the technical support of its engineering staff, which, in
many cases, offers the customer technical assistance during the product
development stage. Certain of the Company's executive officers also actively
participate in the Company's marketing efforts.
CUSTOMERS
The Company produces blanked and stamped parts and processes flat
rolled steel for a variety of industrial customers. The Company supplies steel
blanks primarily to the Big Three automobile manufacturers and manufacturers of
heavy truck wheels and brake parts, and supplies stamped components to other
automobile parts producers such as AP Parts, Johnson Controls and Excel
Industries, who in turn sell to the Big Three and other automobile
manufacturers. In addition, the Company also supplies blanks and stampings to
manufacturers in the heating, ventilating and air conditioning, lawn and
garden, home appliance and construction industries. The Company estimates that
in fiscal 1997, sales to the automotive and light truck industry accounted for
approximately 66.4% of the Company's revenues. The Company processes flat
rolled steel for a number of primary steel producers and for end-product
manufacturers in a variety of industries, including the automotive and lawn and
garden industries.
One of the Company's largest customers is the Parma, Ohio stamping
facility of the Metal Fabricating division of General Motors Corporation ("MFD
Parma"). During fiscal 1997, MFD Parma accounted for approximately 8.7% of the
Company's revenues and, because these revenues relate to blanks that are
produced on a toll processing basis, approximately 20.5% of the total steel
tonnage processed by the Company. The Company is the exclusive supplier of
blanks to MFD Parma and has principally dedicated one of its blanking facilities
to such production. MFD Parma produces stamped exterior body parts for use in
many General Motors automobiles. The Company is linked through an electronic
data interchange with MFD Parma and supplies blanks on a just-in-time basis.
LTV Steel Company, Inc. ("LTV Steel"), a primary steel producer with
significant production facilities located in close proximity to the Company, is
another large customer of the Company. During fiscal 1997, LTV Steel accounted
for approximately 2.2 % of the Company's revenues and approximately 10.3% of the
total steel tonnage processed by the Company. The Company processes steel for
LTV Steel on a toll processing basis and typically ships the processed steel to
end-product manufacturers after completion of the necessary processing
operations.
OPERATIONS AND ENGINEERING
The Company operates its steel processing facilities on an integrated
basis. A significant portion of the processed flat rolled steel required by the
Company in its blanking and stamping operations is supplied through its other
steel processing operations. With four tool and die facilities, the Company
typically designs, engineers and manufactures substantially all of the tools and
dies used in its blanking and stamping operations.
Seven of the Company's facilities were constructed by the Company and
were located and designed to facilitate the integrated flow of the Company's
processing operations. In addition, the Company has developed a just-in-time
delivery system that enables the Company to meet its customers' requirements for
deliveries on shorter lead times thereby minimizing their need to carry
significant inventory levels.
The Company has a highly qualified and trained work force supplemented,
where appropriate, with automation. In 1990, the Company established its own
Total Quality Management program, known as the Integrated Continuous Improvement
Program, which allows employees to take active roles in the improvement of their
manufacturing processes and environment. The employees meet regularly to
generate new ideas or projects relating to quality improvements, production
safety and cost reduction.
RAW MATERIALS
The basic materials required for the Company' steel processing
operations are hot and cold rolled steel. The Company obtains steel for
processing from a number of primary steel producers, including Rouge,
Wheeling-Pittsburgh Steel, LTV Steel,
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Warren Consolidated Steel and North Star BAP Steel LTD. A significant portion of
the Company's steel processing products and services are provided on a toll
processing basis. Under these arrangements, the Company charges a specified fee
for processing steel without acquiring ownership of the steel and being burdened
with the attendant costs of ownership and risk of loss. Through centralized
purchasing, the Company attempts to purchase its raw materials at the lowest
competitive prices for the quantity purchased. The amount of steel available for
processing is a function of the production levels of primary steel producers.
Although the Company has been able to satisfy all of its current requirements
for flat rolled steel, most of its suppliers have instituted allocation programs
due to the current strong demand for flat rolled steel.
COMPETITION
Competition for sales of steel blanks and stampings is intense, coming
from numerous companies, including internal divisions of the Big Three
automobile manufacturers, which have blanking facilities and greater financial
and other resources than the Company. The market for the Company's other steel
processing operations is also highly competitive. The Company competes with a
number of steel processors in its region, such as Worthington Industries and
Samuel Steel Pickling Company, and primary steel producers, many of which also
have comparable facilities and greater financial and other resources than the
Company. The primary characteristics of competition encountered by the Company
in each of these markets are product quality, just-in-time delivery and price.
EMPLOYEES
As of December 31, 1997, the Company had approximately 1,590 employees.
The employees at two of the Company's operating facilities (an aggregate of 349
employees) are covered by collective bargaining agreements that are due to
expire on January 14, 2000 and June 4, 2001, respectively. In addition, on
December 12, 1997, employees of Shiloh of Michigan voted in favor of unionizing.
As of the date hereof, a formal agreement has not yet been entered into with
respect to such employees of Shiloh of Michigan.
BACKLOG
Because the Company conducts its steel processing operations generally
on the basis of short-term orders, backlog is not a meaningful indicator of
future performance.
SEASONALITY
The Company typically experiences decreased revenue and operating
income during its first fiscal quarter of each year, usually resulting from
generally slower overall automobile production during the winter months. The
Company's revenues and operating income in its third fiscal quarter can also be
affected by the typically lower automobile production activities in July due to
manufacturers' changeover in production lines.
ENVIRONMENTAL MATTERS
The Company is subject to environmental laws and regulations concerning
emissions to the air, discharges to waterways, and generation, handling,
storage, transportation, treatment and disposal of waste materials, and is also
subject to other Federal and state laws and regulations regarding health and
safety matters. Each of the Company's production facilities has permits and
licenses allowing and regulating air emissions and water discharges. While the
Company believes that at the present time it is in substantial compliance with
environmental laws and regulations, these laws and regulations are constantly
evolving and it is impossible to predict whether compliance with these laws and
regulations may have a material adverse effect on the Company in the future.
ITEM 2. PROPERTIES.
The Company is a Delaware holding corporation that conducts its
operations through nine manufacturing plants, six located in north central Ohio
and three located in Michigan. In addition, the Company commenced construction
in 1997 of a blanking and stamping facility in Pendergrass, Georgia. The Company
believes substantially all of its property and equipment is in good condition
and that it has sufficient capacity to meet its current operational needs. The
Company considers full capacity of its steel processing facilities to be three
eight hour shifts for 5.5 days per week. At October 31, 1997, the Company's
steel processing operations were operating at near full capacity. The Company's
nine operating facilities, all of which are owned (except for its Utica and
portions of its Canton, Michigan facilities), are as follows:
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<TABLE>
<CAPTION>
SQUARE DATE OF
LOCATION FOOTAGE OPERATION DESCRIPTION OF USE
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<S> <C> <C> <C>
Mansfield, Ohio 274,245 1955 Blanking/Tool and Die
Production
Valley City, Ohio 256,095(1) 1986 Blanking
Wellington, Ohio 70,000(2) 1946 Tool and Die Production
Wellington, Ohio 210,915 1987 Stamping
Valley City, Ohio 257,815 1977 Other Steel Processing
Valley City, Ohio 222,870 1990 Other Steel Processing
Romulus, Michigan(3) 170,600 1996 Blanking
Canton, Michigan 220,555 1996(4) Stamping/Tool and Die
Production
Utica, Michigan 62,500 1997(5) Tool and Die Production
Pendergrass, Georgia 90,000 1998(6) Blanking
</TABLE>
(1) Includes a 56,630 square foot addition to this facility, which was
completed in February 1997.
(2) The Company began construction on an expansion of this facility in July
1997, and anticipates that the facility will be completed in February 1998.
(3) This facility is owned by Shiloh of Michigan, the Company's joint venture
with Rouge. The Company is a 80% equity owner of Shiloh of Michigan.
(4) The Company acquired these operating facilities in November 1996 in
connection with its acquisition of Greenfield. Includes an approximately
45,000 square foot addition to this facility, which is expected to be
completed in August 1998.
(5) The Company acquired these operating facilities in August 1997 in
connection with the acquisition of C&H. The Company leases these
facilities.
(6) The Company began construction of this facility in September 1997, and the
Company anticipates that the facility will be completed in June 1998.
The facilities in Valley City, Ohio are in close proximity to each
other, facilitating greater integration of operations and management. In
addition, the Company's operating facilities at Canton, Michigan consist of six
separate facilities (four of which are leased) located within a five mile radius
of each other.
ITEM 3. LEGAL PROCEEDINGS.
The Company is involved in various lawsuits arising in the ordinary
course of business. In management's opinion, the outcome of these matters will
not have a material adverse effect on the Company's financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS.
No matter was submitted during the fourth quarter of the fiscal year
covered by this report to a vote of securityholders of the Company.
ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY.
The information under this Item 4A is furnished pursuant to Instruction
3 to Item 401(b) of Regulation S-K.
Robert L. Grissinger, Chairman of the Board, President and Chief
Executive Officer. Mr. Grissinger was appointed Chairman of the Board in October
1996. In addition, he was appointed Chief Executive Officer of the Company in
January 1995 and has been President and a Director of the Company since its
formation in April 1993. Mr. Grissinger has also served as the Executive Vice
President of Shiloh Corporation since 1989, and has been employed by Shiloh
Corporation since 1963 in various financial and operational capacities. Mr.
Grissinger is 59 years old.
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Dominick C. Fanello, Vice Chairman of the Board. Mr. Fanello has been
Vice Chairman of the Board since October 1996 and a Director of the Company
since its formation in April 1993. Mr. Fanello served as Chairman of the Board
of the Company from April 1993 to October 1996. In January 1995, Mr. Fanello
resigned his position as the Chief Executive Officer of the Company, a position
that he had previously held since April 1993. Mr. Fanello has also served as the
Chairman and Chief Executive Officer of Shiloh Corporation since 1954, and was
one of the founders of Shiloh Corporation and its predecessor. Mr. Fanello also
serves as a director of Park National Bank (Newark, Ohio), Richland Trust
Company and Rouge. Mr. D. Fanello is 76 years old.
James C. Fanello, Executive Vice President. Mr. Fanello has been the
Executive Vice President and a Director of the Company since its formation in
April 1993. Mr. Fanello had been the President of Stamping and Banking of the
Company from April 1993 through October 1996. Mr. Fanello has been employed by
Shiloh Corporation and its predecessor since 1951 during which time he has held
various positions, including President and Executive Vice President. Mr. J.
Fanello is 69 years old.
William R. Burton, Senior Vice President, Corporate Planning. Mr.
Burton joined the Company in October 1994 and served as President of Shafer
Valve Company ("Shafer Valve") until its sale in July 1996. Since January 1995,
Mr. Burton has served as Senior Vice President, Corporate Planning. From
December 1990 through September 1994, Mr. Burton was the President and General
Manager of Hartman Electrical Manufacturing, a division of Figgie International,
Inc. that manufactures electrical components principally for use in commercial
and military aircraft. Mr. Burton is 59 years old.
G. Rodger Loesch, Executive Vice President of Engineered Products. Mr.
Loesch was appointed Executive Vice President of Engineered Products of the
Company in July 1997. Prior to July 1997, Mr. Loesch had been the Chief
Financial Officer of the Company since January 1995 and the Treasurer of the
Company since its formation in April 1993. Mr. Loesch has also served as the
Corporate Controller of Shiloh Corporation since 1986. Mr. Loesch is a Certified
Public Accountant. Prior to joining Shiloh Corporation, Mr. Loesch was employed
by Burroughs Corporation and Arthur Andersen & Co. Mr. Loesch is 43 years old.
Craig A. Stacy, Chief Financial Officer and Treasurer. Mr. Stacy was
appointed Chief Financial Officer and Treasurer in October 1996. Mr. Stacy had
been the Corporate Controller of the Company since 1994. Prior to joining the
Company, Mr. Stacy was employed by Price Waterhouse LLP and Ernst & Young LLP.
Mr. Stacy is a Certified Public Accountant. Mr. Stacy is 31 years old.
David K. Frink, Executive Vice President of Steel Processing and
Director of Corporate Purchasing. Mr. Frink was named Executive Vice President
of Steel Processing and Director of Corporate Purchasing in August 1996. Prior
to August 1996, Mr. Frink had been the plant general manager at Liverpool Coil
Processing since June 1991. Mr. Frink is 50 years old.
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PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
As of the close of business on January 20, 1998, there were 157
stockholders of record for the Company's Common Stock. The Company believes that
the actual number of stockholders of the Company's Common Stock exceeds 300. The
Company has not declared or paid any cash dividends on shares of its equity
securities, including Common Stock, since its incorporation in April 1993. The
Company currently intends to retain earnings to support its growth strategy and
does not anticipate paying dividends in the foreseeable future. The Common Stock
is traded on the Nasdaq National Market under the symbol "SHLO".
The Company's Common Stock commenced trading on June 29, 1993. The
table below sets forth the high and low closing prices for the Company's Common
Stock for its four quarters in fiscal 1996 and 1997.
<TABLE>
<CAPTION>
High Low
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<S> <C> <C>
1st Quarter
January 31, 1996 $13.00 $10.63
2nd Quarter
April 30, 1996 $14.38 $12.00
3rd Quarter
July 31, 1996 $17.75 $13.00
4th Quarter
October 31, 1996 $18.00 $12.75
1st Quarter
January 31, 1997 $18.25 $15.50
2nd Quarter
April 30, 1997 $18.25 $14.00
3rd Quarter
July 31, 1997 $20.75 $15.50
4th Quarter
October 31, 1997 $20.75 $16.25
</TABLE>
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ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth selected consolidated financial data of
the Company. The data for each of the six years in the period ended October 31,
1997, are derived from the consolidated financial statements of the Company,
which have been audited by Price Waterhouse LLP, independent accountants. The
data presented below should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the Financial
Statements and the notes thereto included elsewhere in this annual report.
<TABLE>
<CAPTION>
(amounts in thousands, except per share data) Year Ended October 31,
--------------------------------------------------------------
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues $273,161 $219,466 $212,348 $194,766 $162,526 $132,661
Cost of sales 214,343 173,836 173,734 164,013 134,607 106,726
-------- -------- -------- -------- -------- --------
Gross profit 58,818 45,630 38,614 30,753 27,919 25,935
Selling, general and administrative expenses 25,557 17,086 14,341 13,962 12,324 13,314
-------- -------- -------- -------- -------- --------
Operating income 33,261 28,544 24,273 16,791 15,595 12,621
Interest expense, net 2,161 111 402 836 1,377 1,820
Minority interest 394 123 -- -- (6) (57)
Other income (expense), net 274 (81) 64 (82) 182 133
-------- -------- -------- -------- -------- --------
Income from continuing operations before taxes
and effect of change in accounting principle 31,768 28,475 23,935 15,873 14,394 10,877
Provision for income taxes 11,675 10,952 9,471 6,491 5,958 4,523
-------- -------- -------- -------- -------- --------
Income from continuing operations before effect
of change in accounting principle 20,093 17,523 14,464 9,382 8,436 6,354
Loss from discontinued operations, net income taxes -- (256) (289) (613) 427 636
Loss on sale of discontinued operations, net of
income taxes -- (9,589) -- -- -- --
Effect of change in accounting principle -- -- -- (281) -- --
-------- -------- -------- -------- -------- --------
Net Income $ 20,093 $ 7,678 $ 14,175 $ 8,488 $ 8,863 $ 6,990
======== ======== ======== ======== ======== ========
ACTUAL:
Income from continuing operations before effect of
change in accounting principle per share $ 1.54 $ 1.35 $ 1.11 $ 0.72
Loss from discontinued operations, net of income
taxes per share -- (0.02) (0.02) (0.05)
Loss on sale of discontinued operations, net of
income taxes per share -- (0.74) -- --
Effect of change in accounting principle per share -- -- -- (0.02)
-------- -------- -------- --------
Net income per share $ 1.54 $ 0.59 $ 1.09 $ 0.65
======== ======== ======== ========
Weighted average number of common shares 13,032 13,011 13,003 12,968
PRO FORMA: (1)
Income from continuing operations before effect of
change in accounting principle per share (1) $ 0.82 $ 0.69
Income from discontinued operations, net of
income taxes per share (1) 0.04 0.07
-------- --------
Net income per share (1) $ 0.86 $ 0.76
======== ========
Weighed average number of common shares: 10,351 9,167
OTHER DATA:
(Excludes Shafer Valve and acquisitions of businesses)
Capital expenditures $ 63,164 $ 37,482 $ 25,519 $ 12,815 $ 12,803 $ 15,504
Depreciation and amortization 11,012 7,166 6,467 6,063 5,125 4,440
BALANCE SHEET DATA:
Working capital $ 45,483 $ 34,813
Total assets 289,626 207,009
Total debt 96,400 52,933
Stockholders' equity 146,619 126,157
</TABLE>
(1) Periods prior to the Reorganization are computed based upon the number of
shares outstanding immediately subsequent to the Company's initial public
offering in July 1993.
-9-
<PAGE> 11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
General
The Company is a vertically integrated steel processor that supplies
blanks, stampings and processed steel, as well as designs and builds tools for
the automotive and other industries. The Company currently provides a broad
range of intermediate steel processing services, which include: (i) blanking and
stamping; and (ii) other steel processing services (which include pickling hot
rolled steel, slitting, edge trimming, roller leveling and cutting to length of
both hot and cold rolled steel). With the August 1997 purchase of C&H, the
Company operates through nine subsidiaries, Shiloh Corporation, Valley City
Steel Company, The Sectional Die Company, Medina Blanking, Inc., Sectional
Stamping, Inc., Liverpool Coil Processing, Inc., Shiloh of Michigan, the
Company's joint venture with Rouge, Greenfield and C & H.
In 1995, the Company prepared a long-term, business plan which included
a strategic decision to concentrate on core steel processing services. As a
result, the Company sought inquiries from prospective bidders for the sale of
its subsidiary, Shafer Valve. Effective April 30, 1996, the Company accounted
for Shafer Valve as a discontinued operation. In May 1996, the Company entered
into an agreement to sell the stock of Shafer Valve to Bettis Corporation. The
sale was completed on July 9, 1996.
The Company typically experiences decreased revenue and operating
income during the first fiscal quarter of each year, usually resulting from
slower overall automobile production during the winter months. The revenues and
operating income in the third fiscal quarter can also be affected by the
typically lower automobile production activities in July due to manufacturers'
changeover in production lines.
In analyzing the financial aspects of the Company's steel processing
operations, a number of factors must be considered. First, plant utilization
levels are very important to profitability because of the capital intensive
nature of these operations. Because the Company performs a number of different
processing operations, however, it is not meaningful to analyze simply the total
tons of steel processed. For example, blanking and stamping involve more
operational processes, from the design and manufacture of tools and dies to the
production and packaging of the final product, than the Company's other steel
processing services and therefore generally have higher margins. Second, a
significant portion of the Company's steel processing products and services is
provided to customers on a toll processing basis. Under these arrangements, the
Company charges a specified toll processing fee for the processing operations
performed without acquiring ownership of the steel and being burdened with the
attendant costs of ownership and risk of loss. Although the proportion of tons
processed by the Company that are directly owned and toll processed may
fluctuate from quarter to quarter primarily based on the customers for which the
Company is providing services during such period, the Company estimates that
during the past three years approximately 87.2%, 85.9% and 86.4%, respectively,
of total tons processed was done on a toll processing basis. Revenues from
operations involving directly owned steel include a component of raw material
cost whereas toll processing revenues do not; consequently, toll processing
generally results in lower gross profit, but higher gross margin, than directly
owned steel processing. Therefore, an increase in the proportion of total
revenues attributable to directly owned steel processing may result in higher
revenues and gross profits but lower gross margins. The Company's blanking and
stamping operations use more directly owned steel than do its other steel
processing operations. In addition, changes in the price of steel can impact the
Company's results of operations because raw material costs are by far the
largest component of cost of sales in processing directly owned steel.
-10-
<PAGE> 12
Results of Operations
The following table sets forth, the periods indicated, income statement data of
the Company expressed as a percentage of revenues:
<TABLE>
<CAPTION>
Years Ended October 31,
------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Revenues 100.0% 100.0% 100.0%
Cost of sales 78.5 79.2 81.8
----- ----- -----
Gross profit 21.5 20.8 18.2
Selling, general and administrative
expenses 9.4 7.8 6.8
--- --- ---
Operating income from continuing
operations 12.1 13.0 11.4
Interest expense .8 -- .4
Interest income .1 -- .2
Minority interest .2 -- --
Other income .1 -- --
---- ---- ----
Income from continuing operations
before taxes 11.7 13.0 11.2
Provision for income taxes 4.3 5.0 4.4
--- --- ---
Income from continuing operations
before effect of change in accounting
principle 7.4 8.0 6.8
Loss from discontinued operations, net of
income taxes -- .1 .1
Loss on sale of discontinued operations,
net of tax -- 4.4 --
Effect of change in accounting principle -- -- --
---- ---- ----
Net income 7.4% 3.5% 6.7%
==== ==== ====
</TABLE>
YEAR ENDED OCTOBER 31, 1997 COMPARED TO YEAR ENDED OCTOBER 31, 1996
REVENUES. Revenues increased by $53.7 million, or 24.5%, to $273.2
million for the year ended October 31, 1997 from $219.5 million for the
comparable period in fiscal 1996. The increase in revenues is primarily due to
the inclusion in fiscal 1997 of $38.0 million in revenues from Greenfield.
Revenues from the blanking and stamping operations for fiscal 1997 increased
approximately 32.8% from the comparable period due to the inclusion of revenue
from Greenfield, while revenue from the other steel processing operations for
fiscal 1997 increased approximately 5.2% from the comparable period in fiscal
1996. The percentage of revenues from directly owned steel processed was 71.7%
for fiscal 1997 and 71.2% for the comparable period in fiscal 1996. Revenues
from the toll processed steel were 28.3% for fiscal 1997 and 28.8% for the
comparable period in fiscal 1996. The increase in the percentage of revenues
from directly owned steel processed was primarily due to the inclusion of
Greenfield which predominantly processes directly owned steel.
GROSS PROFIT. Gross profit increased by $13.2 million, or 28.9%, to
$58.8 million for fiscal 1997 from $45.6 million for the comparable period in
1996. Gross margin increased to 21.5% in fiscal 1997 from 20.8% for the
comparable period in 1996. The increase in gross margin is primarily
attributable to a shift in the mix of toll and directly owned steel processing
at certain facilities and the value added services provided by the inclusion of
Greenfield.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $8.5 million, or 49.7%, to $25.6 million in
fiscal 1997 from $17.1 million for the comparable period in fiscal 1996. As a
percentage of revenues, these expenses increased to 9.4% for fiscal 1997 from
7.8% for the comparable period in fiscal 1996. The largest component of the
increase, both as a percentage of sales and in dollars, arose principally from
the inclusion of Greenfield. In addition, the increase was attributable to costs
associated with the adoption of a supplemental executive retirement plan, and to
a lesser extent, the addition of new personnel at the Company's corporate
offices.
OTHER. Interest expense increased to $2.2 million in fiscal 1997 from
$165,948 for the comparable period in fiscal 1996 due primarily to increased
average borrowing during fiscal 1997 that were primarily incurred in connection
with the acquisition of Greenfield. Interest expense of approximately $1.9
million relating to expansion of several facilities was capitalized in fiscal
1997. The provision for income taxes was $11.7 million in fiscal 1997 compared
with $11.0
-11-
<PAGE> 13
million in fiscal 1996, representing effective tax rates of 36.8% and 38.5%. The
reduction in the effective tax rate is primarily due to state incentive programs
for capital investments.
DISCONTINUED OPERATIONS. On July 9, 1996, the Company sold the stock of
Shafer Valve and accordingly has accounted for this operation as a discontinued
operation. Prior year's statements of income and cash flows have been restated
to reflect the discontinuation of the valve actuator segment.
NET INCOME. Net income from continuing operations for fiscal 1997
increased by $2.6 million or 14.8% to $20.1 million from $17.5 million for the
comparable period in fiscal 1996. This increase was primarily the result of the
inclusion of Greenfield in fiscal 1997.
YEAR ENDED OCTOBER 31, 1996 COMPARED TO YEAR ENDED OCTOBER 31, 1995
REVENUES. Revenues increased by $7.1 million, or 3.4%, to $219.5
million for the year ended October 31, 1996 from $212.4 million for the
comparable period in 1995. The increase in revenues primarily reflects
improvements in the Company's steel processing operations. Revenues from the
blanking and stamping operations for fiscal 1996 increased approximately 1.3%
from the comparable period in fiscal 1995, while revenue from the other steel
processing operations for fiscal 1996 increased approximately 8.4 % from the
comparable period in fiscal 1995. The percentage of toll sales as a percentage
of total sales decreased to 28.8% in fiscal 1996 from 26.3 % in fiscal 1995.
GROSS PROFIT. Gross profit increased by $7.0 million, or 18.2 %, to
$45.6 million for fiscal 1996 from $38.6 million for the comparable period in
fiscal 1995. Gross margin increased to 20.8% in fiscal 1996 from 18.2% for the
comparable period in fiscal 1995. The increase in gross margin is principally
due to management's continued efforts to contain costs and recover historical
steel price increases through higher sale prices to its customers. Continued
improvements in gross margin will be more difficult to achieve as the impact of
these price increases lessens. In addition, the increase in toll processing
sales as a percentage of total sales contributed to gross margin improvement.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $2.8 million, or 19.6%, to $17.1 million in
fiscal 1996 from $14.3 million for the comparable period in fiscal 1995. As a
percentage of revenues, these expenses increased to 7.8% for fiscal 1996 from
6.8% for the comparable period in fiscal 1995. The increase is primarily due to
the expansion of the corporate sales staff and to pre-operating costs with
respect to Shiloh of Michigan.
OTHER. Interest expense increased to $165,948 in fiscal 1996 from
$898,596 for the comparable period in fiscal 1995 due primarily to
capitalization of interest related to expansion of several facilities. The
provision for income taxes was $11 million in fiscal 1996 compared with $ 9.5
million in fiscal 1995, representing effective tax rates of 38.5% and 39.6 %.
The reduction in the effective tax rate is primarily due to state tax credits.
DISCONTINUED OPERATIONS. On July 9, 1996, the Company sold the stock of
Shafer Valve and accordingly has accounted for this operation as a discontinued
operation. Prior year's statements of income and cash flows have been restated
to reflect the discontinuation of the valve actuator segment.
NET INCOME. Net income from continuing operations for fiscal 1996
increased by $3.0 million or 20.7% to $17.5 million from $14.5 million for the
comparable period in fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
At October 31, 1997, the Company had $45.5 million of working capital,
representing a current ratio of 2.1 to 1 and debt to total capitalization of
39.7%. As a result of this strong financial condition, the Company will be able
to continue its planned investment in new equipment and facilities through the
next fiscal year.
Net cash provided by operating activities is primarily generated from
net income of the Company plus non-cash charges for depreciation and
amortization, which because of the capital intensive nature of the Company's
business, are substantial. Net cash provided by operating activities for 1997
was $31.1 million as compared to $16.6 million for the comparable period in
fiscal 1996. Fluctuations in working capital and improved operating income were
the primary factors causing the increase in net cash provided by operations from
fiscal 1996 to fiscal 1997. Net cash provided by operating activities has
historically been used by the Company to fund a portion of its capital
expenditures.
Capital expenditures were $63.2 million during the year ended October
31, 1997 and $37.5 million for the comparable period in fiscal 1996. The capital
expenditures made during 1997 were primarily for expansions of current blanking
and stamping facilities of $30.7 million, as well as the construction of an $8.0
million tool and die facility in Wellington, Ohio, and the announced
construction of a new $18.5 million blanking facility in Pendergrass, Georgia.
-12-
<PAGE> 14
The Company's total capital budget for fiscal 1998 will be approximately $40
million. The capital expenditures in fiscal 1997 and fiscal 1998 are primarily
for facility expansions and additions, which are being made to support increased
business, anticipated new business and to enhance productivity. In addition to
using cash generated by operating activities to fund such capital expenditures,
the Company anticipates funding such activities through bank financing.
On November 1, 1996, the Company completed the acquisition of
Greenfield for approximately $25.0 million. On August 29, 1997, the Company
completed the acquisition of C&H for approximately $10.9 million. These
acquisitions were financed with funds obtained through the Company's credit
facilities.
Prior to January 31, 1997, the Company had a $30 million unsecured
revolving credit facility with KeyBank National Association ("KeyBank"). On
January 31, 1997, the Company increased this facility to $70 million (the
"Shiloh Facility"). The term of the Shiloh Facility extends to February 28, 2001
with an option for successive one year term extensions available at the
Company's request and KeyBank's approval, upon proper written notification. The
Company has the option to select the applicable interest rate at KeyBank's prime
rate or the LIBOR rate plus 1/2% fixed in increments of 30, 60 or 90 days. The
terms of the agreement require an annual commitment fee equal to 1/4% on the
average unused amount of the Shiloh Facility. In addition, the Company is acting
as an 80% guarantor for a $28 million revolving credit facility entered into by
Shiloh of Michigan ("SOM Facility"). The Company is required to maintain certain
customary operating and financial covenants during the terms of the Shiloh
Facility and the SOM Facility. The Company is in compliance with all of its loan
covenants, and none of these covenants would preclude the Company from
completing currently planned capital expenditures.
On January 22, 1998, the Company increased the Shiloh Facility to $135
million. The term of the Shiloh Facility extends to January 31, 2003. The
Company has the option to select the applicable interest rate at KeyBank's prime
rate or the LIBOR rate plus a factor as determined by a pricing matrix based on
the Company's ratio of "Funded Debt to EBITDA." The factor as determined by the
pricing matrix is currently .175%. The terms of the agreement require an annual
facility fee as determined by a pricing matrix based on the Company's ratio of
Funded Debt to EBITDA. This annual facility fee is currently .3%. On January 22,
1998 the Company used $28 million of the Shiloh Facility to retire the
outstanding balance of the SOM Facility.
The Company believes that it currently has sufficient liquidity and
available capital resources to meet its existing needs, and the financial
capability to increase its long-term borrowing level if that becomes appropriate
due to changes in its capital requirements.
In March 1995, Medina County, Ohio issued on behalf of the Company an
aggregate of $5.4 million in principal amount of variable rate industrial
revenue bonds due 2010, which are secured by the Company with a letter of
credit. The funds from these bonds were used to finance a portion of the
expansion at the Company's steel pickling operations in Valley City, Ohio. The
Company had withdrawn the entire $5.4 million as of October 31, 1996.
YEAR 2000
The Company has initiated a review of its management and information
systems to discover whether such systems are Year 2000 compliant. Although the
Company has not completed such review, the Company does not anticipate that
significant compliance efforts will be required.
OUTLOOK
The statements contained in this Annual Report on Form 10-K that are
not historical facts are forward-looking statements. These forward-looking
statements are subject to certain risks and uncertainties with respect to the
Company's operations in fiscal 1997 as well as over the long term, including,
without limitation, (i) a downturn in the automotive industry, which is highly
cyclical, dependent on consumer spending and subject to the impact of domestic
and international economic conditions and regulations and policies regarding
international trade, (ii) the ability of the Company to accomplish its strategic
objectives with respect to external expansion through selective acquisitions and
internal expansion and (iii) increases in the price of, or limitations on the
availability of steel, the Company's primary raw material. Any or all of these
risks and uncertainties could cause actual results to differ materially from
those reflected in the forward-looking statements. These forward-looking
statements reflect management's analysis only as of the date of the filing of
this Report. The Company undertakes no obligation to publicly revise these
forward-looking statements to reflect events or circumstances that arise after
the date hereof. In addition to the disclosure contained herein, readers should
carefully review risks and uncertainties contained in other documents the
Company files from time to time with the Securities and Exchange Commission.
EFFECT OF INFLATION
Inflation generally affects the Company by increasing the interest
expense of floating rate indebtedness and by increasing the cost of labor,
equipment and raw materials. Although the general level of inflation has not had
a material effect on the Company's financial results, the Company's difficulties
in passing through steel price increases adversely affected its operating
results in fiscal 1994.
-13-
<PAGE> 15
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Index to Financial Statements
Report of Independent Accountants
Consolidated Balance Sheet at October 31, 1997 and 1996
Consolidated Statement of Income for three years ended October 31, 1997
Consolidated Statement of Cash Flows for the three years ended October 31, 1997
Consolidated Statement of Stockholders' Equity for the three years ended
October 31, 1997
Notes to Consolidated Financial Statements
Financial Statement Schedule for the three years ended October 31, 1997 is
located in Item 14(a) of the Annual Report on Form 10-K:
II - Valuation and Qualifying Accounts and Reserves
All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
-14-
<PAGE> 16
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of
Shiloh Industries, Inc.
In our opinion, the consolidated financial statements listed on the
accompanying index, present fairly, in all material respects, the financial
position of Shiloh Industries, Inc. and its subsidiaries at October 31, 1997 and
1996 and the results of their operations and their cash flows for each of the
three years in the period ended October 31, 1997, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the management of Shiloh Industries, Inc.; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Cleveland, Ohio
December 11, 1997, except as to Note 17, which is as of January 22, 1998.
-15-
<PAGE> 17
SHILOH INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
October 31, October 31,
1997 1996
---- ----
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 191,688 $ 1,721,152
Accounts receivable 50,151,099 33,115,765
Inventory 31,148,360 18,626,492
Deferred income taxes 370,467 1,034,092
Prepaid expenses 3,921,449 3,573,160
------------ ------------
Total current assets 85,783,063 58,070,661
------------ ------------
Property, plant and equipment, net 187,178,766 122,293,375
Goodwill 12,643,610 615,318
Other assets 4,020,791 26,029,671
------------ ------------
Total assets $289,626,230 $207,009,025
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 20,995,989 $ 9,719,528
Short term note payable 3,000,000 2,500,000
Accrued income taxes 1,916,333 1,412,499
Other accrued expenses 14,387,519 9,625,343
------------ ------------
Total current liabilities 40,299,841 23,257,370
------------ ------------
Long-term debt 93,400,000 50,433,352
Deferred income taxes 9,307,241 7,161,027
------------ ------------
Total liabilities 143,007,082 80,851,749
------------ ------------
Stockholders' equity
Common stock, par value $.01 per share;
25,000,000 shares authorized; 13,038,763 and
13,011,663 shares issued and outstanding at
October 31, 1997 and 1996, respectively 130,387 130,116
Preferred stock, $.01 per share; 5,000,000 shares
authorized and unissued -- --
Paid-in capital 38,743,406 38,375,152
Retained earnings 107,745,355 87,652,008
------------ ------------
Total stockholders' equity 146,619,148 126,157,276
Commitments and contingent liabilities -- --
Total liabilities and stockholders' equity $289,626,230 $207,009,025
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-16-
<PAGE> 18
SHILOH INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Year Ended October 31,
----------------------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Revenues $273,161,251 $ 219,465,925 $ 212,347,916
Cost of sales 214,343,391 173,835,459 173,734,108
----------- ----------- -----------
Gross Profit 58,817,860 45,630,466 38,613,808
Selling, general and administrative expenses 25,556,837 17,086,152 14,340,652
---------- ---------- ----------
Operating income 33,261,023 28,544,314 24,273,156
Interest expense 2,219,003 165,948 898,596
Interest income 57,832 55,408 496,147
Minority interest 394,207 123,162 --
Other income (expense), net 274,081 (81,215) 64,019
---------- ---------- ----------
Income from continuing operations before taxes 31,768,140 28,475,721 23,934,726
Provision for income taxes 11,674,793 10,952,269 9,470,855
---------- ---------- ---------
Income from continuing operations 20,093,347 17,523,452 14,463,871
Loss from discontinued operations, net of income taxes -- (256,139) (288,469)
Loss on sale of discontinued operations, net of
income taxes -- (9,589,213) --
Net income $ 20,093,347 $ 7,678,100 $ 14,175,402
============ ============= =============
Earnings per share:
Income from continuing operations $ 1.54 $ 1.35 $ 1.11
Loss from discontinued operations -- (.02) (.02)
Loss on sale of discontinued operations -- (.74) --
------------ ------------- -------------
Net income per share $ 1.54 $ 0.59 $ 1.09
============ ============= =============
Weighted average number of common shares 13,032,081 13,011,663 13,002,616
</TABLE>
The accompanying notes are an integral part of these financial statements.
-17-
<PAGE> 19
SHILOH INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended October 31,
------------------------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income $ 20,093,347 $ 7,678,100 $14,175,402
Adjustment to reconcile net income from continuing operations to net cash
provided by operating activities:
Depreciation and amortization 11,012,383 7,165,910 6,466,668
Discontinued operations -- 9,845,352 288,469
Minority interest (394,207) (103,162) --
Deferred income taxes 2,809,839 1,290,012 683,979
Deferred pension -- -- 61,827
Loss (gain) on sale of assets (53,065) -- 40,831
Changes in operating assets and liabilities, net of working capital
changes resulting from acquisitions:
Accounts receivable (8,846,145) (3,412,343) (1,757,362)
Inventories (2,539,552) (2,527,297) 2,639,569
Prepaids and other assets (335,682) (1,415,075) 1,690,578
Payables and accruals 9,086,189 3,492,744 1,060,896
Accrued income taxes 503,834 (1,226,016) 1,270,429
----------- ----------- -----------
Net cash provided by continuing operations 31,336,941 20,788,225 26,621,286
Discontinued operations - non cash charges and
working capital changes -- (4,225,697) (1,165,511)
----------- ----------- -----------
Net cash provided by operating activities 31,336,941 16,562,528 25,455,775
----------- ----------- -----------
Cash Flows From Investing Activities:
Capital expenditures (63,164,276) (37,482,394) (25,519,357)
Proceeds from sale of assets 157,134 13,200,000 297,580
Acquisitions, net of cash (13,694,436) (22,577,937) --
----------- ----------- -----------
Net cash used in investing activities (76,701,578) (46,860,331) (25,221,777)
----------- ----------- -----------
Cash Flows From Financing Activities:
Proceeds from short-term borrowings 29,700,000 16,500,000 11,800,000
Repayments of short-term borrowings (29,200,000) (14,000,000) (11,800,000)
Proceeds from long-term borrowings 44,250,000 65,102,310 5,331,042
Repayments of long-term borrowings (1,283,352) (37,975,000) (4,892,836)
Issuance of common stock 368,525 -- 194,696
----------- ----------- -----------
Net cash provided by financing activities 43,835,173 29,627,310 632,902
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents (1,529,464) (670,493) 866,900
Cash and cash equivalents at beginning of period 1,721,152 2,391,645 1,524,745
----------- ----------- -----------
Cash and cash equivalents at end of period $ 191,688 $ 1,721,152 $ 2,391,645
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-18-
<PAGE> 20
SHILOH INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON
STOCK ADDITIONAL
($.01 PAR PAID-IN RETAINED
VALUE) CAPITAL EARNINGS TOTAL
-------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
October 31, 1994 129,889 38,180,683 65,798,506 104,109,078
Issuance of 22,813 common shares 227 194,469 -- 194,696
Net Income -- -- 14,175,402 14,175,402
-------- ----------- ------------ ------------
October 31, 1995 130,116 38,375,152 79,973,908 118,479,176
Net Income -- -- 7,678,100 7,678,100
-------- ----------- ------------ ------------
October 31, 1996 130,116 38,375,152 87,652,008 126,157,276
Issuance of 27,100 common shares 271 368,254 -- 368,525
Net Income -- -- 20,093,347 20,093,347
-------- ----------- ------------ ------------
October 31, 1997 $130,387 $38,743,406 $107,745,355 $146,619,148
======== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-19-
<PAGE> 21
SHILOH INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - Business:
The Company is a vertically integrated steel processor that supplies
high quality blanks, stampings and processed steel as well as designs and builds
tools for the automotive and other industries.
NOTE 2 - Summary of Significant Accounting Policies:
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and all wholly-owned and majority-owned subsidiaries. All significant
intercompany transactions have been eliminated.
REVENUE RECOGNITION
The Company recognizes revenue upon product shipment. Revenues include
both direct sales as well as toll processing revenue. Toll processing revenue is
generated when the Company processes customer owned material. Revenues include
$77,383,879, $63,171,827 and $55,848,345 of toll processing revenue for 1997,
1996 and 1995, respectively.
EMPLOYEE BENEFIT PLANS
The Company accrues the cost of defined benefit pension plans which
cover a majority of the Company's employees in accordance with Statement of
Financial Accounting Standards ("SFAS") 87. The plans are funded based on the
requirements and limitations of the Employee Retirement Income Security Act of
1974. The majority of employees of the Company participate in discretionary
profit sharing plans administered by the Company. The Company also provides
postretirement benefits to certain employees (Note 11).
GOODWILL
Goodwill represents the excess of cost over the fair value of net
assets of acquired entities and is amortized on a straight-line basis over the
expected benefit period of 30 years. During 1997, 1996 and 1995, goodwill
amortization amounted to $297,544, $20,763 and $23,113, respectively.
Accumulated amortization was $375,545 and $78,001 at October 31, 1997 and 1996,
respectively.
The Company uses an undiscounted cash flow method to review the
recoverability of the carrying value of goodwill and other long-term assets.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include checking accounts and all highly
liquid investments with an original maturity of three months or less.
INVENTORIES
Inventories are valued at the lower of cost or market, cost being
determined primarily by the last-in, first-out ("LIFO") method and the balance
determined by the first-in, first-out ("FIFO") method, which approximates
average cost.
-20-
<PAGE> 22
NOTE 2 - Summary of Significant Accounting Policies - (continued):
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Expenditures for
maintenance, repairs and renewals are charged to expense as incurred, whereas
major improvements are capitalized. The cost of these improvements is
depreciated over their estimated useful lives. Useful lives range from five to
twelve years for furniture and fixtures and machinery and equipment, fifteen to
twenty years for land improvements and thirty to forty years for buildings and
their related improvements. Depreciation is computed using principally the
straight-line method for financial reporting purposes and accelerated methods
for income tax purposes.
INCOME TAXES
The Company utilizes the asset and liability method in accounting for
income taxes which requires the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary differences between
the carrying amount and tax basis of assets and liabilities.
CONCENTRATION OF CREDIT RISK
The Company sells products to customers primarily in the automotive and
heavy truck industries. The Company performs on-going credit evaluations of its
customers and generally does not require security when extending credit. The
Company maintains a reserve for potential credit losses. Such losses have
historically been within management's expectations. Currently, the Company does
not have financial instruments with off-balance sheet risk.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and investments, trade receivables and
payables approximates fair value because of the short maturity of those
instruments. The carrying value of the Company's long-term debt is considered to
approximate the fair value of these instruments based on the borrowing rates
currently available to the Company for loans with similar terms and maturities.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
STOCK-BASED COMPENSATION
During 1997, the Company adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123").
The Company continues to apply APB Opinion 25 in accounting for stock-based
employee compensation; however, the impact of the fair value based method
described in SFAS No. 123 is presented in the notes to the financial statements.
EARNINGS PER SHARE
Earnings per share is computed by dividing the net income by the
weighted average number of common shares outstanding.
NEWLY ISSUED ACCOUNTING PRONOUNCEMENTS
In February 1997, Statement of Financial Accounting Standards No. 128,
"Earnings per Share" ("SFAS No. 128"), was issued. This Statement establishes
standards for computing and presenting earnings per share. The Company will
adopt SFAS 128 in the year ending October 31, 1998. This statement is not
expected to have a significant impact on the earnings per share computation as
historically computed by the Company.
In March 1997, Statement of Financial Accounting Standards No. 129,
"Disclosure of Information about Capital Structure" ("SFAS No. 129") was issued.
This Statement establishes standards for disclosing information about an
entity's capital structure. The Company will adopt SFAS No. 129 in the year
ending October 31, 1998. Adoption of SFAS 129 is not expected to have a material
impact on the Company.
In June 1997, Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("SFAS No. 130") was issued. This Statement
establishes standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. The Company
will adopt SFAS No. 130 in the year ending October 31, 1999.
In June 1997, Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("SFAS No.
131") was issued. This Statement requires that public business enterprises
report information about operating segments in annual financial statements using
the management approach. The Company will adopt SFAS No. 131 in the year ending
October 31, 1999. The Company has not yet determined what, if any, impact this
standard will have on the financial statements.
-21-
<PAGE> 23
NOTE 3 - Discontinued Operations
On July 9, 1996, the Company completed the sale of substantially all of
the issued and outstanding common stock of Shafer Valve for $13,200,000 in cash.
The disposition of this segment resulted in a $9,589,213 loss after tax and has
been accounted for as a discontinued operation.
Summary operating data of the discontinued operation for the period
ending July 9, 1996 and fiscal year 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Sales $ 10,931,052 $ 16,461,916
Gross profit 2,395,279 4,235,599
Loss before income taxes (756,391) (309,034)
Income tax benefit 244,238 20,565
------------ ------------
Net loss from discontinued operations $ (512,153) $ (288,469)
============ ============
</TABLE>
NOTE 4- Acquisitions
During fiscal 1997, the Company acquired the entities described below,
which were accounted for by the purchase method of accounting:
On August 29, 1997, the Company acquired substantially all the assets
of C & H for an aggregate cash purchase of approximately $10.9 million,
including acquisition costs. C&H, headquartered in Utica, Michigan, provides
tool design and build services for the automotive industry.
On November 1, 1996, the Company acquired substantially all the assets
and assumed certain liabilities of Greenfield for approximately $25.3 million,
including acquisition costs, comprised of approximately $17.3 million of cash
and approximately $7.6 million of assumed liabilities. Greenfield, headquartered
in Canton, Michigan, provides the automotive industry a variety of processes
including tool and die design and build, stamping, assembly, welding,
prototyping operations and mold design and build.
The purchase prices have been allocated to the assets purchased and the
liabilities assumed based upon the fair value on the dates of acquisitions, as
follows:
<TABLE>
<CAPTION>
(In thousands) C&H Greenfield
--- ----------
<S> <C> <C>
Net working capital, other than cash $ 3,364 $ 8,018
Property, plant and equipment 2,764 9,801
Goodwill 4,805 7,519
------- -------
Purchase price $10,933 $25,338
======= =======
</TABLE>
The operating results of these acquired businesses have been included
in the consolidated statement of income from the dates of acquisition.
On the basis of a pro forma consolidation of the results of operations
as if the C&H acquisition had taken place at the beginning of fiscal 1997,
consolidated net sales, net income and earnings per share would have been $288.7
million, $20.2 million and $1.55 per share, respectively, for fiscal 1997. For
the C&H and Greenfield acquisitions combined, pro forma consolidated net sales,
net income and earnings per share would have been $269.7 million, $8.2 million
and $0.63 per share, respectively, for fiscal 1996. Such pro forma amounts are
not necessarily indicative of what the actual results would have been if the
acquisitions had been effective at the beginning of fiscal years 1996 and 1997.
NOTE 5 - Accounts Receivable:
Accounts receivable in the consolidated balance sheet are expected to
be collected within one year and are net of provisions for doubtful accounts, in
the amount of $849,554 and $913,070 at October 31, 1997 and 1996, respectively.
-22-
<PAGE> 24
NOTE 6 - Inventories:
Inventories consist of the following:
<TABLE>
<CAPTION>
October 31, October 31,
1997 1996
------------ ------------
<S> <C> <C>
Raw materials $ 14,009,471 $ 11,557,662
Work-in-process 12,873,380 2,797,698
Finished goods 5,431,578 5,475,054
------------ ------------
Total at average cost 32,314,429 19,830,414
LIFO reserve (1,166,069) (1,203,922)
------------ ------------
Total $ 31,148,360 $ 18,626,492
============ ============
</TABLE>
Average cost inventory is net of reserves to reduce certain inventory
from cost to net realizable value. Such reserves aggregated $137,938 and $82,181
at October 31, 1997 and 1996, respectively. Of the total inventory at average
cost at October 31, 1997 and 1996, $21,393,078 and $17,741,751, respectively,
were valued using the LIFO method.
NOTE 7 - Other Assets:
Other assets consist of the following:
<TABLE>
<CAPTION>
October 31, October 31,
1997 1996
---------- ------------
<S> <C> <C>
Cash surrender value of life insurance $3,242,679 $ 2,990,140
Other 778,112 461,594
Deposit for acquisition -- 22,577,937
---------- -----------
Total $4,020,791 $26,029,671
========== ===========
</TABLE>
NOTE 8 - Property, Plant and Equipment:
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
October 31, October 31,
1997 1996
------------- -------------
<S> <C> <C>
Land $ 4,307,018 $ 3,584,572
Buildings and improvements 69,457,521 48,916,332
Machinery and equipment 136,681,671 87,121,959
Furniture and fixtures 7,767,319 4,810,494
Construction in progress 30,695,279 30,787,858
------------- -------------
Total, at cost 248,908,808 175,221,215
Less: Accumulated depreciation (61,730,042) (52,927,840)
------------- -------------
Net property, plant and equipment $ 187,178,766 $ 122,293,375
============= =============
</TABLE>
Depreciation expense was $10,698,783, $7,145,146, and $6,443,556 for
1997, 1996 and 1995, respectively.
During the three years ended October 31, 1997, interest costs of
$1,886,464, $650,629 and $445,648 were capitalized as part of property, plant
and equipment respectively.
The Company had commitments for capital expenditures of approximately
$16.2 million at October 31, 1997.
-23-
<PAGE> 25
NOTE 9 - Financing Arrangements:
Short-term debt consists of the following:
<TABLE>
<CAPTION>
October 31, October 31,
1997 1996
---------- ----------
<S> <C> <C>
Revolving credit loan - interest at 5.90% at October 31, 1996 $ -- $2,500,000
Revolving credit loan - interest at 6.16% at October 31, 1997 3,000,000 --
---------- ----------
Total $3,000,000 $2,500,000
========== ==========
</TABLE>
Long-term debt consists of the following:
<TABLE>
<CAPTION>
October 31, October 31,
1997 1996
----------- ------------
<S> <C> <C>
Revolving credit loan - interest at 6.16% at October 31, 1997 $63,000,000 $26,500,000
Revolving credit loan - interest at 6.15% at October 31, 1997 25,000,000 18,500,000
Variable rate industrial development bond, secured by letter of
credit, weighted average interest rate at 3.80% payable on
February 1, 2010 5,400,000 5,433,352
----------- -----------
$93,400,000 $50,433,352
Less: current portion -- --
----------- -----------
$93,400,000 $50,433,352
=========== ===========
</TABLE>
Prior to January 31, 1997, the Company had a $30 million unsecured
revolving credit facility with KeyBank. On January 31, 1997, the Company
increased the Shiloh Facility to $70 million. The term of the Shiloh Facility
extends to February 28, 2001 with an option for successive one year term
extensions available at the Company's request and KeyBank's approval, upon
proper written notification. The Company has the option to select the applicable
interest rate at KeyBank's prime rate or the LIBOR rate plus 1/2 % fixed in
increments of 30, 60 or 90 days. The terms of the agreement require an annual
commitment fee equal to 1/4% on the average unused amount of the Shiloh
Facility.
Prior to February 24, 1997, the Company was acting as an 80% guarantor
for the SOM Facility, a $23 million unsecured revolving credit facility, entered
into by Shiloh of Michigan with KeyBank. On February 24, 1997, the Company
decreased the SOM Facility to $5 million and remains an 80% guarantor of the SOM
Facility. The Company is an 80% owner of Shiloh of Michigan. The Company's joint
venture partner continues to guarantee the remaining 20% of the SOM Facility.
The term of the SOM Facility extends to February 28, 1999 with an option for
successive one year term extensions available at Shiloh of Michigan's request
and KeyBank's approval, upon proper written notification. Shiloh of Michigan has
the option to select the applicable interest rate at KeyBank's prime rate or the
LIBOR rate plus 1/2% fixed in increments of 30, 60 or 90 days. The terms of the
agreement require an annual commitment fee equal to 1/4% on the average unused
amount of the SOM Facility.
Under the Company's revolving credit facilities, including the SOM
Facility, $14 million was unused at October 31, 1997.
At October 31, 1997, the scheduled maturities of all long-term debt
during the next five years is a follows:
<TABLE>
<S> <C>
1998 --
1999 25,000,000
2000 --
2001 63,000,000
2002 --
2003 --
Thereafter 5,400,000
</TABLE>
In March 1995, Medina County, Ohio issued on the behalf of the Company
an aggregate of $5.4 million in principal amount of variable rate industrial
bonds due 2010, which are secured by the Company with a letter of credit. The
funds from these bonds were used to finance a portion of the expansion at the
Company's steel pickling operations in Valley City, Ohio. The entire $5.4
million of such proceeds was borrowed and outstanding as of October 31, 1996.
-24-
<PAGE> 26
Certain of the debt agreements described above contain various
restrictive covenants which require the Company's various operating subsidiaries
to maintain minimum net worth levels and financial ratios. The agreements also
place certain restrictions on additional indebtedness and capital expenditures.
Interest paid amounted to $4,006,614, $1,063,938 and $1,575,547 during 1997,
1996 and 1995, respectively.
NOTE 10 - Leases:
The Company leases certain equipment under operating leases. Rent
expense under operating leases for 1997, 1996 and 1995 was $474,482, $274,441
and $252,791, respectively. Future minimum lease payments under operating leases
are as follows at October 31, 1997:
Operating
----------
1998 $686,188
1999 608,387
2000 546,409
2001 505,777
2002 360,242
----------
Total minimum lease payments $2,707,003
==========
Note 11 - Employee Benefit Plans:
- ---------------------------------
The Company maintains pension plans covering most employees. The assets
of the plans consist primarily of insurance and annuity contracts. The
assumptions used to develop net periodic pension cost were as follows: discount
rate ranged from 7.25% to 8.25% for all plans for the three years ended October
31, 1997; expected long-term rate of return on plan assets ranged from 6.0% to
8.0% for all plans for the three years ended October 31, 1997; rates of increase
in compensation levels of salaried plans ranged from 4.5% to 5.0% for all plans
for the three years ended October 31, 1997. For the valuation of pension
obligations at the end of 1997, the discount rate for all plans was decreased to
7.5% from 8.0% at the end of 1996.
The components of net periodic pension cost are as follows:
<TABLE>
<CAPTION>
October 31,
--------------------------------------------------------
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Service cost for the current period $ 899,753 $ 863,168 $ 688,641
Interest cost on projected benefit
obligation 748,406 651,116 623,452
Actual return on assets (1,141,290) (603,488) (1,100,300)
Net amortization and deferrals 470,402 90,722 574,211
----------- ----------- -----------
$ 977,271 $ 1,001,518 $ 786,004
=========== =========== ==========
</TABLE>
-25-
<PAGE> 27
Employee pension funded status was as follows:
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
--------------- ---------------
Assets Assets
Exceed Exceed
Actuarial present value of benefit obligations: Accumulated Accumulated
Benefits Benefits
------------- -------------
<S> <C> <C>
Vested employees $ (6,869,940) $(6,180,351)
Non-vested employees (197,640) (180,578)
------------ -----------
Accumulated benefit obligation (7,067,580) (6,360,929)
Additional benefits based on estimated future salary levels (3,689,779) (2,994,145)
------------ -----------
Projected benefit obligation (10,757,359) (9,355,074)
Plan assets at fair value 10,191,992 9,728,033
------------ -----------
Funded status (565,367) 372,959
Unamortized net liability existing at date of adoption of SFAS 87 901,772 988,596
Unrecognized net experience (loss) gain 277,529 (366,087)
Minimum liability --- ---
Unrecognized prior service cost 727,088 515,796
------------ -----------
Pension related asset (liability) $ 1,341,022 $ 1,511,264
============ ===========
</TABLE>
In addition to the defined benefit plans described above, the Company
recorded expense of $1,292,320, $1,118,322 and $1,022,830 during 1997, 1996 and
1995, respectively, with respect to its defined contribution plans.
During 1997, the Company initiated a Supplemental Executive Retirement
Plan (SERP) for key employees of the Company. The Company has agreed to pay each
covered employee a certain sum annually for ten (10) years upon retirement or,
in the event of death, to their designated beneficiary. A benefit is also paid
if the employee terminates employment (other than by discharge for cause).
Compensation expense relating to this plan was $1,359,000 in fiscal 1997. Total
benefits accrued under this plan were $1,359,000 at October 31, 1997.
Effective November 1, 1993, the Company adopted SFAS 106. This
statement requires the expected cost of postretirement benefits to be recognized
during the years that employees render service. The Company provides
postretirement health care benefits to certain employees (and their dependents)
who retire early, but coverage generally continues only until age 65. Prior to
the adoption of SFAS 106 these benefits were recorded on a cash basis and were
insignificant in 1993 and 1992. As permitted under SFAS 106, the Company elected
to amortize the transition liability of $586,000 over twenty years.
-26-
<PAGE> 28
The Company's accumulated postretirement benefit obligation (APBO) is comprised
of the following:
<TABLE>
<CAPTION>
October 31, October 31,
1997 1996
----------- -----------
<S> <C> <C>
Retirees $ (671,455) $ (396,018)
Fully eligible active plan participants (240,655) (274,507)
Other active plan participants (1,787,082) 1,263,562)
APBO (2,699,192) 1,934,087)
Unrecognized transition liability 428,450 455,060
Unrecognized prior service cost --- ---
Unrecognized net loss (gain) 1,351,676 876,833
----------- ----------
Postretirement benefit related liability $ (919,066) $ (602,194)
=========== ==========
</TABLE>
The net periodic postretirement benefit cost included the following:
<TABLE>
<CAPTION>
October 31, October 31,
1997 1996
--------------- ---------------
<S> <C> <C>
Service cost of benefits earned $ 124,242 $ 137,813
Interest cost on APBO 181,827 167,549
Amortization of transition liability 26,610 28,401
Net amortization and deferrals 50,153 66,823
--------------- ---------------
Total $ 382,832 $ 400,586
=============== ===============
</TABLE>
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation at October 31, 1997 was 8.0%,
gradually declining to 4.5% in 2001 and remaining at that level thereafter. A
one-percentage point increase in the assumed health care cost trend rate for
each year would increase the accumulated postretirement benefit obligation by
approximately $983,808 at October 31, 1997 and the postretirement benefit cost
by approximately $172,931 for the year then ended. The actuarial present value
of accumulated postretirement benefit obligations was determined using a
weighted average discount rate of 7.5% at October 31, 1997. The 1997 and 1996
net periodic postretirement benefit cost was determined using a weighted average
discount rate of 8.0% and 7.5%, respectively.
-27-
<PAGE> 29
NOTE 12 - Stock and Bonus Plans:
1993 KEY EMPLOYEE STOCK INCENTIVE PLAN
The Company's 1993 Key Employee Stock Incentive Plan (the "Incentive
Plan"), which was adopted by the Company in May 1993, authorizes grants to
officers and other key employees of the Company and its subsidiaries of (i)
stock options that are intended to qualify as "incentive stock options," (ii)
nonqualified stock options and (iii) restricted stock awards. The Incentive Plan
also authorizes grants of nonqualified stock options and restricted stock awards
to consultants to the Company and its subsidiaries. The Incentive Plan
authorizes the granting of stock options and restricted stock awards up to an
aggregate of 450,000 shares of Common Stock, subject to adjustment upon the
occurrence of certain events to prevent any dilution or expansion of the rights
of participants that might otherwise result from the occurrence of such events.
Incentive stock options are exercisable for up to 10 years at an option price of
not less than the fair market value of the Common Stock on the date on which the
option is granted or at an option price of not less than 110% of the fair market
value of the Common Stock in the case of an officer or other key employee who
owns at the time the option is granted more than 10% of the Common Stock.
Nonqualified stock options may be granted for up to 10 years at such exercise
price and upon such terms and conditions as the Board of Directors or the
Compensation Committee may determine. In May 1993, the Company granted
nonqualified stock options for 46,400 shares of Common Stock, with an exercise
price equal to $11.00 per share. Such options become exercisable over a period
of three years commencing on the first anniversary of the date of grant. On
October 17, 1995, the Company granted nonqualified stock options for 47,000
shares of Common Stock (no options were granted in 1994), at an exercise price
of $11.00 per share. Such options became exercisable as of the date of grant and
will remain so for a period of five years commencing on the first anniversary of
the date of grant. On October 22, 1996, the Company granted nonqualified stock
options for 160,000 shares of Common Stock, at an exercise price of $16.50 per
share. Such options became exercisable as of the date of grant and will remain
so for a period of 5 years commencing on the first anniversary of the date of
grant. During fiscal year 1997, 27,100 shares were exercised. There were 226,300
options exercisable at October 31, 1997.
The Company applies the intrinsic value based method of accounting for
this plan. Accordingly, no compensation expense has been recognized for its
fixed stock option plan as options are granted at fair market value. The effect
on the Company's net earnings per share for fiscal 1996, had compensation
expense been determined based on fair value of the awards at the date of grant,
was $0.04 per share. The fair value of each option grant is estimated on the
date of grant using the Black-Scholes option pricing model with the following
weighted average assumptions used for grants: dividend yield of 0%; expected
volatility of 26.0%; risk-free interest rate of 6.1%; and expected lives of 4
years.
EXECUTIVE INCENTIVE BONUS PLAN
In 1996, the Company replaced the Executive Bonus Plan with the
Short-Term Incentive Plan (the "Bonus Plan") which provides annual incentive
bonuses to its eligible employees. The Bonus Plan provides for an aggregate
annual bonus pool (the "Aggregate Amount") equal to 5% of the Company's
operating earnings. Incentives up to the Aggregate Amount may be paid to the
individual participants, in the case of the Chief Executive Officer, by the
Board of Directors upon recommendation by the Compensation Committee, and in the
case of other eligible employees, by the Chief Executive Officer as approved by
the Compensation Committee and the Board of Directors. In determining the
individual incentives, in the case of the Chief Executive Officer, 75% of the
incentive depends upon meeting the corporate goal for return on equity and 25%
of the incentive depends upon meeting specific, project-oriented goals. These
goals are established by the Board of Directors. In the case of corporate
executives eligible for the Bonus Plan, 65% of the incentive depends upon
meeting the corporate goal for return on equity and 35% of the incentive depends
upon specific goals established by the Chief Executive Officer. Finally, in the
case of the remaining employees eligible for the Bonus Plan, 50% of the
incentive depends upon meeting the goal for operating return on assets
established by the Chief Executive Officer and 50% of the incentive depends upon
specific goals as established by the Chief Executive Officer. During fiscal
1997, 1996 and 1995, amounts of $750,038, $516,600 and $519,100, respectively,
were paid under the existing bonus plan for that fiscal year.
-28-
<PAGE> 30
NOTE 13 - Income Taxes:
The components of the provision for income taxes on income from
continuing operations were as follows:
<TABLE>
<CAPTION>
Year Ended October 31,
------------------------------------------------------------------
1997 1996 1995
---------------- ---------------- ----------------
<S> <C> <C> <C>
Current:
Federal $ 7,276,000 $ 8,570,579 $ 7,455,226
State and local 1,588,954 1,091,678 1,331,650
---------------- ---------------- ----------------
8,864,954 9,662,257 8,786,876
Deferred 2,809,839 1,290,012 683,979
Total ---------------- ---------------- ----------------
$ 11,674,793 $ 10,952,269 $ 9,470,855
================ ================ ================
</TABLE>
Temporary differences and carryforwards which give rise to deferred tax
assets and liabilities were comprised of the following:
<TABLE>
<CAPTION>
October 31, October 31,
1997 1996
--------------- ---------------
<S> <C> <C>
Deferred tax assets:
Bad debt reserves $ 324,135 $ 365,228
Inventory reserves 306,828 349,061
State income and franchise taxes 1,173,166 608,622
Accrued group insurance 224,668 366,800
Personal property tax reserves 561,996 394,999
Accrued vacation reserves 397,243 375,807
Net operating loss carryforwards ---- 241,475
Capital loss carryforwards 4,912,050 5,046,335
Other reserves 459,968 647,304
--------------- --------------
8,360,054 8,395,631
Less: Valuation allowance (4,912,050) (5,046,335)
--------------- --------------
Total deferred tax assets 3,448,004 3,349,296
Deferred tax liabilities:
Fixed assets (11,295,229) (8,712,337)
Pension assets (11,416) (763,894)
Accounts receivable marked to market (725,649) ----
Joint venture investment (256,229) ----
Other (96,255) ----
--------------- --------------
Net deferred tax liability $ (8,936,774) $ (6,126,935)
=============== ==============
</TABLE>
The valuation allowance relates to capital loss carryforwards which are
not expected to be utilized.
-29-
<PAGE> 31
A reconciliation of the statutory federal income tax rate to the
effective income tax rate is as follows:
<TABLE>
<CAPTION>
Years Ended October 31,
----------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Federal income tax at statutory rate 35.0% 35.0% 35.0%
State and local income taxes 1.8 3.0 3.6
Other --- 0.5 1.0
---- ---- ----
Effective income tax rate 36.8% 38.5% 39.6%
==== ==== ====
</TABLE>
Income taxes paid amounted to $ 8,757,066, $10,942,558 and $8,616,188
for the years 1997, 1996 and 1995, respectively.
At October 31, 1997, the Company had available a capital loss
carryforward of approximately $12,791,797, expiring in 2001, if not utilized.
The capital loss was incurred on the sale of Shafer Valve and a full valuation
allowance has been provided.
NOTE 14 - Related Party Transactions:
The Company had sales to a significant shareholder of $7,042,217,
$5,360,341 and $5,899,935 for the years 1997, 1996 and 1995, respectively. At
October 31, 1997 and 1996, the Company had receivable balances of $1,091,495 and
$845,482 respectively, due from this shareholder.
NOTE 15 - Quarterly Results of Operations (Unaudited):
<TABLE>
<CAPTION>
(Dollars in Thousands)
-----------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
----------- ----------- ----------- -----------
October 31, 1997
<S> <C> <C> <C> <C>
Revenues $ 64,568 $ 70,689 $ 65,460 $ 72,444
Gross Profit 12,577 15,102 14,276 16,863
Operating Income 7,252 8,986 7,556 9,467
Net Income (Loss) 4,530 5,437 4,649 5,477
Net Income (Loss) per Share .35 .42 .36 .42
----------- ----------- ----------- -----------
October 31, 1996
Revenues $ 51,539 $ 58,045 $ 53,578 $ 56,304
Gross Profit 10,006 11,270 10,810 13,544
Operating Income 6,190 7,399 6,538 8,417
Income from Continuing Operations 3,740 4,544 4,053 5,186
Loss from Discontinued Operations (376) (3) --- 123
Income (Loss) on Sale of Discontinued
Operations --- (10,198) --- 609
Net Income (Loss) $ 3,364 $ (5,657) $ 4,053 $ 5,918
----------- ----------- ----------- -----------
Net Income from Continuing Operations per
Share $ .29 $ .35 $ .31 $ .39
Loss from Discontinued Operations per Share (.03) (.00) (.00) .01
Loss from Sale of Discontinued Operations
per Share (.00) (.78) (.00) .05
----------- ----------- ----------- -----------
Net Income (Loss) per Share $ .26 $ (.43) $ .31 $ .45
----------- ----------- ----------- -----------
</TABLE>
-30-
<PAGE> 32
NOTE 16 - Commitments and Contingent Liabilities:
The Company is a party to several lawsuits and claims arising in the
normal course of its business. In the opinion of management, the Company's
liability or recovery, if any, under pending litigation and claims would not
materially affect its financial condition or results of operations.
NOTE 17 - Subsequent Events:
On January 22, 1998, the Company increased the Shiloh Facility to $135
million. The term of the Shiloh Facility extends to January 31, 2003. The
Company has the option to select the applicable interest rate at KeyBank's prime
rate or the LIBOR rate plus a factor as determined by a pricing matrix based on
the Company's ratio of Funded Debt to EBITDA. The factor as determined by the
pricing matrix is currently .175%. The terms of the agreement require an annual
facility fee as determined by a pricing matrix based on the Company's ratio of
Funded Debt to EBITDA. This annual facility fee is currently .3%. On January 22,
1998, the Company used $28 million of the Shiloh Facility to retire the
outstanding balance of the SOM Facility.
-31-
<PAGE> 33
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
Information with respect to Directors of the Company is set forth in
the Proxy Statement on pages 2 through 4 under the heading "Election of
Directors," which information is incorporated herein by reference. Information
regarding the executive officers of the Company is included as Item 4A of Part I
of this Annual Report on Form 10-K as permitted by Instruction 3 to Item 401(b)
of Regulation S-K. Information required by Item 405 of Regulation S-K is set
forth in the Proxy Statement on page 7 under the heading "Section 16(a)
Beneficial Ownership Reporting Compliance," which information is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information with respect to executive compensation is set forth in the
Proxy Statement on pages 8 through 10 under the heading "Compensation of
Executive Officers" and on page 4 under the heading "Election of Directors --
Compensation Committee Interlocks and Insider Participation and Certain
Relationships and Related Transactions," which information is incorporated
herein by reference (except for the Compensation Committee Report on Executive
Compensation and the Comparative Stock Performance Graph).
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information with respect to security ownership of certain beneficial
owners and management is set forth in the Proxy Statement on pages 5 through 7
under the heading "Beneficial Ownership of Common Stock," which information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information with respect to certain relationships and related
transactions is set forth in the Proxy Statement on page 4 under the heading
"Election of Directors -- Compensation Committee Interlocks and Insider
Participation and Certain Relationships and Related Transactions," which
information is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this Annual Report
on Form 10-K.
1. Financial Statements.
Report of Independent Accountants.
Consolidated Balance Sheet at October 31, 1997 and
1996.
Consolidated Statement of Income for the three years
ended October 31, 1997.
Consolidated Statement of Cash Flows for the three
years ended October 31, 1997.
Consolidated Statement of Stockholders' Equity for
the three years ended October 31, 1997.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules. The following
consolidated financial statement schedules of the
Company and its subsidiaries and the report of
independent accountants thereon are filed as part of
this Annual Report on Form 10-K and should be read in
conjunction with the consolidated financial
statements of the Company and its subsidiaries
included in the Annual Report on Form 10-K:
SCHEDULES
Financial Statement Schedule II.
Valuation and Qualifying Accounts.
-32-
<PAGE> 34
Schedule II
SHILOH INDUSTRIES, INC.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
Additions
Balance at Charged to Balance at
Beginning Costs and End
Description of Period Expenses Deductions of Period
----------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Valuation account for accounts receivable
Year ended October 31, 1997 $913,070 $5,452 $68,968 $849,554
Year ended October 31, 1996 1,105,068 34,600 226,598 913,070
Year ended October 31, 1995 829,344 322,064 46,340 1,105,068
Reserve for excess, slow moving and potentially
obsolete material
Year ended October 31, 1997 $82,181 $137,938 $82,181 $137,938
Year ended October 31, 1996 482,368 82,181 482,368 82,181
Year ended October 31, 1995 505,000 426,340 448,972 482,368
Valuation allowance for deferred tax assets (a)
Year ended October 31, 1997 $5,046,335 $--- $134,285 $4,912,050
Year ended October 31, 1996 92,941 5,046,335 92,941 5,046,335
Year ended October 31, 1995 94,972 --- 2,031 92,941
</TABLE>
Schedules not listed above have been omitted because they are
not applicable or are not required or the information required to be
set forth therein is included in the consolidated financial statements
or notes thereto.
-33-
<PAGE> 35
3. Exhibits:
2.1 Stock Purchase Agreement, dated May 22,
1996, by and between the Company and Bettis
Corporation is incorporated herein by
reference to Exhibit 2.1 of the Company's
Current Report on Form 8-K filed July 24,
1996 (Commission File No. 0-21964).
2.2 Asset Purchase Agreement, dated September 6,
1996, among GDM Acquisition, Inc.,
Greenfield Die & Manufacturing Corp. and 3-D
Engineering, Inc. is incorporated herein by
reference to Exhibit 2.2 of the Company's
Current Report on Form 8-K filed July 24,
1996 (Commission File No. 0-21964).
3.1(i) Restated Certificate of Incorporation of the
Company is incorporated herein by reference
to Exhibit 3.1(i) of the Company's Annual
Report on Form 10-K for the fiscal year
ended October 31, 1995 (Commission File No.
0-21964).
(ii) By-Laws of the Company are incorporated
herein by reference to Exhibit 3.1(ii) of
the Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1995
(Commission File No. 0-21964).
4.1 Specimen certificate for the Common Stock,
par value $.01 per share, of the Company is
incorporated herein by reference to Exhibit
4.1 of the Company's Annual Report on Form
10-K for the fiscal year ended October 31,
1995 (Commission File No. 0-21964).
4.2 Stockholders Agreement, dated June 22, 1993,
by and among the Company, MTD Products Inc.
and the stockholders named therein is
incorporated herein by reference to Exhibit
4.2 of the Company's Annual Report on Form
10-K for the fiscal year ended October 31,
1995 (Commission File No. 0-21964).
4.3 Registration Rights Agreement, dated June
22, 1993, by and among the Company, MTD
Products Inc and the stockholders named
therein is incorporated herein by reference
to Exhibit 4.3 of the Company's Annual
Report on Form 10-K for the fiscal year
ended October 31, 1995 (Commission File No.
0-21964).
4.4 First Amendment to Stockholders Agreement,
dated March 11, 1994, by and among the
Company, MTD Products Inc and the
stockholders named therein is incorporated
herein by reference to Exhibit 4.4 of the
Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1995
(Commission File No. 0-21964).
10.1 Credit Agreement, effective as of April 16,
1996, between the Company, the Banks listed
on Annex A thereto and Society National
Bank, as Agent is incorporated herein by
reference to Exhibit 10.1 of the Company's
Quarterly Report on Form 10-Q for the fiscal
quarter ended April 30, 1996 (Commission
File No. 0-21964).
10.2 Credit Agreement, effective as of April 16,
1996, between Shiloh of Michigan, L.L.C.,
the Banks listed on Annex A thereto and
Society National Bank, as Agent is
incorporated herein by reference to Exhibit
10.2 of the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended April
30, 1996 (Commission File No. 0-21964).
10.3 Guaranty of Payment, dated April 16, 1996,
by the Company in favor of the Banks named
therein (with an attached schedule
identifying the other subsidiaries of the
Company that have entered into an identical
agreement) is incorporated herein by
reference to Exhibit 10.3 of the Company's
Quarterly Report on Form 10-Q for the fiscal
quarter ended April 30, 1996 (Commission
File No. 0-21964).
10.4 Loan Agreement, dated February 1, 1995, by
and between Medina County, Ohio and Valley
City Steel Company is incorporated herein by
reference to Exhibit 10.4 of the Company's
Quarterly Report on Form 10-Q for the fiscal
quarter ended April 30, 1996 (Commission
File No. 0-21964).
10.5 Operating Agreement for Shiloh of Michigan,
L.L.C., dated January 2, 1996, by and among
Shiloh of Michigan, L.L.C., Rouge Steel
Company and the Company is incorporated
herein by reference to Exhibit 10.5 of the
Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended April 30, 1996
(Commission File No. 0-21964).
-34-
<PAGE> 36
10.6 Master Unsecured Demand Promissory Note of
Shiloh Corporation to The Richland Trust
Company of Mansfield, dated April 2, 1991,
is incorporated herein by reference to
Exhibit 10.7 of the Company's Annual Report
on Form 10-K for the fiscal year ended
October 31, 1995 (Commission File No.
0-21964).
*10.7 1993 Key Employee Stock Incentive Plan is
incorporated herein by reference to Exhibit
A of the Company's Proxy Statement on
Schedule 14A for the fiscal year ended
October 31, 1996 (Commission File No.
0-21964).
*10.8 Executive Incentive Bonus Plan is
incorporated herein by reference to Exhibit
10.9 of the Company's Annual Report on Form
10-K for the fiscal year ended October 31,
1995 (Commission File No. 0-21964).
*10.9 Indemnification Agreement, dated July 2,
1993, by and between the Company and Robert
L. Grissinger (with an attached schedule
identifying the directors and officers of
the Company that have entered into an
identical agreement) is incorporated herein
by reference to Exhibit 10.10 of the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995
(Commission File No. 0-21964).
*10.10 Option Agreement, dated May 28, 1993, by and
between the Company and Robert L. Grissinger
(with an attached schedule identifying the
other optionees that have entered into
option agreements with the Company) is
incorporated herein by reference to Exhibit
10.15 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31,
1995 (Commission File No. 0-21964).
10.11 Master Unsecured Demand Promissory Note of
Shiloh Corporation to The Richland Trust
Company of Mansfield, dated December 6, 1996
is incorporated herein by reference to
Exhibit 10.1 of the Company's Quarterly
Report on Form 10-Q/A for the fiscal quarter
ended January 1, 1997 (Commission File No.
0-21964).
10.12 First Amendment to Credit Agreement, dated
January 31, 1997 by and among the Company,
the banks listed on Annex A thereto and
Keybank National Association (successor to
Society National Bank), as Agent is
incorporated herein by reference to Exhibit
10.2 of the Company's Quarterly Report on
Form 10-Q/A for the fiscal quarter ended
January 1, 1997 (Commission File No.
0-21964).
10.13 First Amendment to Credit Agreement, dated
February 24, 1997 by and among Shiloh of
Michigan, LLC, the banks listed on Annex A
thereto and Keybank National Association, as
Agent is incorporated herein by reference to
Exhibit 10.3 of the Company's Quarterly
Report on Form 10-Q/A for the fiscal quarter
ended January 1, 1997 (Commission File No.
0- 21964).
10.14 Master Promissory Note of the Company to
Keybank National Association, dated as of
January 31, 1997 is incorporated herein by
reference to Exhibit 10.4 of the Company's
Quarterly Report on Form 10-Q/A for the
fiscal quarter ended January 1, 1997
(Commission File No. 0-21964).
*10.15 Supplemental Retirement Trust Agreement,
dated June 1, 1997, by and among the
Company, First Union National Bank of North
Carolina and Robert L. Grissinger.
21.1 Subsidiaries of the Company.
23.1 Consent of Price Waterhouse LLP.
24.1 Powers of Attorney.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Company during the
quarter ended October 31, 1997.
* Reflects management contract or other compensatory arrangement required
to be filed as an exhibit pursuant to Item 14(c) of this Report.
-35-
<PAGE> 37
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OF THE SECURITIES EXCHANGE
ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
SHILOH INDUSTRIES, INC.
By: /s/ ROBERT L. GRISSINGER
------------------------------------
Robert L. Grissinger
Chairman, President and
Chief Executive Officer
DATE: JANUARY 29, 1998
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
* Vice Chairman and Director January 29, 1998
- -----------------------------------------
Dominick C. Fanello
/s/ ROBERT L. GRISSINGER Chairman, President and January 29, 1998
- -----------------------------------------Chief Executive Officer
Robert L. Grissinger and Director (Principal
Executive Officer)
* Treasurer and Chief Financial January 29, 1998
- -----------------------------------------
Craig A. Stacy Officer (Principal Accounting
and Principal Financial Officer)
* Director January 29, 1998
- -----------------------------------------
James C. Fanello
* Director January 29, 1998
- -----------------------------------------
Curtis E. Moll
* Director January 29, 1998
- -----------------------------------------
Dieter Kaesgen
* Director January 29, 1998
- -----------------------------------------
David J. Hessler
* Director January 29, 1998
- -----------------------------------------
Richard S. Gray
* Director January 29, 1998
- -----------------------------------------
James A. Karman
* Director January 29, 1998
- -----------------------------------------
Theodore K. Zampetis
</TABLE>
* The undersigned, by signing his name hereto, does sign and execute this
Annual Report on Form 10-K pursuant to the Powers of Attorney executed
by the above-named officers and Directors of the Company and filed with
the Securities and Exchange Commission on behalf of such officers and
Directors.
By: /s/ ROBERT L. GRISSINGER
-------------------------------
ROBERT L. GRISSINGER,
ATTORNEY-IN-FACT
-36-
<PAGE> 38
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT DESCRIPTION
- ---------------------------------------------------------------------------
<S> <C>
2.1 Stock Purchase Agreement, dated May 22, 1996, by and between the Company and Bettis Corporation is
incorporated herein by reference to Exhibit 2.1 of the Company's Current Report on Form 8-K filed July 24,
1996 (Commission File No. 0-21964).
2.2 Asset Purchase Agreement, dated September 6, 1996, among GDM Acquisition, Inc., Greenfield Die &
Manufacturing Corp. and 3-D Engineering, Inc. is incorporated herein by reference to Exhibit 2.2 of the
Company's Current Report on Form 8-K filed July 24, 1996 (Commission File No. 0-21964).
3.1(i) Restated Certificate of Incorporation of the Company is incorporated herein by reference to Exhibit 3.1(i) of
the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1995 (Commission File No.
0-21964).
(ii) By-Laws of the Company are incorporated herein by reference to Exhibit 3.1(ii) of the Company's Annual Report
on Form 10-K for the fiscal year ended October 31, 1995 (Commission File No. 0-21964).
4.1 Specimen certificate for the Common Stock, par value $.01 per share, of the Company is incorporated herein
by reference to Exhibit 4.1 of the Company's Annual Report on Form 10-K for the fiscal year ended October
31, 1995 (Commission File No. 0-21964).
4.2 Stockholders Agreement, dated June 22, 1993, by and among the Company, MTD Products Inc. and the
stockholders named therein is incorporated herein by reference to Exhibit 4.2 of the Company's Annual Report
on Form 10-K for the fiscal year ended October 31, 1995 (Commission File No. 0-21964).
4.3 Registration Rights Agreement, dated June 22, 1993, by and among the Company, MTD Products Inc and the
stockholders named therein is incorporated herein by reference to Exhibit 4.3 of the Company's Annual Report
on Form 10-K for the fiscal year ended October 31, 1994 (Commission File No. 0-21964).
4.4 First Amendment to Stockholders Agreement, dated March 11, 1994, by and among the Company, MTD
Products Inc and the stockholders named therein is incorporated herein by reference to Exhibit 4.4 of the
Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1995 (Commission File No.
0-21964).
10.1 Credit Agreement, effective as of April 16, 1996, between the Company, the Banks listed on Annex A thereto
and Society National Bank, as Agent is incorporated herein by reference to Exhibit 10.1 of the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 1996 (Commission File No. 0-21964).
10.2 Credit Agreement, effective as of April 16, 1996, between Shiloh of Michigan, L.L.C., the Banks listed on Annex A
thereto and Society National Bank, as Agent is incorporated herein by reference to Exhibit 10.2 of the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 1996 (Commission File No. 0-21964).
10.3 Guaranty of Payment, dated April 16, 1996, by the Company in favor of the Banks named therein (with an attached
schedule identifying the other subsidiaries of the Company that have entered into an identical agreement) is
incorporated herein by reference to Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended April 30, 1996 (Commission File No. 0-21964).
10.4 Loan Agreement, dated February 1, 1995, by and between Medina County, Ohio and Valley City Steel
Company is incorporated herein by reference to Exhibit 10.4 of the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended April 30, 1996 (Commission File No. 0-21964).
10.5 Operating Agreement for Shiloh of Michigan, L.L.C., dated January 2, 1996, by and among Shiloh of Michigan,
L.L.C., Rouge Steel Company and the Company is incorporated herein by reference to Exhibit 10.5 of the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 1996 (Commission File No.
0-21964).
10.6 Master Unsecured Demand Promissory Note of Shiloh Corporation to The Richland Trust Company of
Mansfield, dated April 2, 1991, is incorporated herein by reference to Exhibit 10.7 of the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1995 (Commission File No. 0-21964).
</TABLE>
X-1
<PAGE> 39
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT DESCRIPTION
- ---------------------------------------------------------------------------
<S> <C>
10.7 1993 Key Employee Stock Incentive Plan is incorporated herein
by reference to Exhibit A of the Company's Proxy Statement on
Schedule 14A for the fiscal year ended October 31, 1996
(Commission File No. 0-21964).
10.8 Executive Incentive Bonus Plan is incorporated herein by
reference to Exhibit 10.9 of the Company's Annual Report on
Form 10-K for the fiscal year ended October 31, 1995
(Commission File No. 0-21964).
10.9 Indemnification Agreement, dated July 2, 1993, by and between
the Company and Robert L. Grissinger (with an attached
schedule identifying the directors and officers of the Company
that have entered into an identical agreement) is incorporated
herein by reference to Exhibit 10.10 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1995 (Commission File No. 0-21964).
10.10 Option Agreement, dated May 28, 1993, by and between the
Company and Robert L. Grissinger (with an attached schedule
identifying the other optionees that have entered into option
agreements with the Company) is incorporated herein by
reference to Exhibit 10.15 of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995
(Commission File No. 0-21964).
10.11 Master Unsecured Demand Promissory Note of Shiloh Corporation
to The Richland Trust Company of Mansfield, dated December 6,
1996 is incorporated herein by reference to Exhibit 10.1 of
the Company's Quarterly Report on Form 10-Q/A for the fiscal
quarter ended January 1, 1997 (Commission File No. 0-21964).
10.12 First Amendment to Credit Agreement, dated January 31, 1997 by
and among the Company, the banks listed on Annex A thereto and
Keybank National Association (successor to Society National
Bank), as Agent is incorporated herein by reference to Exhibit
10.2 of the Company's Quarterly Report on Form 10-Q/A for the
fiscal quarter ended January 1, 1997 (Commission File No.
0-21964).
10.13 First Amendment to Credit Agreement, dated February 24, 1997
by and among Shiloh of Michigan, LLC, the banks listed on
Annex A thereto and Keybank National Association, as Agent is
incorporated herein by reference to Exhibit 10.3 of the
Company's Quarterly Report on Form 10-Q/A for the fiscal
quarter ended January 1, 1997 (Commission File No. 0-21964).
10.14 Master Promissory Note of the Company to Keybank National
Association, dated as of January 31, 1997 is incorporated
herein by reference to Exhibit 10.4 of the Company's Quarterly
Report on Form 10-Q/A for the fiscal quarter ended January 1,
1997 (Commission File No. 0-21964).
10.15 Supplemental Retirement Trust Agreement, dated June 1, 1997,
by and among the Company, First Union National Bank of North
Carolina and Robert L. Grissinger.
21.1 Subsidiaries of the Company.
23.1 Consent of Price Waterhouse LLP.
24.1 Powers of Attorney.
27.1 Financial Data Schedule.
</TABLE>
X-2
<PAGE> 1
Exhibit 10.15
SUPPLEMENTAL RETIREMENT TRUST AGREEMENT
FOR ROBERT L. GRISSINGER
THIS AGREEMENT is entered into as of the first day of June 1997 by and
among SHILOH INDUSTRIES, INC., an Ohio corporation (the "Company") and FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, a trust company organized under the laws
of the United States of America ("Trustee"); and ROBERT L GRISSINGER (the
"Participant").
WHEREAS, Company established the Supplemental Executive Retirement
Agreement between Shiloh Industries, Inc. and Robert L. Grissinger (the "SERP")
as sponsoring employer of the SERP, effective as of June 1, 1997, attached
hereto as Exhibit "A".
WHEREAS, the SERP provides for the payment of benefits to the employees
participating in the SERP and said employees' beneficiaries upon the occurrence
of certain events as set forth in the SERP;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the SERP
as an unfunded plan maintained for the purpose of providing additional
retirement benefits for Robert L. Grissinger ("Participant") for the purposes of
Title I of the Employee Retirement Income Security Act of 1974; and
WHEREAS, it is the intention of the Company to make contributions to
the Trust to provide itself with a source of funds to assist the Company in the
meeting of its liabilities under the SERP.
NOW, THEREFORE, the parties do hereby agree that the Trust shall be
comprised, held and disposed of as follows:
Section 1. Establishment of Trust.
(a) The Company hereby establishes with the Trustee a Trust consisting
of such monies or other property acceptable to the Trustee as shall from time to
time be transferred to the Trustee by the Company or by a trustee other than
this Trustee, or by any other person pursuant to the SERP which shall become the
principal of the Trust to be held, administered and disposed of by Trustee as
provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which Company is
the grantor, within the meaning of subpart E, part 1, subchapter J, chapter l,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
<PAGE> 2
(d) The principal of the Trust, and any earnings thereon, shall be held
separate and apart from other funds of the Company and shill be used exclusively
for the uses and purposes of Participant and general creditors of the Company as
herein set forth. Participant and his beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets of the Trust. Any
rights created under the Plan and this Trust Agreement shall be mere unsecured
contractual rights of the Participant and his beneficiaries against the Company.
Any assets held by the Trust will be subject to the claims of Company's general
creditors under federal and state law in the event of Insolvency, as defined in
Section 3(a) herein.
(e) The Company, in its sole discretion, may at any time, or from time
to time, make additional deposits of cash or other property in trust with
Trustee to augment the principal to be held, administered and disposed of by
Trustee as provided in this Trust Agreement. Neither Trustee nor the Participant
or his beneficiaries shall have any right to compel such additional deposits.
Moreover, Trustee shall be under no duty or obligation, and shall have no right,
to determine the adequacy of or to compute any amount to be paid to it pursuant
to the Plan, or to enforce the collection of any sums from Company.
(f) Upon a Change of Control, Company shall, as soon as possible, but
in no event longer than seven (7) days following the Change of Control, as
defined herein, make an irrevocable contribution of cash or other property
acceptable to the Trustee to the Trust in an amount that is sufficient, when
added to the other assets of the Trust, to pay the Participant or his
beneficiaries the benefits to which the Participant or his beneficiaries would
be entitled pursuant to the terms of the Plan as of the date on which the Change
of Control occurred. Notwithstanding anything to the contrary herein, Trustee or
the Participant or his beneficiaries shall have the right to compel such
additional contributions.
(g) Following a Change of Control, the Company shall continue
thereafter as of the end of each calendar year ending after the Change of
Control, to be required to irrevocably deposit additional cash or other property
acceptable to the Trustee in an amount sufficient to pay Participant or his
beneficiaries the benefits payable pursuant to the terms of the Plan as of the
close of the calendar year. The Trustee or Participant or his beneficiaries
shall have the right to compel such additional deposits required hereunder.
Section 2. Payments to Plan Participant and His Beneficiaries.
(a) The Company shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of the Participant (and
his beneficiaries), that provides a formula or other instructions acceptable to
Trustee for determining the amounts so payable, the form in which such amount is
to be paid (as provided for or available under the Plan), and the time of
commencement for payment of such amounts. Except as otherwise provided herein,
Trustee shall make payments to Participant (or upon his death, his
beneficiaries) in accordance with such Payment Schedule. The Trustee shall make
provision for the reporting and withholding of any federal, state or local taxes
that may be required to be withheld with
2
<PAGE> 3
respect to the payment of benefits pursuant to the terms of the Plan and shall
pay amounts withheld to the appropriate taxing authorities or determine that
such amounts have been reported, withheld and paid by Company.
(b) The entitlement of the Participant or his beneficiaries to benefits
under the Plan shall be determined by Company or such party as it shall
designate under the Plan, and any claim for such benefits shall be considered
and reviewed under the procedures set out in the Plan.
(c) Company may make payment of benefits directly to Participant (or
upon his death, his beneficiaries) as they become due under the terms of the
Plan. Company shall notify Trustee of its decision to make payment of benefits
directly prior to the time amounts are payable to the Participant or his
beneficiaries. In addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in accordance with the
terms of the Plan, Company shall make the balance of each such payment as it
falls due. Trustee shall notify Company where principal and earnings are not
sufficient.
Section 3. Trustee Responsibility Regarding Payments to Trust
Beneficiary When Company Is Insolvent.
(a) Trustee shall cease payment of benefits to the Participant and his
beneficiaries if the Company is Insolvent. Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) Company is unable to pay
its debts as they become due, or (ii) Company is subject to a pending proceeding
as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of Company under federal and state law as set forth
below.
(1) The Board of Directors and the Chief Executive Officer of
Company shall have the duty to inform Trustee in writing of Company's
Insolvency. If a person claiming to be a creditor of Company alleges in writing
to Trustee that Company has become Insolvent, Trustee shall determine whether
Company is Insolvent and, pending such determination, Trustee shall discontinue
payment of benefits to the Participant or his beneficiaries.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person claiming to be a
creditor alleging that Company is Insolvent, Trustee shall have no duty to
inquire whether Company is Insolvent. Trustee may in all events rely on such
evidence concerning Company's solvency as may be furnished to Trustee and that
provides Trustee with a reasonable basis for making a determination concerning
Company's solvency.
(3) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to the Participant or his
beneficiaries and shall hold the assets of the Trust for the
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<PAGE> 4
benefit of Company's general creditors. Nothing in this Trust Agreement shall in
any way diminish any right of the Participant or his beneficiaries to pursue
their rights as general creditors of Company with respect to benefits due under
the Plan or otherwise.
(4) Trustee shall resume the payment of benefits to the
Participant or his beneficiaries in accordance with Section 2 of this Trust
Agreement only after Trustee has determined that Company is not Insolvent (or is
no longer Insolvent).
(c) Provided that there are sufficient assets, if Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to the
Participant or his beneficiaries under the terms of the Plan for the period of
such discontinuance, less the aggregate amount of any payments made to the
Participant or his beneficiaries by Company in lieu of the payments provided for
hereunder during any such period of discontinuance.
Section 4. Payments to Company.
(a) Except as provided in Section 3 hereof, Company shall have no right
or power to direct Trustee to return to Company or to divert to others any of
the Trust assets before all payments of benefits have been made to the
Participant and his beneficiaries pursuant to the terms of the Plan.
Section 5. Investment Authority.
(a) Notwithstanding any provisions to the contrary contained in
paragraph (b) of this Section 5 or any other provision of this Trust Agreement,
in no event may Trustee invest in securities (including stock or rights to
acquire stock) or obligations issued by Company, other than a de minimis amount
held in common investment vehicles in which Trustee invests. All rights
associated with assets of the Trust shall be exercised by Trustee or the person
designated by Trustee, and shall in no event be exercisable by or rest with the
Participant.
(b) Except as otherwise specifically provided in this Trust Agreement
or under investment guidelines provided by Company to Trustee at any time and
from time to time, Trustee shall have all powers necessary to hold in trust and
administer the assets of the Trust as contemplated hereby, and to be exercised
in its discretion or as directed by Company, as the case may be, including,
without limitation:
(l) To purchase, sell, hold, exchange, lease (for terms
extending beyond the termination of the trust or otherwise), rent, mortgage,
pledge, assign, convey, convert, divide, repair, partition, transfer or
otherwise acquire for or dispose of all or any part of the trust estate;
(2) To invest and reinvest all or any part of the trust estate
in such stocks (common and preferred), bonds, notes, debentures, certificates,
instruments, bank accounts (including savings accounts, time certificates of
deposit or any other type of account in any bank, savings and loan association
or other
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<PAGE> 5
financial institution, including any affiliate of Trustee), mutual fund shares,
shares or participations in any common or collective trust fund, securities,
repurchase agreements from any savings institution, financial institution or
bank, and in any other property, real or personal, tangible or intangible,
whether or not by such instrument is of the class or kind ordinarily approved or
held to be lawful for the investment of trust funds; to make and change any such
investments from time to time; and to invest any part of the trust estate in
property located outside the Company's state of domicile, including property
located outside the United States of America; provided, however, that any such
investment, reinvestment or other acquisition shall be subject to paragraph (a)
above;
(3) To cause the securities or other property which may
comprise the trust estate, in whole or in part, to be registered in the name of
Trustee or in the name of Trustee as Trustee, or in the name of a nominee or
nominees, with or without disclosing the Trust, or (in the case of securities)
to take and keep the same unregistered and to retain them or any part of them in
such manner that they will pass by delivery;
(4) To open and maintain one or more separate brokerage
accounts (including but not limited to margin, cash or other types) for the
proper investment of the securities of the trust estate; and to instruct any
broker or brokerage firm utilized by Trustee to open and maintain such separate
brokerage accounts;
(5) To exercise, or refrain from the exercise of; all
conversion, subscription, voting and other rights of any nature pertaining to
any securities of any corporation held as part of the trust estate (including
securities of Trustee or any affiliate of Trustee), to participate in
foreclosures, mergers, liquidations and similar transactions with respect to
such securities, to grant proxies, discretionary or otherwise, in respect of
such securities; and to take all actions in complying with applicable securities
laws and regulations;
(6) To determine whether any money or other property coming
into the hands of Trustee shall be considered as part of the principal or income
of the trust estate, and to apportion between such principal and income any loss
or expenditure in connection with the trust estate as Trustee deems just and
equitable (including the right to specifically allocate to any beneficiary for
any fiscal year capital gains incurred during such fiscal year);
(7) To collect, receive and give acquittances for all income,
rent and profits of the trust estate, and to compromise and adjust any claims
which the trust estate, or Trustee, may assert against others, or which others
may assert against the trust estate or Trustee;
(8) To accept by transfer or conveyance any property,
satisfactory to Trustee, from any source, to be added to and become a part of
the estate, subject to all of the terms and conditions provided in this Trust
Agreement;
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<PAGE> 6
(9) To maintain in the trust estate an amount or amounts of
uninvested cash, from time to time, as may be reasonably necessary to provide
for future payments to be made from the trust estate;
(10) To retain any property at any time received by Trustee;
(11) To deposit securities in any voting trust or with
custodians or securities clearing corporations or depositories or similar
organizations, whether located in the State of Ohio or elsewhere in the United
States or abroad, and to delegate power thereto, and to pay or agree to pay part
of its expenses and compensation with respect to any property so deposited;
(12) To commence or defend suits or legal proceedings and to
represent the Trust in suits or legal proceedings in any court or before any
other body or tribunal;
(13) To appoint one or more individuals or corporations as a
custodian or subtrustee of any property, and as part of its reimbursable
expenses under this Trust Agreement, to pay the reasonable compensation and
expenses of any such custodian or subtrustee;
(14) To settle, compromise or submit to arbitration any
claims, debts, or damages due or owing to or from the Trust;
(15) To employ suitable agents, fiduciaries, consultants and
legal counsel, and, as part of its reasonable expenses under this Trust
Agreement, to pay their reasonable expenses and compensation;
(16) To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other instruments that may
be necessary or appropriate to carry out the powers granted herein; and
(17) To pay any premium as it becomes due on any other life
insurance policy held by the Trustee, as directed by the Company;
(l8) Generally to do all acts, exclusive of acts involving
administration of the Plan, which may be necessary or desirable for the
protection of the Trust
Section 6. Disposition of Income.
(a) During the term of this Trust, all income received by the Trust,
net of expenses and taxes, shall be accumulated and reinvested.
Section 7. Accounting by Trustee.
(a) Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions required to be
made, including such specific records as shall be agreed upon in writing between
Company and Trustee. Within sixty (60) days following the close of each calendar
year and within sixty (60) days after the removal or resignation of Trustee,
Trustee shall deliver to Company a written account of its administration of the
Trust during such year or during the period from the close of the last preceding
year to the date of such removal or resignation, setting forth all investments,
receipts,
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<PAGE> 7
disbursements and other transactions effected by it, including a description of
all securities and investments purchased and sold with the cost or net proceeds
of such purchases or sales (accrued interest paid or receivable being shown
separately), and showing all cash, securities and other property held in the
Trust at the end of such year or as of the date of such removal or resignation,
as the case may be.
Section 8. Responsibility of Trustee.
(a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of like character and with like aims; provided, however, that Trustee
shall incur no liability to any person for any action taken pursuant to a
direction, request or approval given by Company which is contemplated by, and in
conformity with, the terms of the Plan or this Trust and is given in writing by
Company. In the event of a dispute between Company and a party, Trustee may
apply to a court of competent jurisdiction to resolve the dispute.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Company agrees to indemnify Trustee against
Trustee's costs, expenses, and liabilities (including without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If Comply does not pay such costs, expenses and liabilities in a
reasonably timely manner, Trustee may obtain payment from the Trust.
(c) Trustee may consult with legal counsel (who may also be counsel for
Company generally) with respect to any of its duties and obligations hereunder,
and shall be fully protected in reasonably relying upon any advice of such legal
counsel having expertise with respect to such matters.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder, and to pay any such
person or entity their reasonable fees for its services.
(e) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
Trustee shall have no power to name a beneficiary of the policy other than the
Trust, to assign the policy (as distinct from conversion of the policy to a
different form) other than to a successor Trustee, or to loan to any person the
proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
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<PAGE> 8
(g) Company agrees to indemnify Trustee from and against any loss,
cost, damage, expense or liability (including, without limitation, reasonable
attorney fees) arising out of any alleged or actual act, or failure to act, on
the part of the Trustee pursuant to the direction of the Company; provided,
however, that Trustee shall not be entitled to any such indemnification in the
event any such loss, cost, damage, expense or liability results from Trustee's
negligence or willful misconduct. The provisions of this paragraph shall survive
the amendment or termination of this Trust Agreement or the resignation or
removal of the Trustee.
(h) (i) Any action by Company pursuant to this Trust Agreement shall be
satisfactorily evidenced to Trustee by a certified copy of a resolution of the
Board of Directors of Company or by any certificate, notice, order, request,
instruction, direction or objection of Company. Company shall promptly file with
Trustee a certified list of the names and specimen signatures of the officers of
Company and any delegee authorized to act for it. Company shall promptly notify
Trustee of the addition or deletion of any person's name to or from such list.
Until actual receipt by Trustee of notice that any such person is no longer
authorized so to act, Trustee may continue to rely on the authority of any such
person.
(ii) Any certificates, notices, orders, requests, instructions,
directions or objections of Company, any plan administrator, or any other person
authorized to act pursuant to this Trust Agreement shall be satisfactorily
evidenced to Trustee by a written statement (provided, however, that Trustee
may, in its sole and reasonable discretion, accept oral notices, orders,
requests, instructions, directions and objections subject to confirmation in
writing), and Trustee shall be fully protected for acting in accordance
therewith or for failing to act in the absence thereof.
(iii) Communications to Trustee shall be sent to Trustee's office
or to such other address as Trustee shall specify in writing, and such
communications to Trustee shall be binding upon the Trust and Trustee when
received by Trustee.
(i) Company shall maintain and furnish Trustee with such reports,
documents and information as shall be required by Trustee to perform its duties
and discharge its responsibilities under this Trust Agreement, including without
limitation a certified copy of the Plan and any and all amendments thereto and
written reports setting forth the name, address, date of birth, and social
security and tax identification numbers of the Participant or his beneficiaries,
and a listing of the Participant's accrued benefit under the Plan. Trustee shall
be entitled to rely on the most recent reports, documents and information
furnished to it by Company. Company shall be required to notify Trustee as to
the termination of the employment of the Plan participant by death, retirement
or otherwise.
(j) Trustee shall not be responsible in any respect for the
administration of the Plan.
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<PAGE> 9
Section 9. Compensation and Expenses of Trustee.
(a) Company shall pay all administrative and Trustee's fees and
expenses and all taxes on income received by the Trust. If not so paid by
Company, the fees and the expenses shall be paid from the Trust.
Section 10. Resignation and Removal of Trustee.
(a) Trustee may resign at any time by written notice to Company, which
shall be effective sixty (60) days after receipt of such notice unless Company
and Trustee agree otherwise,
(b) Prior to a Change of Control, as defined herein, Trustee may be
removed by Company on sixty (60) days notice or upon shorter notice accepted by
Trustee.
(c) Upon a Change of Control, Trustee may not be removed by Company for
five (5) years without the prior written approval of Participant (or upon his
death, his beneficiaries).
(d) Upon resignation or removal of Trustee and appointment of successor
Trustee, all assets shall subsequently be transferred to the successor Trustee.
The transfer shall be completed within sixty (60) days after receipt of notice
of resignation, removal or transfer, if practicable, unless Company extends the
time limit.
(e) If Trustee resigns or is removed, a successor shall be appointed,
in accordance with section 11 hereof, by the elective date of resignation or
removal under paragraphs (a), (b) or (c) of this section. If no such appointment
has been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust
Section 11. Appointment of Successor.
(a) If Trustee resigns or is removed in accordance with Section 10(a),
(b) or (c) hereof, Company with the approval of Participant (or upon his death,
his beneficiaries) may appoint any third party that is a bank trust department,
or other party acceptable to the Participant as a successor to replace Trustee
upon resignation or removal. The appointment shall be effective when accepted in
writing by the new Trustee, who shall have all the rights and powers of the
former Trustee, including ownership rights in the Trust assets. The former
Trustee shall execute any instrument necessary or reasonably requested by
Company or the successor Trustee to evidence the transfer.
(b) The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 7 and 8 hereof. The successor Trustee shall not be responsible for and
Company shall indemnify and defend the successor Trustee from any claim or
liability resulting from any action or inaction of any prior Trustee or from any
other past event, or any condition existing at the time it becomes successor
Trustee.
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<PAGE> 10
Section 12. Amendment or Termination.
(a) Subject to Section 12(b), below, this Trust Agreement may be
amended by a written instrument executed by Trustee, Company and Participant (or
upon his death, his beneficiaries). Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Plan or shall make the Trust
revocable after it has become irrevocable in accordance with Section 1(b)
hereof.
(b) The Trust shall not terminate until the date on which the
Participant and his beneficiaries are no longer entitled to benefits pursuant to
the terms of the Plan. Upon termination of the Trust any assets remaining in the
Trust shall be returned to the Company.
Section 13. Miscellaneous.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to the Participant or his beneficiaries under this
Trust Agreement may not be anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
(d) For purposes of this Trust Agreement, a "Change of Control" of the
Company shall be deemed to occur when:
(i) The individuals who constitute the Board at the beginning of
any period of two consecutive years cease for any reason during that period to
constitute a majority of the members of the Board (unless the election, or the
nomination for election by the stockholders of the Company, of each nonencumbent
nominee for the Board who is elected to the Board during that period is approved
by the votes of at least two-thirds of the members of the Board who constituted
the Board at the beginning of that period and are still serving as members of
the Board at the time of any such election or nomination for election); or
(ii) The Board adopts a resolution declaring that in its opinion
the transactions contemplated by any event or series of events (including,
without limitation, any tender offer, except a tender offer by the Company or a
subsidiary, for shares of stock in the Company or the execution of an agreement
that provides for the merger or consolidation of the Company with another
corporation or the sale of all or substantially all of the assets of the
Company) that in the opinion of the Board will, or is likely to, result in a
change in control of the Company are certain to be consummated.
Section 14. Effective Date.
(a) The effective date of this Trust Agreement shall be the first day
of June 1997.
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IN WITNESS WHEREOF, the Company, Participant and Trustee have executed
the Agreement as of the date first above written.
Witnesses: SHILOH INDUSTRIES, INC.
/s/ PHYLLIS D. JOHNSTON By: /s/ Craig A. Stacy
- ------------------------------ -------------------------
Phyllis D. Johnston Title: CFO & Treasurer
- ------------------------------ -----------------------
Witness 1 - type or print name "Company"
/s/ MELISSA M. SMITH
- ------------------------------
Melissa M. Smith
- ------------------------------ FIRST UNION NATIONAL BANK OF
Witness 2 - type or print name NORTH CAROLINA
By: /s/ Authorized Signatory
- ------------------------------ ------------------------
Title:
- ------------------------------ ----------------------
Witness 1 - type or print name "Trustee"
- ------------------------------
- ------------------------------
Witness 2 - type or print name
/s/ MICHAEL W. DONAHOE /s/ ROBERT L. GRISSINGER
- ------------------------------ ------------------------------
Michael W. Donahoe ROBERT L. GRISSINGER
- ------------------------------
Witness 1 - type or print name "Participant"
/s/ SUSAN C. LESTER
- ------------------------------
Susan C. Lester
- ------------------------------
Witness 2 - type or print name
<PAGE> 12
EXHIBIT A
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
BETWEEN SHILOH INDUSTRIES, INC. AND ROBERT L. GRISSINGER
This Agreement is between Shiloh Industries, Inc..
(hereinafter "Corporation") and Robert L. Grissinger (hereinafter "Employee").
Employee is a highly compensated employee and an important member of
Corporation's management team. Employee has made substantial contributions over
the years to the development and maintenance of Corporation's business and
continues to be a key factor in the Corporation's success. In recognition of
Employee's career contributions to Corporation and his expected contributions
over his remaining employment period and in an attempt to ensure that Employee
is provided with adequate qualified retirement benefits for his past and future
years of service, Corporation wishes to provide Employee with a nonqualified
retirement benefit arrangement (hereinafter, the "benefit"). The benefit
provided under this Agreement is in addition to any compensation which is
currently paid to Employee or may be paid under other agreements between
Corporation and Employee. In exchange for valuable consideration recited herein,
the parties have agreed as follows:
SECTION 1 - RETIREMENT BENEFIT. Upon termination of Employee's
full-time employment with Corporation, Corporation shall pay Employee in the
manner specified below a retirement benefit equal to (a) minus (b), where:
(a) is equal to an amount which is the Actuarial Equivalent,
calculated and expressed in the form of a lump-sum payment, of
a ten (10) year certain life annuity to Employee with the
monthly payments under such annuity commencing upon Employee's
attainment of age sixty-five (65) and equal to fifty percent
(50%) of Employee's Average Monthly Compensation; and
(b) is equal to an amount which is the Actuarial Equivalent,
calculated and expressed in the form of a lump-sum payment, of
the benefits paid or payable to or on behalf of Employee under
the Shiloh Industries, Inc. Pension Plan (the "Pension
Plan").
For purposes of calculating the above, "Average Monthly Compensation" shall be
defined in the same manner as used in the Pension Plan, disregarding any
limitations imposed by the Pension Plan under Sections 401(a)(17) or 415 of the
Internal Revenue Code of 1986, as amended from time to time (hereinafter, the
"Code"). "Actuarial Equivalent" shall be determined by the actuaries of the
Pension Plan and shall mean a benefit having the same value as the benefit which
it replaces, using the same actuarial factors and assumptions, including any
early retirement subsidies, provided for and used in the Pension Plan. The
Actuarial Equivalent of Employee's retirement benefit shall be paid in 120
consecutive approximately equal monthly installments beginning on the first day
of the month following Employee's termination of employment with the
Corporation.
<PAGE> 13
SECTION 2 - DEATH OF EMPLOYEE. If Employee dies prior to the
commencement of his benefit under this Agreement his Designated Beneficiary, as
defined in Section 7 below, shall be entitled to receive a retirement benefit
equivalent to the amount Employee would have been entitled to receive, if
immediately prior to this death, he had terminated employment with the
Corporation, started receiving his benefits under this Agreement, and died
thereafter. Such benefit shall be paid in lieu of any other benefit under this
Agreement. Payment of this benefit shall commence as soon as possible, but no
more than 120 days following the date of Employee's death. If Employee dies
after his benefit commences but before receiving all payments to which he is
entitled to under this Agreement, his Designated Beneficiary shall receive the
remainder of the payments under this Agreement. These payments shall be paid to
Employee's Designated Beneficiary at the same time and on the same basis as if
Employee were still living.
SECTION 3- TERMINATION OF EMPLOYMENT FOR CAUSE. Notwithstanding any
other provisions of this Agreement, payment of the benefit to Employee or his
Designated Beneficiary will, at the discretion of the Committee, as defined in
Section 11(a), be forfeited, and Corporation shall have no further obligation
to Employee or his Designated Beneficiary under this Agreement, if Employee is
discharged from employment with Corporation due to acts of willful malfeasance
or gross negligence in a matter of material importance to Corporation. The
Committee shall make this determination in good faith and in its sole
discretion. If Employee is a member of the Committee at the time the subject of
his discharge comes before the Committee, he shall not be entitled to vote on
any matter regarding his employment status.
SECTION 4 - ESTABLISHMENT OF IRREVOCABLE TRUST. The Corporation shall
establish an irrevocable trust fund (the Supplement Retirement Trust Agreement
for Robert L. Grissinger, hereinafter, the "Trust") through which assets to
satisfy its obligations under this Agreement shall be set aside to aid in
providing for benefit payments to the Employee. Any assets or property held by
the Trust shall continue to be subject to the claims of the general creditors of
the Corporation only upon the insolvency or bankruptcy of the Corporation, as
provided therein, and no person other than the Corporation shall, by virtue of
the provisions of this Agreement, have any interest in such funds to the extent
that any person, including the Employee, acquires the right to receive payment
from the Agreement, such right being no greater than the right of any unsecured
general creditor to the Corporation.
SECTION 5 - NO RIGHT OF EMPLOYMENT. Nothing contained in this Agreement
shall be deemed to confer upon Employee any right of continued employment with
Corporation.
SECTION 6 - EMPLOYEE'S RIGHTS NOT ASSIGNABLE. No right or benefit under
this Agreement shall be subject to anticipation, alienation, sale, assignment,
pledge, encumbrance or charge; and any attempt to anticipate, alienate, sell,
assign, pledge, encumber or charge the same shall be void. No right or benefit
shall be liable for or subject to the debts, contracts, liabilities or torts of
the person entitled to such
<PAGE> 14
benefits. If Employee or Employee's Designated Beneficiary should become
bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or
charge any right to benefits under this Agreement, then those rights, in the
discretion of the Committee, shall cease. In this case, Corporation may hold or
apply the benefits at issue or any part thereof for the benefit of Employee or
Employee's Designated Beneficiary in such manner as the Committee may deem
proper.
SECTION 7 - WITHHOLDING OF TAXES. The Corporation shall have the right
to deduct from payment of any amount under the Agreement any taxes required by
law to be withheld from Employee or his Designated Beneficiary with respect to
such payment.
SECTION 8 - DESIGNATION OF BENEFICIARY. The Designated Beneficiary of
Employee's benefit under this Agreement shall be the individual, trust or other
legal entity named by Employee in a writing delivered to Corporation, making
specific reference to this Agreement. In the absence of such written notice,
benefits shall be paid to Employee's estate. If Employee is not survived by a
Designated Beneficiary, or if the Designated Beneficiary dies or is not in
existence prior to the completion of all payments due under Section 2 hereof,
all remaining payments which would have been paid to Employee or Employee's
Designated Beneficiary shall be paid to Employee's estate.
SECTION 9 - BENEFITS NOT CURRENT COMPENSATION. The benefits payable
under this Agreement shall not be deemed to be salary or other compensation to
Employee for purposes of computing benefits to which he may be entitled under
any pension or other arrangement of Corporation for the benefit of its
employees.
SECTION 10 - DETERMINATION OF BENEFITS, CLAIMS, PROCEDURE AND
ADMINISTRATION.
(a) Administration by Compensation Committee. This Agreement shall
be administered by the Compensation Committee (hereinafter,
the "Committee") of the Board of Directors of the Corporation.
Subject to the provisions of this Agreement, the Committee
shall have sole discretionary authority to:
(i) interpret the Agreement;
(ii) create and revise rules and procedures for the
administration of the Agreement;
(iii) employ or retain such persons (including actuaries or
attorneys) to assist in the property administration
of the Agreement; or
(iv) direct the Trustee of the Trust to distribute
Employee's benefits pursuant to the Trust.
(b) Claim. If Employee believes that the is being denied a benefit
to which he is entitled under this Agreement, he may file a
written request for such benefit with the Committee, setting
forth his claim. The request must be addressed to the
Committee at Corporation's then principal place of business.
For purposes of this Section 10, upon Employee's death, his
rights may be exercised by his Designated Beneficiary.
(c) Claim Decision. Upon receipt of the claim, the Committee
shall advise Employee that a reply will be forthcoming
within 90 days and shall, in fact, deliver such reply
<PAGE> 15
within such period. The Committee may, however, extend the
reply period for an additional 90 days for reasonable cause.
If the claim is denied in whole or in part, the Committee
shall adopt a written opinion setting forth:
(i) the specific reason or reasons for such denial;
(ii) the specific reference to pertinent provisions of
this Agreement on which such denial is based;
(iii) a description of any additional material or
information necessary for Employee to perfect his
claim and an explanation why such material or such
information is necessary;
(iv) appropriate information as to the steps to be taken
if Employee wishes to submit the claim for review;
and
(v) the time limits for requesting a review under this
subsection 10(d) and for review under subsection
10(e) below.
(d) Request for Review. Within 60 days after the receipt by
Employee of the written opinion described above, Employee may
request in writing that the Committee review the
determination. Such request must be addressed to the
Committee, at the Corporation's then principal place of
business. Employee or his duly authorized representative, may,
but need not, review the pertinent documents and submit issues
and comments in writing for consideration by the Committee. If
Employee does not request a review of the determination by the
Committee within such 60-day period, he shall be barred and
estopped from challenging the determination.
(e) Review of Decision. Within 60 days after the Committee has
received a request for review, it will review the committee's
determination. After considering all materials presented by
Employee, the Committee will render an opinion, setting forth
the specific reasons for the decision and containing specific
references to the pertinent provisions of this Agreement on
which the decision is based. If special circumstances require
that the 60-day time period be extended, the Committee will so
notify Employee and will render the decision as soon as
possible, but not later than 120 days after receipt of the
request for a review. All decisions of the Committee will be
final and binding upon all persons and shall be made by the
majority vote of the Committee.
SECTION 11 - TERMINATION. This Agreement may be terminated by a written
agreement signed by both parties and will otherwise terminate only when both
parties have satisfied all their obligations under this Agreement.
SECTION 12 - NOTICE. Any notice required to be given under this
Agreement shall be sufficient if made in writing and mailed by certified mail to
Employee at his home address or such other address as he may from time to time
indicate to Corporation, and the Corporation at the principal office of
Corporation to the attention of the Compensation Committee of the Board.
SECTION 13 - AGREEMENT PROVISIONS.
(a) Whenever possible, each provision of this Agreement shall be
interpreted in such a manner so as to be effective and valid
under applicable law (including the Code), but if any
provision of this Agreement shall be held to be prohibited by
or invalid under applicable law, then (i) such provision shall
be deemed amend to, and to have contained from the outset such
language as shall be necessary to, accomplish the objectives
of the provisions as originally written to the fullest extent
permitted by law and (ii) and other provisions of this
Agreement shall remain in full force and effect.
(b) No rule of strict construction shall be applied against the
Corporation, the Committee, the Board of Directors of the
Corporation or any other person in the
<PAGE> 16
interpretation of any terms of this Agreement or any rule or
procedure established by the Committee.
(c) Whenever any person entitled to receive any payment is
under a legal disability, or is incapacitated in any way, so
as to be unable to manage his financial affairs, the
Committee, at its discretion, may make such payment for the
benefit of such person to his legal representative, or to a
relative or friend of such person for his benefit, or it may
apply the payment for the benefit of such person in any manner
it deems advisable. When the Committee or the Corporation make
any payment pursuant to this subsection, it shall be
considered as a complete discharge of any liability for the
making of such payments under the Agreement.
(d) Where the context admits, words in the masculine gender shall
include the feminine and neuter genders, the plural shall
include the singular and the singular shall include the
plural.
(e) The captions of sections and paragraphs of this Agreement are
for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
SECTION 14 - PRIOR AGREEMENTS. This Agreement supersedes in all
respects any and all prior agreements between the parties, whether written or
oral, regarding nonqualified retirement benefits.
SECTION 15 - AMENDMENT. This Agreement may be amended, from time to
time, in a writing signed by both parties.
SECTION 16 - LAW GOVERNING. This Agreement shall be governed by and
construed under the laws of the State of Ohio.
<PAGE> 17
Executed on this 1st day of June, 1997.
SHILOH INDUSTRIES, INC.
By: /s/ Craig A. Stacy
------------------
Its: CFO & Treasurer
------------------
CORPORATION
/s/ Robert L. Grissinger
------------------------
Robert L. Grissinger
EMPLOYEE
<PAGE> 1
Exhibit 21.1
LIST OF SUBSIDIARIES OF SHILOH INDUSTRIES, INC.
The following is a list of the subsidiaries of Shiloh Industries, Inc.,
a Delaware corporation (the "Corporation"). The common stock of all the
corporations listed below is wholly owned, directly or indirectly, by the
Corporation. If indented, the corporation is a wholly owned subsidiary of the
corporation under which it is listed unless otherwise noted.
<TABLE>
<CAPTION>
NAME OF CORPORATION STATE OF INCORPORATION
<S> <C>
Shiloh Corporation Ohio
The Sectional Die Company Ohio
Sectional Stamping, Inc. Ohio
Valley City Steel Company (1) Ohio
Medina Blanking, Inc. (2) Ohio
Liverpool Coil Processing, Incorporated Ohio
Greenfield Die & Manufacturing Corporation Ohio
C&H Design Company Michigan
Jefferson Blanking, Inc. Georgia
</TABLE>
The Corporation also owns an 80% equity interest in Shiloh of Michigan, L.L.C.,
a Michigan limited liability company. The Corporation owns an 19.75% equity
interest in Bing Banking L.L.C., a Michigan limited liability company.
- ----------
(1) Valley City Steel Company is 49% owned by the Corporation and 51% owned
by Shiloh Corporation.
(2) Medina Blanking, Inc. is 22% owned by the Corporation, 22% owned by
Shiloh Corporation and 56% owned by Valley City Steel Company.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-21161) of Shiloh Industries, Inc. of our report
dated December 11, 1997, appearing on Page 15 of this Annual Report on Form
10-K.
/s/ Price Waterhouse LLP
Cleveland, Ohio
January 27, 1998
<PAGE> 1
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and officers of Shiloh Industries, Inc., a Delaware corporation, hereby
constitutes and appoints Robert L. Grissinger, Craig A. Stacy and Thomas C.
Daniels, and each of them, as the true and lawful attorney or attorneys-in-fact,
with full power of substitution and revocation, for each of the undersigned and
in the name, place and stead of each of the undersigned, to sign on behalf of
each of the undersigned an Annual Report on Form 10-K for the fiscal year ended
October 31, 1997 pursuant to Section 13 of the Securities Exchange Act of 1934
and to sign any and all amendments to such Annual Report, and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including, without limitation, a Form 12b-25, with the Securities and Exchange
Commission, granting to said attorney or attorneys-in-fact, and each of them,
full power and authority to do so and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorney or attorneys-in-fact or any of
them or their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
This Power of Attorney may be executed in multiple counterparts, each
of which shall be deemed an original with respect to the person executing it.
Executed as of this 28th day of November 1997.
<TABLE>
<CAPTION>
<S> <C>
/s/ Dominick C. Fanello /s/ James C. Fanello
- ------------------------------ -----------------------------
Dominick C. Fanello James C. Fanello
Vice Chairman of the Board and Director
Director
/s/ David J. Hessler /s/ Curtis E. Moll
- ------------------------------ -----------------------------
David J. Hessler Curtis E. Moll
Director Director
/s/ James A. Karman /s/ Theodore K. Zampetis
- ------------------------------ -----------------------------
James A. Karman Theodore K. Zampetis
Director Director
/s/ Dieter Kaesgen /s/ Richard S. Gray
- ------------------------------ -----------------------------
Dieter Kaesgen Richard S. Gray
Director Director
/s/ Robert L. Grissinger /s/ Craig A. Stacy
- ------------------------------ -----------------------------
Robert L. Grissinger Craig A. Stacy
President, Chief Executive Treasurer and Chief Financial
Officer (Principal Executive Officer (Principal Financial
Officer), Chairman of the and Accounting Officer)
Board and Director
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000904979
<NAME> SHILOH CORP.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<CASH> 191,688
<SECURITIES> 0
<RECEIVABLES> 50,151,099
<ALLOWANCES> 849,554
<INVENTORY> 31,148,360
<CURRENT-ASSETS> 85,783,063
<PP&E> 248,908,808
<DEPRECIATION> 61,730,042
<TOTAL-ASSETS> 289,626,230
<CURRENT-LIABILITIES> 40,299,841
<BONDS> 0
0
0
<COMMON> 130,387
<OTHER-SE> 146,488,761
<TOTAL-LIABILITY-AND-EQUITY> 289,626,230
<SALES> 273,161,251
<TOTAL-REVENUES> 273,161,251
<CGS> 214,343,391
<TOTAL-COSTS> 239,900,228
<OTHER-EXPENSES> (726,120)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,219,003
<INCOME-PRETAX> 31,768,140
<INCOME-TAX> 11,674,793
<INCOME-CONTINUING> 20,093,347
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,093,347
<EPS-PRIMARY> 1.54
<EPS-DILUTED> 1.54
</TABLE>
