What changed in this filing

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Item 1. Financial Statements

2020-08-06 compared with 2020-05-12 · 115 added, 113 removed, 460 unchanged (33% of the section changed)

5 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Cost of goods sold

Selling, general and administrative expenses

Goodwill impairment

Amortization of intangible assets

6 unchanged sentences

Other loss (income), net

Income (loss) before income tax benefit

Income (loss) before income tax (benefit) expense

Income tax (benefit) expense

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Net income (loss)

36 unchanged sentences

Common shares, par value $1 per share, authorized 10,000 shares;

issued and outstanding shares 5,916 at March 31, 2020 and 5,777 at September 30, 2019

issued and outstanding shares 5,916 at June 30, 2020 and 5,777 at September 30, 2019

Additional paid-in capital

8 unchanged sentences

(Unaudited, Amounts in thousands)

Six Months Ended

Nine Months Ended

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

Amortization and write-off of debt issuance cost

Amortization of debt issuance cost

Loss (gain) on disposal of operating assets or impairment of operating assets

Gain on insurance proceeds received

Goodwill impairment

Share transactions under company stock plan

3 unchanged sentences

Contract assets

Refundable taxes

Refundable income taxes

Prepaid expenses and other current assets

2 unchanged sentences

Accrued income and other taxes

Net cash (used for) provided by operating activities

Net cash provided by operating activities

Cash flows from investing activities:

12 unchanged sentences

Share retirement

Net cash provided by (used for) financing activities

Increase (decrease) in cash and cash equivalents

Net cash used for financing activities

Decrease in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

11 unchanged sentences

(Unaudited, Amounts in thousands )

Six Months Ended

March 31, 2020

Nine Months Ended

June 30, 2020

Comprehensive

4 unchanged sentences

Share transactions under equity based plans

Balance - March 31, 2020

Balance - June 30, 2020

Three Months Ended

March 31, 2020

June 30, 2020

Comprehensive

Shareholders’

Balance - December 31, 2019

Balance - March 31, 2020

Comprehensive income

Performance and restricted share expense

Share transactions under equity based plans

Balance - March 31, 2020

Six Months Ended

March 31, 2019

Balance - June 30, 2020

Nine Months Ended

June 30, 2019

Comprehensive

6 unchanged sentences

Share transactions under equity based plans

Balance - March 31, 2019

Balance - June 30, 2019

Three Months Ended

March 31, 2019

June 30, 2019

Comprehensive

Shareholders’

Balance - December 31, 2018

Balance - March 31, 2019

Comprehensive loss

Share retirement

Performance and restricted share expense

Share transactions under equity based plans

Balance - March 31, 2019

Balance - June 30, 2019

See notes to unaudited consolidated condensed financial statements.

19 unchanged sentences

The results of operations for any interim period are not necessarily indicative of the results to be expected for other interim periods or the full year.

In March 2020, the novel strain of coronavirus ("COVID-19") was recognized as a pandemic by the World Health Organization, and the outbreak subsequently became increasingly widespread in the United States and other countries in which we operate.

The Company has taken proactive steps to ensure the safety of its employees and customers as well as to preserve the Company’s financial flexibility.

The Company will continue to monitor the development of and responses to the COVID-19 pandemic and the impact of COVID-19 on its business and respond accordingly.

The full impact of the COVID-19 outbreak on the Company continues to evolve subsequent to the quarter ended March 31, 2020 and as of the date these unaudited consolidated condensed financial statements are issued.

As such, the full magnitude that the pandemic will have on the Company’s financial condition, liquidity and future results of operations is uncertain.

The Company continues to monitor the development of and responses to the COVID-19 pandemic and the impact of COVID-19 on its business and respond accordingly.

The full impact of the COVID-19 outbreak on the Company continues to evolve and the full magnitude that the pandemic will have on the Company’s financial condition, liquidity and future results of operations is uncertain.

As the pandemic continues to impact operations of businesses across the world, our ability to meet customer demands for products may be impaired or, similarly, our customers have experienced and may continue to experience adverse business consequences.

Reduced demand for products or impaired ability to meet customer demand (including as a result of disruptions at our facilities, to transportation of products, and/or vendors) could have a material adverse effect on our business, operations and financial performance.

Given the evolution of the COVID-19 pandemic and the varied global responses to curb its spread, the Company is not presently able to estimate the effects of the COVID-19 outbreak on its future results of operations, financial condition or liquidity for fiscal year 2020.

Reduced demand for products or impaired ability to meet customer demand (including as a result of disruptions at our facilities, in the transportation of products, and/or in the operations of our vendors) could have a material adverse effect on our business, operations and financial performance.

Given the continuing evolution of the COVID-19 pandemic and the varied global responses to curb its spread, the Company is not presently able to estimate the effects of the COVID-19 outbreak on its future results of operations, financial condition or liquidity for fiscal year 2020.

Accounting Policies

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Net Income (loss)

26 unchanged sentences

Recently Adopted Accounting Standards

The Company adopted Topic 842 using the cumulative effect method as of October 1, 2019 for the adoption of Topic 842.

The Company adopted Topic 842 as of October 1, 2019, using the cumulative effective method.

Under the transition method selected by the Company, leases that are not short-term in nature existing at, or entered on October 1, 2019 were required to be recognized and measured.

8 unchanged sentences

For a portion of the Company's inventory, cost is determined using the last-in, first-out ("LIFO") method.

Approximately 35% and 27% of the Company’s inventories at March 31, 2020 and September 30, 2019, respectively use the LIFO method.

Approximately 41% and 27% of the Company’s inventories at June 30, 2020 and September 30, 2019, respectively, use the LIFO method.

An actual valuation of inventory under the LIFO method is made at the end of each fiscal year based on the inventory levels and costs existing at that time.

2 unchanged sentences

The first-in, first-out (“FIFO”) method is used for the remainder of the inventories, which are stated at the lower of cost or net realizable value.

If the FIFO method had been used for the inventories for which cost is determined using the LIFO method, inventories would have been $8,285 and $8,296 higher than reported at March 31, 2020 and September 30, 2019 , respectively.

If the FIFO method had been used for the inventories for which cost is determined using the LIFO method, inventories would have been $8,280 and $8,296 higher than reported at June 30, 2020 and September 30, 2019 , respectively.

Accumulated Other Comprehensive Loss

5 unchanged sentences

The adoption of Topic 842 requires lessees to recognize a ROU asset and a lease liability on the consolidated condensed balance sheet, with the exception of short-term leases.

The Company primarily leases its manufacturing buildings, specifically at its Orange location, office equipment and forklifts.

The Company primarily leases its manufacturing buildings, specifically at its Orange location, machinery and office equipment.

The Company determines if a contract contains a lease based on whether the contract conveys the right to control the use of identified assets for a period in exchange for consideration.

5 unchanged sentences

If the Company determines there exists a reasonable certainty of exercising termination or early buyout options, then the lease terms are adjusted to account for these facts.

A portion of our real estate leases are generally subject to annual changes in the Consumer Price Index ("CPI").

The changes to the CPI are treated as variable lease payments.

A portion of our real estate leases include rents that are generally subject to annual changes in the Consumer Price Index ("CPI").

Such changes to the CPI are treated as variable lease payments.

The Company elected the package of practical expedients permitted under the transition guidance within the new standard which, among other things, allowed the Company to carry forward the historical lease classification.

7 unchanged sentences

Three Months Ended

March 31, 2020

Six Months Ended

March 31, 2020

June 30, 2020

Nine Months Ended

June 30, 2020

Lease expense

29 unchanged sentences

Financing cash flows from finance leases

Right-of-use assets obtained in exchange for new lease liabilities:

Operating leases

Weighted-average remaining lease term (years):

4 unchanged sentences

Operating leases

Future minimum lease under non-cancellable leases at March 31, 2020 were as follows:

Future minimum lease under non-cancellable leases at June 30, 2020 were as follows:

Finance Leases

1 unchanged sentence

Year ending September 30,

2020, (excluding the six months ended March 31, 2020)

2020 (excluding the nine months ended June 30, 2020)

Total lease payments

Imputed interest

Present value of lease liabilities

As previously disclosed in the 2019 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments initial or remaining non-cancellable lease terms in excess of one year would have been as follows:

As previously disclosed in the Company's 2019 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments under initial or remaining non-cancellable lease terms in excess of one year would have been as follows:

Finance Leases

14 unchanged sentences

The Credit Agreement matures on August 6, 2021 and is comprised of a senior secured revolving credit facility with a maximum borrowing of $30,000 .

The Credit Agreement also has an accordion feature, which allows the Company to increase maximum borrowings by up to $10,000 upon consent of the existing lender or upon additional lenders joining the Credit Agreement.

The Credit Agreement also has an accordion feature, which allows the Company to increase maximum borrowings by up to $10,000 upon consent of the Lender or upon additional lenders joining the Credit Agreement.

The terms of the Credit Agreement contain both a lock box arrangement and subjective acceleration clause.

As a result, the amount outstanding on the revolving credit facility is classified as a short-term liability.

As a result, the amount outstanding on the revolving credit facility is classified as a short-term

The proceeds from the Credit Agreement were used to pay fees and expenses incurred in connection with the Credit Agreement and continue to be used for working capital purposes and general corporate purposes.

23 unchanged sentences

then 10% of the total collateral is used, but if the collateral exceeds $35,000 , then 10% of the total commitment is used as lending will not exceed the $35,000 revolving commitment unless the accordion feature is enacted.

This will reset back to previous requirements prior to the Fourth Amendment, commencing July 1, 2020.

As of March 31, 2020 and September 30, 2019, the total collateral was $26,000 and $24,000 , respectively and the revolving commitment was $35,000 for both periods.

Commencing July 1, 2020, the terms reverted back to the requirements in place prior to the Fourth Amendment.

The total collateral at June 30, 2020 and September 30, 2019 was $25,603 and $24,000 , respectively and the revolving commitment was $35,000 for both periods.

The measurement at 10% was $2,560 and $2,400 , respectively.

Total availability at March 31, 2020 and September 30, 2019 was $7,999 and $7,709 , respectively, which exceed both the collateral and total commitment threshold.

Total availability at June 30, 2020 and September 30, 2019 was $13,492 and $7,709 , respectively, which exceed both the collateral and total commitment threshold.

If availability had fallen short, the Company would be required to meet the FCCR covenant, which must not be less than 1.1 to 1.0.

Because the availability was greater than the 10.0% of the revolving commitment as of March 31, 2020 and September 30, 2019, the FCCR calculation was not required.

Because the availability was greater than the 10.0% of the revolving commitment as of June 30, 2020 and September 30, 2019, the FCCR calculation was not required.

Amounts borrowed under the Credit Agreement are secured by substantially all the assets of the Company and its U.S.

2 unchanged sentences

Borrowings will bear interest at the Lender's established domestic rate or LIBOR, plus the applicable margin as set forth in the Credit Agreement.

The revolver has a rate based on LIBOR plus 2.00% spread at March 31, 2020 and 1.75% spread at September 30, 2019, which was 3.6% both at March 31, 2020 and September 30, 2019, respectively and the Export Credit Agreement has a rate based on LIBOR plus 1.50% spread at March 31, 2020 and 1.25% spread at September 30, 2019, which was 3.1% and 3.4% at March 30, 2020 and September 30, 2019, respectively.

The revolver has a rate based on LIBOR plus 1.50% , which was 1.7% at June 30, 2020 and 3.6% at September 30, 2019, and the Export Credit Agreement has a rate based on LIBOR plus 1.00% spread at June 30, 2020 and 1.25% spread at September 30, 2019, which was 1.2% and 3.4% at June 30, 2020 and September 30, 2019, respectively.

The Company also has a commitment fee of 0.25% under the Credit Agreement to be incurred on the unused balance of the revolver.

7 unchanged sentences

Interest rates on foreign borrowings are based on Euribor rates which range from 1.0% to 4.2% .

In December 2018, the Company entered into a six month short-term debt arrangement of $1,137 to be used for working capital purposes, which was subsequently repaid in fiscal 2019.

In December 2018, the Company entered into a six month short-term debt arrangement of $1,137 to be used for working capital purposes at Maniago, which was subsequently repaid in fiscal 2019.

In September 2019, Maniago modified its repayment schedule for one tranche of its existing term debt by reducing its next two payments by approximately $96 and extending the loan for an additional six months in which the final payment will be made at that time (to be paid by October 2020).

10 unchanged sentences

Debt issuance costs

The Company incurred debt issuance costs as it pertains to the Credit Agreement in the amount of $212 , and incurred additional costs in fiscal 2019 of $75 related to the First and Second Amendments, which is included in the consolidated condensed balance sheets as a deferred charge in other current assets, net of amortization of $158 and $106 at March 31, 2020 and September 30, 2019, respectively.

The Company incurred debt issuance costs as it pertains to the Credit Agreement in the amount of $212 , and incurred additional costs in fiscal 2019 of $75 related to the First and Second Amendments, which is included in the consolidated condensed balance sheets as a deferred charge in other current assets, net of amortization of $180 and $106 at June 30, 2020 and September 30, 2019, respectively.

In response to the economic uncertainty created by the COVID-19 pandemic, as described above in Note 1, Summary of Significant Accounting Policies , and taking into consideration the Company’s market capitalization, status as a smaller reporting company, and uncertainties and volatility in, and disruptions to, the capital markets, as well as the terms of the Company’s Credit Agreement, the Company applied for and received funds under Paycheck Protection Program (or "PPP") of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").

On April 10, 2020, the Company entered into an unsecured promissory note under the Paycheck Protection Program (the “PPP Loan”).

The PPP Loan to the Company was made through JPMorgan Chase Bank, N.A., a national banking association and the Company’s existing lender.

The note has an aggregate principal amount of approximately $ 5,025 and a two year term.

The interest rate on the PPP Loan is 0.98% , which shall be deferred for the first six months of the term of the loan.

The promissory note evidencing the PPP Loan contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, or provisions of the promissory note.

The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, and/or filing suit and obtaining judgment against the Company.

The loan proceeds were received on April 10, 2020 and were used for payroll, interest on mortgage obligations, rents on leases and utility payments.

As of June, 30, 2020, the Company

repaid $ 261 proceeds back to its lender, leaving a remaining balance of $4,764 , of which $ 2,382 will be paid in the next twelve months and the remaining $ 2,382 in the following twelve months after.

Under the terms of the CARES Act, PPP Loan recipients can apply for and potentially be granted forgiveness for all or a portion of loans granted under the PPP.

Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payroll costs and mortgage interest, rent or utility costs and the maintenance of employee and compensation levels.

Although the Company intends to file for forgiveness, no assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in part.

As of June 30, 2020, the Company is waiting for further guidance regarding how to apply for the forgiveness for all or a portion of the PPP loan.

For each interim reporting period, the Company makes an estimate of the effective tax rate it expects to be applicable for the full fiscal year for its operations.

This estimated effective rate is used in providing for income taxes on a year-to-date basis.

The Company’s effective tax rate through the first six months of fiscal 2020 was (8)% , compared with 16% for the same period of fiscal 2019.

The decrease in the effective rate was primarily attributable to changes in jurisdictional mix of income in fiscal 2020 compared with the same period of fiscal 2019 and discrete tax benefits through the second quarter of fiscal 2019 applied against a year-to-date loss.

The Company’s effective tax rate through the first nine months of fiscal 2020 was (2)% , compared with 8% for the same period of fiscal 2019.

The decrease in the effective rate was primarily attributable to changes in jurisdictional mix of income in fiscal 2020 compared with the same period of fiscal 2019.

The effective tax rate differs from the U.S.

2 unchanged sentences

statutory tax rate.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted and signed into law.

The CARES Act includes provisions relating to refundable payroll tax credits, deferral of certain payment requirements for the employer portion of Social Security taxes, net operating loss carryback periods and temporarily increasing the amount of net operating losses that corporations can use to offset income, alternative minimum tax ("AMT") credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property.

CARES Act did not materially affect the Company’s second quarter of fiscal 2020 income tax provision, deferred tax assets and liabilities, or related taxes payable.

As previously mentioned, the CARES Act was enacted and signed into law, which includes provisions relating to refundable payroll tax credits, deferral of certain payment requirements for the employer portion of Social Security taxes, net operating loss carryback periods and temporarily increasing the amount of net operating losses that corporations can use to offset income, alternative minimum tax ("AMT") credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property.

The CARES Act did not materially affect the Company’s third quarter of fiscal 2020 income tax provision, deferred tax assets and liabilities, or related taxes payable.

The Company continues to assess the future implications of these provisions within the CARES Act on its consolidated condensed financial statements but does not expect the impact to be material.

1 unchanged sentence

federal jurisdiction, Ireland, Italy, and various state and local jurisdictions.

The Company believes it has appropriate support for its federal income tax returns.

Retirement Benefit Plans

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Interest cost

2 unchanged sentences

Net periodic cost

During the six months ended March 31, 2020 and 2019, the Company made $244 and $48 in contributions, respectively, to its defined benefit pension plans.

The Company anticipates making $ 173 of additional cash contributions to fund its defined benefit pension plans during the balance of fiscal 2020 and will use carryover balances from previous periods that have been available for use as a credit to reduce the amount of cash contributions that the Company is required to make to certain defined benefit plans in fiscal 2020.

During the nine months ended June 30, 2020 and 2019, the Company made $604 and $48 in contributions, respectively, to its defined benefit pension plans.

The Company does no t anticipate making additional cash contributions to fund its defined benefit pension plans for the balance of fiscal 2020 and will use carryover balances from previous periods that have been available for use as a credit to reduce the amount of cash contributions that the Company is required to make to certain defined benefit plans in fiscal 2020.

The Company's ability to elect to use such carryover balance will be determined based on the actual funded status of each defined benefit pension plan relative to the plan's minimum regulatory funding requirements.

15 unchanged sentences

With respect to such performance shares, compensation expense is being accrued based on the probability of meeting the performance target.

The Company is currently recognizing compensation expense for two tranches of awards where it has concluded it is probable that the performance criteria for that award will be met, while the Company is not currently recognizing compensation expense for one tranche of awards where it had concluded that it is not probable that the performance criteria for those awards will be met.

During each future reporting period, such expense may be subject to adjustment based upon the Company's financial

performance, which impacts the number of common shares that it expects to vest upon the completion of the performance period.

The Company is currently recognizing compensation expense for one of its tranches of awards where it has concluded it is probable that the performance criteria for that award will be met, while the Company is not currently recognizing compensation expense for two tranches of awards where it had concluded that it is not probable that the performance criteria for those awards will be met.

During each future reporting period, such expense may be subject to adjustment based upon the Company's financial performance, which impacts the number of common shares that it expects to vest upon the completion of the performance period.

The performance shares were valued at the closing market price of the Company’s common shares on the date of the grant.

The vesting of such shares is determined at the end of the performance period.

During the first six months of fiscal 2020, the Company granted 134 shares under the 2016 Plan to certain key employees.

During the first nine months of fiscal 2020, the Company granted 134 shares under the 2016 Plan to certain key employees.

The awards were split into two tranches, 47 performance shares and 87 shares of time-based restricted shares, with a grant date fair value of $2.50 per share.

3 unchanged sentences

The unearned compensation is being amortized ratably over the restricted stock vesting period of one year or three years.

During the first six months of fiscal 2020, the Company granted its non-employee directors 57 restricted shares under the 2016 Plan, with a grant date fair value of $4.39 , which vests over one year.

During the first nine months of fiscal 2020, the Company granted its non-employee directors 57 restricted shares under the 2016 Plan, with a grant date fair value of $4.39 , which vest over one year.

One award for 61 restricted shares vested.

If all outstanding share awards are ultimately earned and vest at the target number of shares, there are approximately 524 shares that remain available for award at March 31, 2020 .

If all outstanding share awards are ultimately earned and vest at the target number of shares, there are approximately 524 shares that remain available for award at June 30, 2020 .

If any of the outstanding share awards are ultimately earned and vest at greater than the target number of shares, up to a maximum of 200% (decreased to 150% for awards starting in fiscal 2020) of such target, then a fewer number of shares would be available for award.

Stock-based compensation under the 2016 Plan was $225 and $426 during the first six months of fiscal 2020 and 2019, respectively and $70 and $190 during the three months of fiscal 2020 and 2019, respectively.

As of March 31, 2020 , there was $732 of total unrecognized compensation cost related to the performance shares and restricted shares awarded under the 2016 Plan.

Stock-based compensation under the 2016 Plan was $262 and $367 during the first nine months of fiscal 2020 and 2019, respectively and $37 expense and $59 benefit during the third quarter of fiscal 2020 and 2019, respectively.

As of June 30, 2020 , there was $495 of total unrecognized compensation cost related to the performance shares and restricted shares awarded under the 2016 Plan.

The Company expects to recognize this cost over the next 1.3 years.

The Company produces forged components for (i) turbine engines that power commercial, business and regional aircraft as well as military aircraft and armored military vehicles;

The Company produces forged components for (i) turbine engines that power commercial, business and regional aircraft as well as military aircraft and other military applications;

(ii) airframe applications for a variety of aircraft;

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Commercial revenue

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Aerospace components for:

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

North America

In addition to the disaggregating revenue information provided above, approximately 63% of total net sales as of March 31, 2020 is recognized on an over-time basis because of the continuous transfer of control to the customer, with the remainder recognized at a point in time.

In addition to the disaggregating revenue information provided above, approximately 60% of total net sales as of June 30, 2020 are recognized on an over-time basis because of the continuous transfer of control to the customer, with the remainder recognized at a point in time.

Contract Balances

6 unchanged sentences

If the performance obligation is point in time, the contract liability reverses upon shipment.

The following table contains a roll forward of contract assets and contract liabilities for the period ended March 31, 2020:

The following table contains a roll forward of contract assets and contract liabilities for the period ended June 30, 2020:

Contract assets - Beginning balance, October 1, 2019

1 unchanged sentence

Less amounts billed to the customers

Contract assets - Ending balance, March 31, 2020

Contract assets - Ending balance, June 30, 2020

Contract liabilities (included within Accrued liabilities) - Beginning balance, October 1, 2019

1 unchanged sentence

Performance obligations satisfied

Contract liabilities (included within Accrued liabilities) - Ending balance, March 31, 2020

There were no impairment losses recorded on contract assets as of March 31, 2020.

Contract liabilities (included within Accrued liabilities) - Ending balance, June 30, 2020

There were no impairment losses recorded on contract assets as of June 30, 2020.

Remaining performance obligations

As of March 31, 2020, the Company has $106,987 of remaining performance obligations, the majority of which are anticipated to be completed within the next twelve months.

As of June 30, 2020, the Company has $100,880 of remaining performance obligations, the majority of which are anticipated to be completed within the next twelve months.

Commitments and Contingencies

5 unchanged sentences

A subsidiary of the Company, Quality Aluminum Forge, LLC ("Orange"), is currently a defendant in a lawsuit filed by Avco Corporation (“Avco”) in the Pennsylvania State Court, which was filed in August 2019, alleging that certain forged pistons delivered by the Orange plant failed to meet material specifications required by Avco.

No specific amount of damages was claimed by Avco and no discovery has occurred at this time and Orange disagrees with the allegations made by Avco.

Avco also sued Arconic, Inc.

(“Arconic”), which was the raw material supplier.

No specific amount of damages was claimed by Avco and discovery has only recently begun.

Orange disagrees with the allegations made by Avco and has made cross claims against Arconic.

Previously, Orange was a defendant with respect to the same action in the United States District Court for the District of Rhode Island, which action was dismissed in connection with the movement of the matter to Pennsylvania State Court.

Although the Company records reserves

for legal disputes and other matters in accordance with GAAP, the ultimate outcomes of these types of matters are inherently uncertain.

Although the Company records reserves for legal disputes and other matters in accordance with GAAP, the ultimate outcomes of these types of matters are inherently uncertain.

Actual results may differ significantly from current estimates.

3 unchanged sentences

and unfair competition.

A settlement has been reached and was scheduled for preliminary court approval in April 2020.

This date is currently postponed and has not yet been re-scheduled due to COVID-19.

A settlement has been reached and the Company received preliminary court approval on July 13, 2020, following a brief COVID-19 delay.

The Company previously recorded adequate reserves to cover the settlement.

1 unchanged sentence

Also, during the quarter, the International Brotherhood of Boilermakers Union filed a petition to represent this same group of hourly employees.

The Company is working with the National Labor Relations Board to schedule an election, the timing of which may be affected by COVID-19.

The Company’s obligations will be more fully understood following the outcome of this election.

A mail ballot election took place in June and the National Labor Relations Board has certified the International Brotherhood of Boilermakers as the elected representative of the Company’s hourly production employees.

The Company’s obligations will be more fully understood following the ratification of a collective bargaining agreement.

Recovery on the insurance claim related to the fire on December 26, 2018 at the Orange location continues in fiscal 2020.

The Company continues to work diligently to restore the site back to full service as safely and quickly as possible.

The 2500 ton press from storage that was placed in service in fiscal 2019 continues to run and the press located in Michigan was taken off-line at the end of November 2019, was relocated to Orange and was placed in service in March 2020.

Restoration is nearly complete for the structure of the manufacturing building and two additional presses damaged in the fire.

The Company began running one of the restored presses at the end of December 2019, while the second is now expected to be in use starting June 2020.

Two of the six presses damaged in the fire remain to be restored.

The Company anticipates having those restored in the fourth quarter of 2020.

During the first six months of fiscal 2020, the Company received cash proceeds from insurance of $6,787 and, separately, the insurance carrier provided $713 proceeds directly to the landlord for the continued restoration of the damaged building as prescribed under the lease arrangement.

The table below reflects the receipt of proceeds and how they were expended as of March 31, 2020.

The 2500 ton press from storage that was placed in service in fiscal 2019 continues to run and the press located in Michigan was taken off-line at the end of November 2019, relocated to Orange and was placed into service in March 2020.

Restoration is nearly complete for the structure of the manufacturing building and the presses damaged in the fire.

The Company began running one restored press at the end of December 2019, while another restored press began running at the end of July 2020, allowing Orange to have 6 out of 8 presses in production going into the fourth quarter.

Two of the six presses damaged in the fire are still in the restoration process.

The Company anticipates having those restored at the end of fourth quarter of fiscal 2020.

During the first nine months of fiscal 2020, the Company received cash proceeds from insurance of $8,787 and, separately, the insurance carrier provided $713 of proceeds directly to the landlord for the continued restoration of the damaged building as prescribed under the lease arrangement.

The table below reflects the receipt of proceeds and how they were expended as of June

Any additional recoveries in excess of recognized losses are treated as gain contingencies and will be recognized when the gain is realized or realizable.

The Company also maintains business interruption insurance coverage and continues to work with the insurance company to reach an agreement on the recoverable amounts of business interruption expenses, which $915 was realized in the first six months of fiscal 2020.

The Company also maintains business interruption insurance coverage and continues to work with the insurance company to reach an agreement on the recoverable amounts of business interruption expenses, of which $915 was realized in the first nine months of fiscal 2020.

Balance sheet (Other receivables):

4 unchanged sentences

Business interruption

March 31, 2020

The tables below reflect how the proceeds received impacted the consolidated condensed statements of operations for the six months ended and three months ended March 31,2020.

Six Months Ended March 31, 2020

June 30, 2020

The tables below reflect how the proceeds received impacted the consolidated condensed statements of operations for the nine months ended and three months ended June 30,2020.

Nine Months Ended June 30, 2020

Balance without insurance proceeds

3 unchanged sentences

Gain on insurance proceeds received

Net income (loss)

Three Months Ended March 30, 2020

Income (loss) before income tax (benefit) expense

Three Months Ended June 30, 2020

Balance without insurance proceeds

3 unchanged sentences

Gain on insurance proceeds received

Net income (loss)

Subsequent Events

The CARES Act, enacted by the federal government on March 27, 2020, established a number of programs designed to assist U.S.

companies respond to and recover from the impact of the COVID-19 pandemic.

In response to the economic uncertainty created by the COVID-19 pandemic, as described above in Note 1, Summary of Significant Accounting Policies , and taking into consideration the Company’s market capitalization, status as a smaller reporting company, and uncertainties and volatility in, and disruptions to, the capital markets, as well as the terms of the Company’s Credit Agreement, the Company applied for and received funds under the Paycheck Protection Program (or “PPP”) of the CARES Act.

On April 10, 2020, the Company entered into an unsecured promissory note under the Paycheck Protection Program (the “PPP Loan”).

The PPP Loan to the Company is being made through JPMorgan Chase Bank, N.A., a national banking association and the Company’s existing lender.

The note has an aggregate principal amount of approximately $5,025 and a two year term.

The interest rate on the PPP Loan is 0.98% , which shall be deferred for the first six months of the term of the loan.

The loan proceeds were received on April 10, 2020 and have been used and will be used for payroll, interest on mortgage obligations, rents on leases and utility payments.

Income (loss) before income tax (benefit) expense

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What changed 10-Q

Item 1. Financial Statements