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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For Quarterly Period Ended March 31, 2020
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from             to            
Commission File Number: 1-5415
A. M. Castle & Co.
(Exact name of registrant as specified in its charter) 
 

Maryland36-0879160
(State or other jurisdiction of incorporation of organization)(I.R.S. Employer Identification No.)
1420 Kensington Road, Suite 220,Oak Brook,Illinois60523
(Address of principal executive offices)(Zip Code)
Registrant’s telephone, including area code (847) 455-7111

(Former name, former address and former fiscal year, if changed since last report) None
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, Par Value $0.01 Per ShareCTAMOCTQX Best Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    
Yes   No    
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    
Yes   No   
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Yes   No    
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    
Yes   No    
The number of shares outstanding of the registrant’s common stock as of May 13, 2020 was 73,910,334 shares.


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A. M. Castle & Co.
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Amounts in thousands, except par value and per share data
A.M. Castle & Co.
Condensed Consolidated Balance Sheets
 As of
 March 31, 2020December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents$4,269  $6,433  
Accounts receivable, less allowances of $1,979 and $1,766, respectively
83,554  74,697  
Inventories151,239  144,411  
Prepaid expenses and other current assets10,171  9,668  
Income tax receivable2,390  1,995  
Total current assets251,623  237,204  
Goodwill and intangible assets8,176  8,176  
Prepaid pension cost6,317  5,758  
Deferred income taxes1,484  1,534  
Operating right-of-use assets32,309  29,423  
Other noncurrent assets437  792  
Property, plant and equipment:
Land5,575  5,579  
Buildings20,801  20,950  
Machinery and equipment40,840  41,054  
Property, plant and equipment, at cost67,216  67,583  
Accumulated depreciation(21,282) (20,144) 
Property, plant and equipment, net45,934  47,439  
Total assets$346,280  $330,326  
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable$59,361  $41,745  
Accrued and other current liabilities10,922  11,188  
Operating lease liabilities6,065  6,537  
Income tax payable497  573  
Short-term borrowings2,277  2,888  
Current portion of finance leases579  596  
Total current liabilities79,701  63,527  
Long-term debt, less current portion246,168  263,523  
Deferred income taxes3,619  3,775  
Finance leases, less current portion8,080  8,208  
Other noncurrent liabilities2,859  2,894  
Pension and postretirement benefit obligations6,658  6,709  
Noncurrent operating lease liabilities26,317  22,760  
Commitments and contingencies (see Note 12)
Stockholders’ deficit:
Common stock, $0.01 par value—200,000 Class A shares authorized with 74,079 shares issued and 73,911 shares outstanding at March 31, 2020, and 3,818 shares issued and 3,650 shares outstanding at December 31, 2019
741  38  
Additional paid-in capital86,670  61,461  
Accumulated deficit(99,782) (88,741) 
Accumulated other comprehensive loss(14,297) (13,374) 
Treasury stock, at cost — 168 shares at March 31, 2020 and 168 shares at December 31, 2019
(454) (454) 
Total stockholders’ deficit(27,122) (41,070) 
$346,280  $330,326  

The accompanying notes are an integral part of these financial statements.
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A.M. Castle & Co.
Condensed Consolidated Statements of Operations
and Comprehensive Loss
Three Months Ended
 March 31,
20202019
Net sales$126,610  $149,527  
Costs and expenses:
Cost of materials (exclusive of depreciation)92,296  110,958  
Warehouse, processing and delivery expense18,036  20,277  
Sales, general and administrative expense16,214  16,502  
Depreciation expense2,076  2,121  
Total costs and expenses128,622  149,858  
Operating loss(2,012) (331) 
Interest expense, net9,976  9,449  
Other expense (income), net196  (1,602) 
Loss before income taxes(12,184) (8,178) 
Income tax benefit(1,143) (175) 
Net loss$(11,041) $(8,003) 
Basic and diluted loss per common share$(1.67) $(3.82) 
Comprehensive loss:
Net loss$(11,041) $(8,003) 
Change in unrecognized pension and postretirement benefit costs, net of tax25  23  
Foreign currency translation adjustments, net of tax(948) (464) 
Comprehensive loss$(11,964) $(8,444) 
The accompanying notes are an integral part of these financial statements.


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A.M. Castle & Co.
Condensed Consolidated Statements of Cash Flows
Three Months Ended
March 31,
 20202019
Operating activities:
Net loss$(11,041) $(8,003) 
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation2,076  2,121  
Amortization of deferred financing costs and debt discount3,436  2,565  
    Unrealized foreign currency loss (gain)2,063  (140) 
Noncash interest paid in kind4,065  3,852  
Noncash rent expense89  728  
Noncash compensation expense291  643  
Deferred income taxes(14) (836) 
Changes in assets and liabilities:
Accounts receivable(9,661) (12,701) 
Inventories(7,928) (3,810) 
Prepaid expenses and other current assets(430) (142) 
Other noncurrent assets(166) (111) 
Prepaid pension costs(534) (189) 
Accounts payable17,792  11,088  
Income tax payable and receivable(475) 521  
Accrued and other current liabilities(204) 1,084  
Pension and postretirement benefit obligations and other noncurrent liabilities(86) (67) 
Net cash used in operating activities(727) (3,397) 
Investing activities:
Capital expenditures(683) (764) 
Proceeds from sale of property, plant and equipment50    
Net cash used in investing activities(633) (764) 
Financing activities:
Proceeds from long-term debt including credit facilities2,000    
Repayments of long-term debt including credit facilities(500)   
(Repayments of) proceeds from short-term borrowings, net(563) 1,471  
Principal paid on financing leases(144) (149) 
Payments of debt restructuring costs(1,474)   
Net cash (used in) provided by financing activities(681) 1,322  
Effect of exchange rate changes on cash and cash equivalents(123) 13  
Net change in cash and cash equivalents(2,164) (2,826) 
Cash and cash equivalents - beginning of year6,433  8,668  
Cash and cash equivalents - end of period$4,269  $5,842  

The accompanying notes are an integral part of these financial statements.
5

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A.M. Castle & Co.
Consolidated Statements of Stockholders' Equity (Deficit)
Common
Shares
Treasury
Shares
Common
Stock
Treasury
Stock
Additional
Paid-in
Capital
(Accumulated Deficit) Retained
Earnings
Accumulated Other
Comprehensive
Loss
Total
Balance as of December 31, 20183,803    $38  $  $55,421  $(50,472) $(14,348) $(9,361) 
Cumulative effect from adoption of the new lease standard (Leases: Topic 842)—  —  —  —  —  246  —  246  
Net loss—  —  —  —  —  (8,003) —  (8,003) 
Foreign currency translation, net of tax—  —  —  —  —  —  (464) (464) 
Change in unrecognized pension and postretirement benefit costs, net of tax—  —  —  —  —  —  23  23  
Reclassification to equity of interest paid in kind attributable to conversion option, net of $315 tax effect
—  —  —  —  896  —  —  896  
Share-based compensation—  —  —  —  401  —  —  401  
Vesting of restricted shares and other—  (168) —  (454) 529  —  —  75  
Balance as of March 31, 20193,803  (168) $38  $(454) $57,247  $(58,229) $(14,789) $(16,187) 
Balance as of December 31, 20193,818  (168) $38  $(454) $61,461  $(88,741) $(13,374) $(41,070) 
Net loss—  —  —  —  —  (11,041) —  (11,041) 
Foreign currency translation, net of tax—  —  —  —  —  —  (948) (948) 
Change in unrecognized pension and postretirement benefit costs, net of tax—  —  —  —  —  —  25  25  
Common shares issued upon conversion of debt (Note 6)70,261  —  703  —  25,245  —  —  25,948  
Share-based compensation—  —  —  —  214  —  —  214  
Vesting of restricted shares and other—  —  —  —  (250) —  —  (250) 
Balance as of March 31, 202074,079  (168) $741  $(454) $86,670  $(99,782) $(14,297) $(27,122) 
The accompanying notes are an integral part of these financial statements.
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A. M. Castle & Co.
Notes to Condensed Consolidated Financial Statements
Unaudited - Amounts in thousands except per share data and percentages
(1) Basis of Presentation
The Condensed Consolidated Financial Statements of A.M. Castle & Co. and its consolidated subsidiaries (collectively, the "Company") included herein and the notes thereto have been prepared by the Company, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), and accounting principles generally accepted in the United States of America (“GAAP”). The Condensed Consolidated Balance Sheet at December 31, 2019 is derived from the audited financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. In the opinion of the Company's management, the unaudited statements included herein contain all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of financial results for the interim period. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The operating results for the three months ended March 31, 2020, as reported herein, may not necessarily be indicative of the Company’s operating results for the full year.
(2) New Accounting Standards
Standards Updates Adopted
In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” ASU No. 2018-13 amends Fair Value Measurement (Topic 820) to add, remove, and modify fair value measurement disclosure requirements. The ASU’s changes to disclosures aim to improve the effectiveness of Topic 820's disclosure requirements under the aforementioned FASB disclosure framework project. The Company adopted the disclosure requirements of ASU No. 2018-13 in this Form 10-Q for the three-months ended March 31, 2020 and determined it had no impact on its fair value disclosures herein.
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” ASU 2019-12 amends ASC 740 to simplify the accounting for income taxes by removing certain exceptions for investments, intraperiod allocations and interim calculations, and adding guidance to reduce complexity in the accounting standard under the FASB’s simplification initiative. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020. Upon adoption, the amendments in ASU 2019-12 should be applied on a prospective basis to all periods presented. Early adoption is permitted. The Company adopted the new guidance under ASU 2019-12 in the first quarter of 2020 and removed the exception for intraperiod allocations from its interim period tax provision calculation, accordingly.
On March 2, 2020, the SEC issued Final Rule Release No. 33-10762, "Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities" (the “final rule”). The final rule simplifies the disclosure requirements related to certain registered securities under SEC Regulation S-X, Rules 3-10 and 3-16, which currently require separate financial statements for (1) subsidiary issuers and guarantors of registered debt securities unless certain exceptions are met and (2) affiliates that collateralize registered securities offerings if the affiliates’ securities are a substantial portion of the collateral. Under the final rule, alternative financial disclosures or narrative disclosures (referred to collectively as “Alternative Disclosures”) may be provided in lieu of separate financial statements of the guarantors or affiliates. The amendments in the final rule are generally effective for filings on or after January 4, 2021, with early application permitted. The Company has elected to adopt the amendments of the final rule for the quarter ended March 31, 2020 and accordingly, has elected to present the alternative disclosures of the guarantors of its registered securities in Part I Item 2, Management's Discussion and Analysis, of this Form 10-Q.
Standards Updates Issued Not Yet Effective
In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 adds a current expected credit loss (“CECL”) impairment model to U.S. GAAP that is based on expected losses rather than incurred losses. Modified retrospective adoption is required with any cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. ASU 2016-13 is effective for smaller reporting companies for fiscal years beginning after December 15, 2022, including interim periods within the year of
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adoption. Early adoption is permitted. The Company will adopt the guidance and disclosure requirements of ASU 2016-13 in fiscal year 2023.
In August 2018, the FASB issued ASU No. 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans - General (Topic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plan.” ASU No. 2018-14 amends Compensation - Retirement Benefits (Topic 715) to add or remove certain disclosure requirements related to defined benefit pension and other postretirement plans. The ASU’s changes to disclosures aim to improve the effectiveness of Topic 715's disclosure requirements under the FASB’s disclosure framework project. ASU No. 2018-14 is effective for public entities for fiscal years beginning after December 15, 2020. ASU No. 2018-14 does not impact the interim disclosure requirements of Topic 715. Early adoption is permitted. The Company will adopt the disclosure requirements of this new guidance in fiscal year 2021.
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The purpose of ASU 2020-04 is to provide optional guidance for a limited time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. In response to concerns about structural risks of interbank offered rates, and, in particular, the risk of cessation of the London Interbank Offered Rate (LIBOR), reference rate reform refers to a global initiative to identify alternative reference rates that are more observable or transaction-based and less susceptible to manipulation. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply the amendments for contract modifications by topic or industry subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected for a topic or an industry subtopic, the amendments in ASU 2020-04 must be applied prospectively for all eligible contract modifications for that topic or industry subtopic. The Company is currently assessing the accounting and financial impact of reference rate reform and will consider applying the optional guidance of ASU 2020-04 accordingly.
(3) Revenue
The Company recognizes revenue from the sale of products when the earnings process is complete and when the title and risk and rewards of ownership have passed to the customer, which is primarily at the time of shipment. Revenue recognized other than at the time of shipment represented less than 1% of the Company’s consolidated net sales in the three months ended March 31, 2020 and March 31, 2019, respectively. Customer payment terms are established prior to the time of shipment. Provisions for allowances related to sales discounts and rebates are recorded based on terms of the sale in the period that the sale is recorded. The Company utilizes historical information and the current sales trends of the Company's business to estimate such provisions. The provisions related to discounts and rebates due to customers are recorded as a reduction within net sales in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss.
The Company records revenue from shipping and handling charges in net sales. Costs incurred in connection with shipping and handling the Company’s products, which are related to third-party carriers or performed by Company personnel, are included in warehouse, processing and delivery expenses. In the three months ended March 31, 2020 and March 31, 2019, shipping and handling costs included in warehouse, processing and delivery expenses were $5,607 and $6,136, respectively. As a practical expedient under Accounting Standards Codification No. 606, "Revenue from Contracts with Customers (Topic 606)" ("ASC 606"), the Company has elected to account for shipping and handling activities as fulfillment costs and not a promised good or service. As a result, there is no change to the Company's accounting for revenue from shipping and handling charges under ASC 606.
The Company maintains an allowance for doubtful accounts related to the potential inability of customers to make required payments. The allowance for doubtful accounts is maintained at a level considered appropriate based on historical experience and specific identification of customer receivable balances for which collection is unlikely. The provision for doubtful accounts is recorded in sales, general and administrative expense in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. Estimates of doubtful accounts are based on historical write-off experience as a percentage of net sales and judgments about the probable effects of economic conditions on certain customers. The Company considered the economic impact of the the novel coronavirus ("COVID-19") pandemic on the collectibility of customer accounts receivable and determined that no additional allowance for doubtful accounts was required as of March 31, 2020. The full impact of the COVID-19 pandemic is unknown and rapidly evolving. The Company will continue to analyze any financial and commercial impacts of the COVID-19 pandemic, including any adverse impact the COVID-19 pandemic may have on the collectibility of customer accounts receivable.
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The Company also maintains an allowance for credit memos for estimated credit memos to be issued against current sales. Estimates of allowance for credit memos are based upon the application of a historical issuance lag period to the average credit memos issued each month.
Accounts receivable allowance for doubtful accounts and credit memos activity is as follows:
 Three Months Ended
March 31,
 20202019
Balance, beginning of period$1,766  $1,364  
Add Provision charged to expense(a)
223  192  
Recoveries  11  
Less Charges against allowance
(10) (60) 
Balance, end of period$1,979  $1,507  
(a) Includes the net amount of credit memos reserved and issued.
The Company operates primarily in North America. Net sales are attributed to countries based on the location of the Company’s subsidiary that is selling direct to the customer. Net sales exclude assessed taxes such as sales and excise tax. Company-wide geographic data is as follows:
Three Months Ended
March 31,
20202019
Net sales
United States$85,437  $95,132  
Canada10,023  11,840  
Mexico11,122  12,656  
France11,712  15,098  
China4,825  10,411  
All other countries3,491  4,390  
Total$126,610  $149,527  
The Company does not incur significant incremental costs when obtaining customer contracts and any costs that are incurred are generally not recoverable from its customers. Substantially all of the Company's customer contracts are for a duration of less than one year and individual customer purchase orders for contractual customers are fulfilled within one year of the purchase order date. As a practical expedient under ASC 606, the Company has elected to continue to recognize incremental costs of obtaining a contract, if any, as an expense when incurred if the amortization period of the asset would have been one year or less. The Company does not have any costs to obtain a contract that are capitalized under ASC 606.
(4) Loss Per Share
Diluted loss per common share is computed by dividing net loss by the weighted average number of shares of the common stock of A.M. Castle & Co. outstanding plus outstanding common stock equivalents. Common stock equivalents consist of restricted stock awards and other share-based payment awards, and shares that may be issued upon conversion of the Company’s outstanding 5.00% / 7.00% Convertible Senior Secured Paid-in-Kind ("PIK") Toggle Notes due 2022 (the “Existing Notes”) and the Company's outstanding 3.00% / 5.00% Convertible Senior Secured PIK Toggle Notes due 2024 (the “New Notes”), which are included in the calculation of weighted average shares outstanding using the if-converted method. Refer to Note 6 - Debt, for further description of the Existing Notes and New Notes.
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The following table is a reconciliation of the basic and diluted loss per common share calculations:
 
Three Months Ended
 March 31,
 20202019
Numerator:
Net loss$(11,041) $(8,003) 
Denominator:
Weighted average common shares outstanding6,608  2,096  
Effect of dilutive securities:
Outstanding common stock equivalents    
Denominator for diluted loss per common share6,608  2,096  
Basic loss per common share$(1.67) $(3.82) 
Diluted loss per common share$(1.67) $(3.82) 
Excluded outstanding share-based awards having an anti-dilutive effect1,407  1,600  
The computation of diluted loss per common share does not include common shares issuable upon conversion of the Company’s Existing Notes or New Notes, as they were anti-dilutive under the if-converted method.
The Existing Notes are convertible into shares of the Company’s common stock at any time at the initial conversion price of $3.77 per share. The New Notes are convertible into shares of the Company’s common stock at any time at the initial conversion price of $0.46 per share. In future periods, absent a fundamental change as described in Note 6 - Debt, the outstanding Existing Notes and New Notes could increase diluted average shares outstanding by a maximum of approximately 209,717 shares.
(5) Goodwill and Intangible Asset
As of both March 31, 2020 and December 31, 2019, the Company had goodwill with a carrying value of $2,676, none of which is tax deductible. There were no changes in the amount of goodwill recognized in the three months ended March 31, 2020. The Company's other intangible asset is comprised of an indefinite-lived trade name, which is not subject to amortization. The gross carrying value of the trade name intangible asset was $5,500 at both March 31, 2020 and December 31, 2019.
The Company tests both its goodwill and intangible asset for impairment on an annual basis and more often if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. As a result of the recent outbreak of the COVID-19 pandemic, which has spread across the globe to many countries in which the Company does business and is impacting worldwide economic activity, the Company has determined that the potential impact on its business, including, but not limited to, a potential decrease in revenue, supply chain disruptions and/or facility closures, represented a triggering event requiring an interim impairment test of its goodwill and indefinite-lived trade name assets. Based on the results of these interim impairment tests, the Company determined its one reporting unit's goodwill and indefinite-lived trade name asset were not impaired as of March 31, 2020.
While the Company considered the impact the COVID-19 pandemic may have on it future cash flows when preparing its interim goodwill impairment test, the full extent of the impact that the COVID-19 pandemic will have on the Company's business, operations and financial condition is currently unknown. The Company will continue to assess its goodwill for impairment as events and circumstances change. Any further deterioration in the Company's forecasted revenue, gross material margin, and/or costs and expenses could result in an impairment of a portion or all of its goodwill. The amount of such impairment would be recognized as an expense in the period the goodwill is impaired.
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(6) Debt
Long-term debt consisted of the following:
 
As of
March 31, 2020December 31, 2019
LONG-TERM DEBT
Floating rate Revolving A Credit Facility due February 28, 2022$103,500  $102,000  
12.00% Revolving B Credit Facility due February 28, 2022(a)
26,570  25,788  
3.00% / 5.00% Convertible Senior Secured PIK Toggle Notes
due August 31, 2024(b)
95,135    
5.00% / 7.00% Convertible Senior Secured PIK Toggle Notes
due August 31, 2022(c)
3,757  193,660  
Total principal balance of long-term debt228,962  321,448  
Plus: derivative liability for embedded conversion feature(d)
38,962    
Less: unvested restricted 3.00% / 5.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2024(e)
(228)   
Less: unvested restricted 5.00% / 7.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2022(e)
  (323) 
Less: unamortized discount(21,273) (57,313) 
Less: unamortized debt issuance costs(255) (289) 
Total long-term debt246,168  263,523  
Less: current portion of long-term debt    
Total long-term portion$246,168  $263,523  
(a) Included in balance is interest paid in kind of $5,070 as of March 31, 2020 and $4,288 as of December 31, 2019.
(b) There was no interest paid in kind included in the balance as of March 31, 2020.
(c) Included in balance is interest paid in kind of $618 as of March 31, 2020 and $28,991 as of December 31, 2019.
(d) If the Company receives shareholder approval for the authorization of additional shares of the Company's common stock, the derivative liability for the embedded conversion feature will be reclassified from a liability to equity (see further discussion below).
(e) Represents the unvested portion of restricted 3.00% / 5.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2024 issued to certain members of management and the unvested portion of restricted 5.00% / 7.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2022 issued to certain members of management (see Note 9 - Share-based compensation).
Credit Facilities
On August 31, 2017, the Company entered into the Revolving Credit and Security Agreement with PNC Bank, National Association ("PNC") as lender and as administrative and collateral agent (the “Agent”), and other lenders party thereto (the "Original ABL Credit Agreement"). The Original ABL Credit Agreement provided for a $125,000 senior secured, revolving credit facility (the "Revolving A Credit Facility") under which the Company and four of its subsidiaries each are borrowers (collectively, in such capacity, the “Borrowers”). The obligations of the Borrowers have been guaranteed by the subsidiaries of the Company named therein as guarantors.
On June 1, 2018, the Company entered into an Amendment No. 1 to Original ABL Credit Agreement (the “Credit Agreement Amendment No. 1”) by and among the Company, the Borrowers and guarantors party thereto and the Agent and the other lenders party thereto, which amended the Original ABL Credit Agreement to provide for additional borrowing capacity. On March 27, 2020, the Company entered into an Amendment No. 2 to the Original ABL Credit Agreement (the "Credit Agreement Amendment No. 2") by and among the Company, the Borrowers and guarantors party thereto and the Agent and the other lenders party thereto, which amended the Original ABL Credit Agreement (as amended by the Credit Agreement Amendment No. 1 and Credit Agreement No. 2, the “ABL Credit Agreement”) to permit the Exchange Offer (defined below) to proceed.
The ABL Credit Agreement provides for an additional $25,000 last out Revolving B Credit Facility (the "Revolving B Credit Facility" and together with the Revolving A Credit Facility, the "Credit Facility"). The Credit Facility was made
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available in part by way of a participation in the Revolving B Credit Facility by certain of the Company’s stockholders. Borrowings under the Credit Facility will mature on February 28, 2022.
Subject to certain exceptions and permitted encumbrances, the obligations under the ABL Credit Agreement are secured by a first priority security interest in substantially all of the assets of each of the Borrowers and certain subsidiaries of the Company that are named as guarantors. The proceeds of the advances under the ABL Credit Agreement may only be used to (i) pay certain fees and expenses to the Agent and the lenders under the ABL Credit Agreement, (ii) provide for the Borrowers' working capital needs and reimburse drawings under letters of credit, (iii) repay the obligations under the Debtor-in-Possession Revolving Credit and Security Agreement dated as of July 10, 2017, by and among the Company, the lenders party thereto, and PNC, and certain other existing indebtedness, and (iv) provide for the Borrowers' capital expenditure needs, in accordance with the ABL Credit Agreement.
The Company may prepay its obligations under the ABL Credit Agreement at any time without premium or penalty, and must apply the net proceeds of material sales of collateral in prepayment of such obligations. Payments made must be applied to the Company's obligations under the Revolving A Credit Facility, if any, prior to its obligations under the Revolving B Credit Facility. In connection with an early termination or permanent reduction of the Revolving A Credit Facility prior to March 27, 2021, a 0.50% fee shall be due and, for the period from March 28, 2021 through September 27, 2021, a 0.25% fee shall be due, in each case in the amount of such commitment reduction, subject to reduction as set forth in the ABL Credit Agreement. Indebtedness for borrowings under the ABL Credit Agreement is subject to acceleration upon the occurrence of specified defaults or events of default, including (i) failure to pay principal or interest, (ii) the inaccuracy of any representation or warranty of a loan party, (iii) failure by a loan party to perform certain covenants, (iv) defaults under indebtedness owed to third parties, (v) certain liability producing events relating to ERISA, (vi) the invalidity or impairment of the Agent’s lien on its collateral or of any applicable guarantee, and (vii) certain adverse bankruptcy-related and other events.
Interest on indebtedness under the Revolving A Credit Facility accrues at a variable rate based on a grid with the highest interest rate being the applicable LIBOR-based rate plus a margin of 3.0%, as set forth in the ABL Credit Agreement. Interest on indebtedness under the Revolving B Credit Facility accrues at a rate of 12.0% per annum, which will be paid in kind unless the Company elects to pay such interest in cash and the Revolving B payment conditions specified in the ABL Credit Agreement are satisfied. Additionally, the Company must pay a monthly facility fee equal to the product of (i) 0.25% per annum (or, if the average daily revolving facility usage is less than 50% of the maximum revolving advance amount, 0.375% per annum) multiplied by (ii) the amount by which the maximum revolving advance amount exceeds such average daily revolving facility usage for such month.
The weighted average interest rate on outstanding borrowings under the Revolving A Credit Facility for the three months ended March 31, 2020 and the three months ended March 31, 2019 was 4.71% and 5.57%, respectively. The weighted average facility fee for each such quarter was 0.25%. The Company pays certain customary recurring fees with respect to the ABL Credit Agreement. Interest expense related to the Revolving B Credit Facility of $782 and $686 was paid in kind in the three months ended March 31, 2020 and the three months ended March 31, 2019, respectively.
The ABL Credit Agreement includes negative covenants customary for an asset-based revolving loan. Such covenants include limitations on the ability of the Borrowers to, among other things, (i) effect mergers and consolidations, (ii) sell assets, (iii) create or suffer to exist any lien, (iv) make certain investments, (v) incur debt and (vi) transact with affiliates. In addition, the ABL Credit Agreement includes customary affirmative covenants for an asset-based revolving loan, including covenants regarding the delivery of financial statements, reports and notices to the Agent. The ABL Credit Agreement also contains customary representations and warranties and event of default provisions for a secured term loan.
The Company's ABL Credit Agreement contains a springing financial maintenance covenant requiring the Company to maintain a Fixed Charge Coverage Ratio of 1.0 to 1.0 in any Covenant Testing Period (as defined in the ABL Credit Agreement) when the Company's cash liquidity (as defined in the ABL Credit Agreement) is less than $12,500. The Company is not in a Covenant Testing Period as of March 31, 2020.
Unamortized debt issuance costs of $255 associated with the ABL Credit Agreement were recorded as a reduction in long-term debt as of March 31, 2020.
Convertible Senior Secured Notes
On March 27, 2020, the Company completed an exchange offer and consent solicitation (the “Exchange Offer”) to issue its New Notes and shares of its common stock in exchange for its Existing Notes, including any accrued and
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unpaid interest on the Existing Notes as of the date in which the Exchange Offer was completed. Pursuant to the terms of the Exchange Offer, $190,200 in aggregate principal amount of the Existing Notes were tendered and accepted and in exchange, the Company issued $95,135 in aggregate principal amount of its New Notes and 70,261 shares of its common stock. The New Notes are guaranteed on a senior basis by all current and future domestic subsidiaries (other than those designated as "unrestricted subsidiaries") of the Company (the "Guarantors"). Holders of the Existing Notes who did not tender into this Exchange Offer will retain their Existing Notes. An aggregate principal amount of Existing Notes in the amount of $3,693 were not tendered and remained outstanding at the date of Exchange Offer.
The New Notes have substantially the same terms that the Existing Notes had prior to the completion of the Exchange Offer except for the following primary differences: (i) the New Notes are not exempt from the registration requirements of the Securities Act of 1933, as amended, and have the benefit of registration rights to the holders of the New Notes, (ii) the interest on the New Notes accrues at the rate of 3.00% per annum if paid in cash and at the rate of 5.00% per annum if paid in kind, compared to interest on the Existing Notes, which accrues at the rate of 5.00% per annum if paid in cash and at the rate of 7.00% per annum if paid in kind, and (iii) the New Notes have a maturity date of August 31, 2024, compared to the Existing Notes, which have a maturity date of August 31, 2022.
In conjunction with the Exchange Offer, on March 27, 2020, the Company, the guarantors of the Existing Notes and the trustee for the Existing Notes entered into a supplemental indenture to the indenture governing the Existing Notes (the “Existing Indenture”) to provide for, among other things, the elimination or amendment of substantially all of the restrictive covenants, the release of all collateral securing the Company’s obligations under the Existing Indenture, and the modification of certain of the events of default and various other provisions contained in the Existing Indenture (the "Supplemental Indenture").
Also on March 27, 2020, PNC (in its capacity as “First Lien Agent”), the trustee for the Existing Notes and the Company and certain of its subsidiaries executed an intercreditor agreement (the “New Intercreditor Agreement”) providing for the lien priority of the first lien facility over the New Notes. The terms and conditions of the New Intercreditor Agreement are substantially consistent with those applicable to the intercreditor agreement between the First Lien Agent and the trustee for the Existing Notes prior to the completion of the Exchange Offer (the “Existing Intercreditor Agreement”). PNC and the trustee for the Existing Notes also entered into an amendment of the Existing Intercreditor Agreement to, among other things, remove certain limitations and rights of the Existing Notes with respect to the first lien facility.
The New Notes were issued pursuant to an indenture (the “New Notes Indenture”), which the Company and the Guarantors entered into with Wilmington Savings Fund Society, FSB, as trustee and collateral agent ("Indenture Agent"), on March 27, 2020. The New Notes are, secured by a lien on all or substantially all of the assets of the Company, its domestic subsidiaries and certain of its foreign subsidiaries, which lien the Indenture Agent has agreed will be junior to the lien of the Agent under the ABL Credit Agreement.
The New Notes are convertible into shares of the Company’s common stock at any time at the initial conversion price of $0.46 per share, which rate is subject to adjustment as set forth in the New Notes Indenture. Under the New Notes Indenture, upon the conversion of the New Notes in connection with a Fundamental Change (as defined in the New Notes Indenture), for each $1.00 principal amount of the New Notes, that number of shares of the Company’s common stock issuable upon conversion shall equal the greater of (a) $1.00 divided by the then applicable conversion price or (b) $1.00 divided by the price paid per share of the Company's common stock in connection with such Fundamental Change calculated in accordance with the New Notes Indenture, subject to other provisions of the New Notes Indenture. Subject to certain exceptions, under the New Notes Indenture a “Fundamental Change” includes, but is not limited to, the following: (i) the acquisition of more than 50% of the voting power of the Company’s common equity by a “person” or “group” within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended; (ii) the consummation of any recapitalization, reclassification, share exchange, consolidation or merger of the Company pursuant to which the Company’s common stock will be converted into cash, securities or other property; (iii) the “Continuing Directors” (as defined in the New Notes Indenture) cease to constitute at least a majority of the board of directors; and (iv) the approval of any plan or proposal for the liquidation or dissolution of the Company by the Company’s stockholders.
The Existing Notes are convertible into shares of the Company’s common stock at any time at the initial conversion price of $3.77 per share, which rate is subject to adjustment as set forth in the Supplemental Indenture. Under the Supplemental Indenture, the conversion of the Existing Notes in connection with a Fundamental Change (as defined in the Supplemental Indenture) is substantially the same as under the New Notes Indenture, other than the applicable conversion price.
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Upon conversion of the New Notes and/or the Existing Notes, the Company will pay and/or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, together with cash in lieu of fractional shares. The value of shares of the Company’s common stock for purposes of the settlement of the conversion right, if the Company elects to settle in cash, will be calculated as provided in the New Notes Indenture or Supplemental Indenture, as applicable, using a 20 trading day observation period.
As discussed previously, the New Notes are convertible into` common stock at the option of the holder. The Company determined that the conversion option is not clearly and closely related to the economic characteristics of the New Notes, nor does the conversion option meet the own equity scope exception as the Company does not currently have sufficient authorized and unissued common stock shares to satisfy the maximum number of common stock shares that could be required to be issued upon conversion. As a result, the Company concluded that the embedded conversion option must be bifurcated from the New Notes, separately valued, and accounted for as a derivative liability. The initial value allocated to the derivative liability was $38,962, with a corresponding reduction in the carrying value of the New Notes. During each reporting period, the derivative liability, which is classified in long-term debt, will be marked to fair value through earnings. If the Company receives shareholder approval for the increase in the number of shares of common stock authorized and available for issuance upon conversion of the New Notes so the conversion option can be share-settled in full, the conversion option is expected to qualify for equity classification and the bifurcated derivative liability will no longer need to be accounted for as a separate derivative on a prospective basis from the date of reassessment. Any remaining debt discount that arose at the date of debt issuance from the original bifurcation will continue to be amortized through interest expense.
The New Notes are fully and unconditionally guaranteed, jointly and severally, by certain subsidiaries of the Company. The New Notes and the related guarantees are secured by a lien on substantially all of the Company’s and the guarantors’ assets, subject to certain exceptions pursuant to certain collateral documents pursuant to the New Notes Indenture. The terms of the New Notes contain numerous covenants imposing financial and operating restrictions on the Company's business. These covenants place restrictions on the Company’s ability and the ability of its subsidiaries to, among other things, pay dividends, redeem stock or make other distributions or restricted payments; incur indebtedness or issue certain stock; make certain investments; create liens; agree to certain payment restrictions affecting certain subsidiaries; sell or otherwise transfer or dispose assets; enter into transactions with affiliates; and enter into sale and leaseback transactions.
Neither the New Notes nor the Existing Notes may be redeemed by the Company in whole or in part at any time prior to maturity, except the Company may be required to make an offer to purchase the New Notes using the proceeds of certain material asset sales involving the Company or one of its restricted subsidiaries, as described more particularly in the New Notes Indenture. In addition, if a Fundamental Change (as defined in the New Notes Indenture and the Supplemental Indenture, as applicable) occurs at any time, each holder of any New Notes or Existing Notes has the right to require the Company to repurchase such holder’s notes for cash at a repurchase price equal to 100% of the principal amount thereof, together with accrued and unpaid interest thereon, subject to certain exceptions.
The Company must use the net proceeds of material sales of collateral, which proceeds are not used for other permissible purposes, to make an offer of repurchase to holders of the New Notes. Indebtedness for borrowings under the New Notes Indenture and the Supplemental Indenture is subject to acceleration upon the occurrence of specified defaults or events of default as set forth under each such indenture, including failure to pay principal or interest, the inaccuracy of any representation or warranty of any obligor, failure by an obligor to perform certain covenants, the invalidity or impairment of the Agent’s lien on its collateral under the New Notes Indenture, the invalidity or impairment of any applicable guarantee, and certain adverse bankruptcy-related and other events.
Upon satisfaction of certain conditions more particularly described in the New Notes Indenture, including the deposit in trust of cash or securities sufficient to pay the principal of and interest and any premium on the New Notes, the Company may effect a covenant defeasance of certain of the covenants imposing financial and operating restrictions on the Company’s business. In addition, and subject to certain exceptions as more particularly described in the New Notes Indenture, the Company may amend, supplement or waive provisions of the New Notes Indenture with the consent of holders representing a majority in aggregate principal amount of the New Notes, and may in effect release collateral from the liens securing the New Notes with the consent of holders representing 66.67% in aggregate principal amount of the New Notes.
Interest on the New Notes accrues at the rate of 3.00% per annum if paid in cash and at the rate of 5.00% per annum if paid in kind, payable quarterly beginning with the quarter ending June 30, 2020. Interest on the Existing Notes continues to accrue at the rate of 5.00% per annum if paid in cash and at the rate of 7.00% per annum if paid
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in kind, payable quarterly. Pursuant to the terms of both the New Notes Indenture and the Supplemental Indenture, the Company is currently paying interest on both the New Notes and the Existing Notes in kind. Interest expense related to the Existing Notes of $65 and $3,166 was paid in kind in the three months ended March 31, 2020 and the three months ended March 31, 2019, respectively.
The Company determined that the Exchange Offer was considered to be a troubled debt restructuring within the scope of ASC No. 470-60, "Debt-Troubled Debt Restructurings". Accordingly, for the quarter ended March 31, 2020, the Company has expensed legal and other direct costs incurred in conjunction with the Exchange Offer in the amount of $737 in "Selling, general and administrative expenses" in the Condensed Consolidated Statements of Operations and Comprehensive Loss and recognized additional legal and other direct costs incurred also in the amount for $737 as a decrease to additional paid-in capital for the quarter ended March 31, 2020.
Short-term borrowings
The Company's French subsidiary is party to a local credit facility under which it may borrow against 100% of the eligible accounts receivable factored, with recourse, up to 6,500 Euros. The French subsidiary is charged a factoring fee of 0.16% of the gross amount of accounts receivable factored. Local currency borrowings on the French subsidiary's credit facility are charged interest at the daily 3-months Euribor rate plus a 1.0% margin and U.S dollar borrowings on the credit facility are 3-months LIBOR plus a 1.0% margin. The French subsidiary utilizes the local credit facility to support its operating cash needs. As of March 31, 2020 and December 31, 2019, the French subsidiary had borrowings of $2,277 and $2,888, respectively, under the local credit facility.
(7) Fair Value Measurements
The three-tier value hierarchy used by the Company, which prioritizes the inputs used in the valuation methodologies, is:
Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants.
The fair value of cash, accounts receivable and accounts payable approximate their carrying values. The fair value of cash equivalents are determined using the fair value hierarchy described above.
The Company’s pension plan asset portfolio as of March 31, 2020 and December 31, 2019 is primarily invested in fixed income securities, which generally fall within Level 2 of the fair value hierarchy. Fixed income securities are valued based on evaluated prices provided to the trustee of the pension plan by independent pricing services. Such prices may be determined by various factors which include, but are not limited to, market quotations, yields, maturities, call features, ratings, institutional size trading in similar groups of securities and developments related to specific securities.
Fair Value Measurements of Debt
As of March 31, 2020, the fair value of the Company's New Notes, including the conversion option, was estimated to be $96,462, compared to a face value of $95,135. As of March 31, 2020, the fair value of the Company's Existing Notes, including the conversion option, was estimated to be $3,247 compared to a face value of $3,757. As of December 31, 2019, the fair value of the Company's Existing Notes, including the conversion option, was estimated to be $136,085 compared to a face value of $193,660. The fair value of the New Notes as of March 31, 2020 and the Existing Notes as of December 31, 2019 was determined using a binomial lattice model using assumptions based on market information and historical data, and a review of prices and terms available for similar debt instruments that do not contain a conversion feature, as well as other factors related to the callable nature of the Notes, which is a Level 3 input as defined by the fair value hierarchy. The fair value of the Existing Notes as of March 31, 2020 was estimated based on a model that discounted future principal and interest payments at interest rates available to the Company at the end of the period for similar debt of the same maturity, which is a Level 2 input as defined by the fair value hierarchy.
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The following valuation assumptions were used in determining the fair value of the New Notes, including the conversion option, as of March 31, 2020:
Risk-free interest rate0.35 %
Credit spread14.11 %
PIK premium spread2.00 %
Volatility50.00 %
As of March 31, 2020, the fair value of the Company's Revolving B Credit Facility was estimated to be $25,882 compared to a face value of $26,570. As of December 31, 2019, the fair value of the Company's Revolving B Credit Facility was estimated to be $25,082 compared to a face value of $25,788.The fair value of the Revolving B Credit Facility was estimated based on a model that discounted future principal and interest payments at interest rates available to the Company at the end of the period for similar debt of the same maturity, which is a Level 2 input as defined by the fair value hierarchy.
Given the short-term nature and/or the variable interest rates, the fair value of borrowings under the Revolving A Credit Facility and the French subsidiary's foreign line of credit approximated the carrying value as of March 31, 2020.
Fair Value Measurement of Embedded Conversion Feature
The fair value of the derivative liability for the embedded conversion feature of the New Notes was estimated to be $38,962 as of March 31, 2020. The estimated fair value of the derivative liability for the embedded conversion feature of the New Notes, which falls within Level 3 of the fair value hierarchy, is measured on a recurring basis using a binomial lattice model using assumptions based on market information and historical data, and a review of prices and terms available for similar debt instruments that do not contain a conversion feature. There was no significant change in the fair value of the embedded conversion feature of the New Notes between March 27, 2020, the date it was recorded, and March 31, 2020.
(8) Stockholders’ Equity
Exchange Offer
The Company issued 70,261 shares of its common stock on March 27, 2020 in connection with the Exchange Offer (see Note 6 - Debt). The issuance of these shares was recorded using the fair value of the Company's common stock on the date the shares were issued, and resulted in an increase in the par value of common stock and additional paid-in capital of $703 and $25,245, respectively. The shares were issued in exchange for Existing Notes, and, as such, the Company received no cash proceeds as part of the exchange.
Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss are as follows:
As of
March 31, 2020December 31, 2019
Unrecognized pension and postretirement benefit costs, net of tax$(7,046) $(7,071) 
Foreign currency translation losses, net of tax(7,251) (6,303) 
Total accumulated other comprehensive loss$(14,297) $(13,374) 
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Changes in accumulated other comprehensive loss by component in the three months ended March 31, 2020 and March 31, 2019 are as follows:

Defined Benefit Pension and Postretirement ItemsForeign Currency ItemsTotal
Three Months EndedThree Months EndedThree Months Ended
March 31,March 31,March 31,
202020192020201920202019
Beginning Balance$(7,071) $(9,153) $(6,303) $(5,195) $(13,374) $(14,348) 
Other comprehensive loss before reclassifications, net of tax    (948) (464) (948) (464) 
Amounts reclassified from accumulated other comprehensive loss, net of tax (a)
25  23      25  23  
Net current period other comprehensive income (loss)25  23  (948) (464) (923) (441) 
Ending Balance$(7,046) $(9,130) $(7,251) $(5,659) $(14,297) $(14,789) 
(a) See reclassifications from accumulated other comprehensive loss table below for details of reclassification from accumulated other comprehensive loss in the three months ended March 31, 2020 and March 31, 2019.

Reclassifications from accumulated other comprehensive loss are as follows:
Three Months Ended
March 31,
20202019
Unrecognized pension and postretirement benefit items:
Prior service cost (a)
$13  $13  
Actuarial loss (a)
12  10  
Total before tax25  23  
Tax effect    
Total reclassifications for the period, net of tax$25  $23  
(a) These accumulated other comprehensive loss components are included in the computation of net periodic pension and postretirement benefit cost included in other income, net.
(9) Share-based Compensation
Restricted Shares
The Company's Board of Directors (the "Board") has issued restricted shares of the Company's common stock ("Restricted Shares") and restricted Existing Notes (the "Existing Restricted Notes") to certain officers of the Company, as well as Restricted Shares to certain members of the Board. On March 27, 2020, in conjunction with the Exchange Offer, the Company issued restricted New Notes (the "New Restricted Notes") and Restricted Shares in exchange for all of the outstanding Existing Restricted Notes, including any accrued and unpaid interest on the Existing Restricted Notes as of the date in which the Exchange Offer was completed (the "Restricted Note Exchange"). Pursuant to the Restricted Note Exchange, $1,613 in aggregate principal amount of the Existing Restricted Notes were tendered and accepted and in exchange, the Company issued $793 in aggregate principal amount of New Restricted Notes and 586 shares of Restricted Shares. The New Restricted Notes outstanding were convertible into an additional 1,740 shares of the Company's common stock as of March 31, 2020.
The Restricted Shares granted to certain officers of the Company on September 1, 2017 cliff vest three years from the date of grant, subject to the conditions set forth in the MIP. As they relate to the first tranche of Existing Restricted Notes, New Restricted Notes and Restricted Shares issued as a result of the Restricted Note Exchange cliff vest three years from the original date of grant, September 31, 2017. As they relate to the second tranche of Existing Restricted Notes, which were made available as lapsed incentive awards and awarded to certain officers of the Company on March 25, 2020, the New Restricted Notes and Restricted Shares issued as a result of the Restricted Note Exchange cliff vest on August 31, 2024.
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A summary of the activity of the Company's Restricted Shares as of March 31, 2020 and in the three months then ended follows:
SharesWeighted-Average Grant Date Fair Value
Outstanding at January 1, 20201,429  $3.13  
Issued upon exchange of Existing Restricted Notes586  0.38  
Forfeited    
Vested(607) 3.14  
Outstanding at March 31, 20201,408  1.98  
Expected to vest after March 31, 20201,408  1.98  
Performance Share Units
The Board has granted performance share units ("PSUs") as awards under the MIP to non-executive senior level managers and other select personnel. The PSUs contain a performance-based condition tied to the enterprise value of the Company. Each PSU that vests entitles the participant to receive, at the discretion of the Company's Board, one share of the Company's common stock or cash equal to the fair market value of one share of the Company's common stock. Vesting occurs upon achievement of a defined enterprise value of the Company, with 50% vesting upon achievement of the defined enterprise value between the performance period September 30, 2020 and September 30, 2022, and the remaining 50% vesting upon the achievement of the defined enterprise value as a result of a specified transaction, as defined in the PSU agreement, on or before September 30, 2022.
As of March 31, 2020, there were 783 PSUs outstanding.
Share-Based Compensation Expense
Compensation expense recognized related to the PSUs is based on management’s expectation of future performance compared to the pre-established performance goals. If the performance goals are not expected to be met, no compensation expense is recognized and any previously recognized compensation expense is reversed. As of March 31, 2020, no compensation expense was recognized for these awards to date as the threshold for expense recognition for the performance-based condition had not been met.
As of March 31, 2020, the unrecognized share-based compensation expense related to unvested Restricted Shares was $435 and is expected to be recognized over a weighted-average period of approximately 0.7 years. Forfeitures are accounted for as they occur.
As of March 31, 2020, the unrecognized share-based compensation expense related to the outstanding New Restricted Notes was $793 and is expected to be recognized over a weighted-average period of approximately 0.8 years. The Company will recognize this compensation expense on a straight-line basis over the remaining vesting period using the fair value of the New Restricted Notes at the Restricted Note Exchange date.
(10) Employee Benefit Plans
Components of the net periodic pension and postretirement benefit credit are as follows:
 Three Months Ended
March 31,
 20202019
Service cost$112  $106  
Interest cost1,014  1,322  
Expected return on assets(1,681) (1,531) 
Amortization of prior service cost13  13  
Amortization of actuarial loss12  10  
Net periodic pension and postretirement benefit credit$(530) $(80) 
Contributions paid$  $  
The Company anticipates making no additional cash contributions to its pension plans in the remainder of 2020.
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The Company was party to a multi-employer pension plan from which the Company determined to withdraw. At March 31, 2020, the total estimated liability to withdraw from the plan was $3,099. The current liability associated with the Company's withdrawal from the multi-employer pension plan of $240 is included in accrued and other current liabilities in the Condensed Consolidated Balance Sheets and the long-term liability of $2,859 is included in other noncurrent liabilities in the Condensed Consolidated Balance Sheets.
(11) Income Taxes
The Company's tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items. The Company’s effective tax rate is expressed as income tax benefit as a percentage of loss before income taxes.
On March 27, 2020, the U.S. federal government signed into law the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, to provide economic relief to U.S. companies impacted by the COVID-19 pandemic. Pursuant to the provisions of the CARES Act, the Company will carryback its net operating losses from 2019 to offset taxable net income realized in 2018.
In the three months ended March 31, 2020, the Company recorded income tax benefit of $1,143 on a loss before income taxes of $12,184, for an effective tax rate of 9.4%. In the three months ended March 31, 2019, the Company recorded income tax benefit of $175 on a loss before income taxes of $8,178, for an effective tax rate of 2.1%. The most significant factors impacting the effective tax rate in the three months ended March 31, 2020 were (i) the increase in net operating loss carrybacks due to the CARES Act, (ii) the recording of the period expense associated with the quasi territorial tax regime called the Global Intangible Low Taxed Income Inclusion (“GILTI”), (iii) the foreign rate differential, and (iv) changes in valuation allowances in the United States and Canada.
The Company's U.S. federal corporate income tax rate is 21%.