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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

For the quarterly period ended July 31, 2004

OR

For the transition period from              to             

Commission file number 0-21964

SHILOH INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Suite 202, 103 Foulk Road, Wilmington, Delaware 19803

(Address of principal executive offices—zip code)

(302) 656-1950

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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  x    No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

Number of shares of Common Stock outstanding as of August 20, 2004 was 15,645,071 shares.

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SHILOH INDUSTRIES, INC.

INDEX

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PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

SHILOH INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands)

(Unaudited)

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

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SHILOH INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollar and share amounts in thousands, except per share data)

(Unaudited)

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

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SHILOH INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)

(Unaudited)

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

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SHILOH INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except per share data)

(Unaudited)

Note 1—Basis of Presentation and Stock Options and Executive Compensation

The condensed consolidated financial statements have been prepared by Shiloh Industries, Inc. and its subsidiaries (the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished in the condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of such financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. Although the Company believes that the disclosures are adequate to make the information presented not misleading, it is suggested that these condensed consolidated financial statements be read in conjunction with the audited financial statements and the notes thereto included in the Company’s 2003 Annual Report on Form 10-K for the fiscal year ended October 31, 2003.

Revenues and operating results for the nine months ended July 31, 2004 are not necessarily indicative of the results to be expected for the full year.

Reclassifications

Certain prior year amounts have been reclassified to be consistent with current year presentation.

Stock Options and Executive Compensation

In accordance with the provision of Statement of Financial Accounting Standard (“SFAS”) No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure – an amendment of SFAS No. 123,” the Company has elected to continue applying the intrinsic value approach under Accounting Principles Board No. 25 in accounting for its stock-based compensation plans. Accordingly, the Company does not recognize compensation expense for stock options when the exercise price at the grant date is equal to or greater than the fair market value of the stock at that date.

The following table illustrates the effect on net income and net income per share as if the fair value based method had been applied to all outstanding and vested awards in each period:

(Shares in thousands)

The Company’s stock option plan, adopted in May 1993, provides for granting officers and employees of the Company options to acquire an aggregate of 1,700,000 shares of the Company’s common stock at an exercise price equal to 100% of market value on the date of grant.

Note 2—New Accounting Standards

In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN No. 46”). FIN No. 46 addresses consolidation by business enterprises of variable interest entities that possess certain characteristics. The interpretation requires that if a business enterprise has a controlling financial interest in a variable interest entity, the assets, liabilities and results of operations of the variable interest entity must be included in the

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consolidated financial statements with those of the business enterprise. This interpretation applies immediately to variable interest entities created after January 31, 2003 and to variable interest entities in which an enterprise obtains an interest after that date. In December 2003, the FASB issued FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities – an interpretation of ARB 51 (revised December 2003)” (“FIN No. 46R”), which includes significant amendments to previously issued FIN No. 46. Among other provisions, FIN No. 46R includes revised transition dates for public entities. The Company adopted the provisions of FIN No. 46R during the second quarter of fiscal 2004. The adoption of this interpretation did not have a material effect on the Company’s financial position or results of operations.

In December 2003, the FASB issued SFAS No.132-Revised 2003, “Employers’ Disclosures about Pensions and Other Postretirement Benefits” (“SFAS No. 132R”). The revised statement increases the existing generally accepted accounting disclosure requirements by requiring more details about pension plans assets, benefit obligations, cash flows, benefit costs and related information. Companies will be required to segregate plan assets by category, such as debt, equity and real estate, and to provide certain expected rates of return and other informational disclosures for fiscal years ending after December 15, 2003. SFAS No. 132R also requires companies to disclose various elements of pension and postretirement benefit costs in interim-period financial statements for quarters beginning after December 15, 2003. Because SFAS No. 132R only revises disclosure requirements, it will not have an impact on the Company’s financial position or results of operations.

In December 2003, President Bush signed into law the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”). The Act expanded Medicare to include, for the first time, coverage for prescription drugs. The Company sponsors retiree medical programs at certain of its locations. At present, no analysis of the potential reduction in the Company’s costs or obligations has been performed. Also, the Company has not yet determined whether some or all of its current retiree medical plans would require modification in order to qualify for beneficial treatment under the Act. Because of various uncertainties related to the Company’s response to this legislation and the appropriate methodology for this event, the Company has elected to defer financial recognition of this legislation in accordance with FASB Staff Position No. FAS 106-1 (“FSP FAS 106-1”), “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003.”

In April 2004, the FASB issued proposed FASB Staff Position No. FAS 106-2 (“FSP FAS 106-2”), which supercedes FSP FAS 106-1. FSP FAS 106-2 applies to sponsors of single-employer defined benefit postretirement health care plans for which (a) the employer has concluded that prescription drug benefits available under the plan are “actuarially equivalent” and thus qualify for the subsidy under the Act and (b) the expected subsidy will offset or reduce the employer’s share of the cost of postretirement prescription drug coverage provided by the plan. In general, FSP FAS 106-2 concludes that the plan sponsors should follow SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions,” in accounting for the effects of the Act. For employers that have elected deferral under FSP FAS 106-1, this guidance is effective for the first interim period beginning after June 15, 2004. The Company has not yet determined the effects of this guidance on the Company’s financial position or results of operations.

Note 3—Change in Accounting

Effective November 1, 2002, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”), which required that the Company prospectively cease amortization of goodwill and conduct periodic impairment tests of goodwill. As a result of the impairment tests, the Company recorded a charge of $1,963, net of a $1,058 income tax benefit, to write-off the goodwill balance as a cumulative effect of a change in accounting principle. The Company has no other intangible assets impacted by SFAS No. 142.

Note 4—Inventories

Inventories consist of the following:

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Note 5—Property, Plant and Equipment

Property, plant and equipment consist of the following:

Note 6—Financing Arrangements

Debt consists of the following:

The weighted average interest rate for all debt, excluding capital lease debt, for the three and nine months ended July 31, 2004 was 4.86% and 4.88%, respectively. The weighted average interest rate for all debt, excluding capital lease debt, for the three and nine months ended July 31, 2003 was 4.83% and 5.14%, respectively.

On January 15, 2004, the Company entered a Credit and Security Agreement (the “Credit Agreement”) with a syndicate of lenders led by LaSalle Bank National Association, as lead arranger and administrative agent, National City Bank, as co-lead arranger and syndication agent, and KeyBank National Association, as documentation agent. The Credit Agreement provides the Company with borrowing capacity of $185,000 in the form of a $60,000 three-year revolving credit facility maturing January 2007 and two five-year term loans of $75,000 and $50,000 maturing January 2009.

Under the Credit Agreement, the Company has the option to select the applicable interest rate based upon two indices – a Base Rate, as defined in the Credit Agreement, or the Eurodollar rate, as adjusted by the Eurocurrency Reserve Percentage, if any (“LIBOR”). The selected index is combined with a designated margin from an agreed upon pricing matrix. The Base Rate is the greater of the LaSalle publicly announced prime rate or the Federal Funds effective rate plus 0.5% per annum. LIBOR is the published Bloomberg Financial Markets Information Service rate. At July 31, 2004, the interest rate for the revolving credit facility was LIBOR plus 2.75% and the interest rate of the $75,000 term loan was at LIBOR plus 3.0%. The margins for the revolving credit facility and $75,000 term loan improve if the Company achieves improved ratios of funded debt to EBITDA, as defined in the Credit Agreement. At July 31, 2004, the interest rate of the $50,000 term loan was at LIBOR plus 4.0%. The margin under the $50,000 term loan decreased by 0.5% during the third quarter of fiscal 2004 because the Company’s senior debt ratings from Moody’s Investor Services and Standard and Poor’s improved.

Borrowings under the Credit Agreement are collateralized by a first priority security interest in substantially all of the tangible and intangible property of the Company and its domestic subsidiaries and 65% of the stock of foreign subsidiaries. Available borrowings under the revolving credit facility are based on a borrowing base formula of 85% of eligible accounts receivable and 55% of eligible inventory, as defined in the Credit Agreement.

The Credit Agreement requires the Company to observe several financial covenants. At July 31, 2004, the covenants required a minimum fixed coverage ratio of 1.25 to 1.00, a maximum leverage ratio of 3.50 to 1.00 and a minimum net worth equal to the sum of $95,000 plus 50% of consolidated net income since January 30, 2004. During the term of the Credit Agreement, the covenant requirements become less restrictive as the Company achieves certain defined improvements in financial performance. The Credit Agreement also establishes limits for additional borrowings, dividends, investments, acquisitions or mergers and sales of assets. At July 31, 2004, the Company was in compliance with the covenants under the Credit Agreement.

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Borrowings under the revolving credit facility must be repaid in full in January 2007. Repayments of borrowings under the $50,000 term loan began in June 2004 and are due quarterly thereafter at $250 per quarter. A final payment of $47,500 is required at maturity. In March 2004, the Company began repaying its borrowings under the $75,000 term loan with a quarterly installment of $3,625. Quarterly payments continue thereafter increasing annually until year five when the payments decline until maturity. The Company may prepay the borrowings under the revolving credit facility and the $75,000 term loan without penalty. A prepayment of the $50,000 term loan during the first twelve months subsequent to closing requires a premium of 1% of the prepayment. At the conclusion of each fiscal year, the Company will be required to make mandatory prepayments equal to 50% of the Company’s excess cash flow, as defined in the Credit Agreement, if the Company’s leverage ratio is greater than 2.00 to 1.00. The Company does not anticipate a mandatory prepayment will be required for fiscal 2004.

The Credit Agreement specifies that upon the occurrence of an event or condition deemed to have a material adverse effect on the business or operations of the Company, as determined by the administrative agent of the lending syndicate or the required lenders, as defined, of 51% of the aggregate commitment under the Credit Agreement, the borrowings outstanding at the time become due and payable. However, the Company does not anticipate at this time any change in business conditions or operations that could be deemed as a material adverse change by the lenders.

In May 2002, the Company issued two 9.0% promissory notes to two directors of the Company, who are also officers of MTD Products, in the aggregate principal of $460. These notes were due May 1, 2004 and were repaid on such date.

In June 2003, the Company entered into a finance agreement with an insurance broker for various insurance policies. The financing transaction bore interest at 4.89% and required monthly payments of $92 through April 2003. In June 2004, the Company entered into a new finance agreement with an insurance broker for various insurance policies that bears interest at a fixed rate of 4.89% and requires monthly payments of $93 through April 2005. As of July 31, 2004 and October 31, 2003, $728 and $453, respectively, remained outstanding under these agreements and were classified as current debt in the Company’s consolidated financial statements.

In June 2004, the Company issued a $2,000 promissory note to the State of Ohio related to specific machinery and equipment at one of the Company’s Ohio divisions. The promissory note bears interest at 1% for the first year of the term and 3% per annum for the balance of the term, with interest only payments for the first year of the term. Principal payments begin in August 2005 in the amount of $25, and monthly principal payments continue thereafter increasing annually until July 2011, when the loan matures. The Company may prepay this promissory note without penalty.

After considering letters of credit of $5,146 that the Company has issued, available funds under the Credit Agreement were $41,830 at July 31, 2004. Overdraft balances were $19,634 at July 31, 2004 and $29,850 at October 31, 2003 and are included in accounts payable.

Note 7—Pension Matters

In accordance with SFAS No. 132R, the components of net periodic benefit cost (income) for the three and nine months ended July 31, 2004 and 2003 are as follows:

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The total amount of Company pension plan contributions paid for the nine months ended July 31, 2004 was $6,146. The Company expects estimated pension plan contributions to be $1,185 for the remainder of fiscal 2004. Fiscal 2004 pension plan contributions have declined from the $16,935 levels funded in fiscal 2003. The funding levels of fiscal 2003, combined with improved investment performance, have resulted in improved funding ratios of pension plan assets to liabilities, which has lowered the contribution levels for fiscal year 2004.

Note 8—Equity Matters

Income Per Share

Basic income per share is computed by dividing net income available to common stockholders by the weighted average number of shares of the Company’s common stock (“Common Stock”) outstanding during the period. The basic weighted average number of shares also includes the pro rata earned shares of Common Stock to be issued to the Company’s President and Chief Executive Officer in accordance with his employment agreement. In addition, the diluted income per share reflects the potential dilutive effect of the Company’s stock option plan and the unearned shares of Common Stock issuable to the Company’s President and Chief Executive Officer in accordance with his employment agreement.

The shares of Common Stock issuable pursuant to stock options outstanding under the Company’s Amended and Restated 1993 Key Employee Stock Incentive Plan and the shares of Common Stock issuable to the President and Chief Executive Officer are included in the diluted income per share calculation to the extent they are dilutive. The following is a reconciliation of the numerator and denominator of the basic and diluted income per share computation for net income:

(Shares in thousands)

Executive Compensation

Under the terms of the five-year employment agreement with the Company’s President and Chief Executive Officer, the executive will receive an annual base salary, in arrears, in unrestricted shares of Common Stock for the first three years of the

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agreement. The number of shares to be issued is 350,000 at the end of year one, 300,000 at the end of year two and 250,000 at the end of year three. The executive will draw a base salary paid in cash during years four and five. The Company initially recorded the issuance of the total stock award of 900,000 shares of Common Stock as unearned compensation reducing stockholders’ equity by $1,530 for the value of the award at $1.70 per share, the market price of the Common Stock at the date of the agreement. The related compensation expense is being recognized over the service period during the first three years of the agreement. On January 31, 2003, in accordance with the agreement, the Company issued 350,000 shares of Common Stock for services rendered from the period February 1, 2002 through January 31, 2003, the first year of the agreement. On January 31, 2004, the Company issued 300,000 shares of Common Stock for services rendered from the period February 1, 2003 through January 31, 2004, the second year of the agreement. For the three and nine months ended July 31, 2004, respectively, the Company recorded, as compensation expense, $106 and $341. For the three and nine months ended July 31, 2003, respectively, the Company recorded, as compensation expense, $127 and $404.

Comprehensive Income

Comprehensive income amounted to $3,843 and $918, net of tax, for the three months ended July 31, 2004 and 2003, respectively, and $13,347 and $344, net of tax, for the nine months ended July 31, 2004 and 2003, respectively. The difference between net income and comprehensive income resulted from the change in the unrealized holding gain on available for sale securities.

Note 9—Related Party Information

On November 1, 1999, the Company acquired MTD Automotive, the automotive division of MTD Products Inc, a significant stockholder of the Company. The acquisition was recorded using the purchase method of accounting.

As set forth in the MTD Automotive Purchase Agreement, the purchase price was adjusted at the end of fiscal 2002 upon resolution of a final contingency related to certain price concessions. This final contingency payment was received during the second quarter ended April 30, 2003 in the amount of $1,472.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Dollars in thousands, except per share data)

General

Shiloh is a full service manufacturer of first operation blanks, engineered welded blanks, complex stampings and modular assemblies for the automotive, heavy truck and other industrial markets. In addition, Shiloh is a designer and engineer of precision tools and dies and welding and assembly equipment for use in its blanking and stamping operations and for sale to original equipment manufacturers (“OEMs”), Tier I automotive suppliers and other industrial customers. The Company’s blanks, which are engineered two dimensional shapes cut from flat-rolled steel, are principally sold to automotive and truck OEMs and are used for exterior steel components, such as fenders, hoods and doors. These blanks include first operation exposed and unexposed blanks and more advanced engineered welded blanks, which are manufactured from two or more blanks of different steel or gauges that are welded together utilizing both mash seam resistance and laser welding. The Company’s stampings are principally used as components in mufflers, seat frames, structural rails, window lifts, heat shields, vehicle brakes and other structural body components.

The Company also builds modular assemblies, which include components used in the structural and powertrain systems of a vehicle. Structural systems include bumper beams, door impact beams, steering column supports, chassis components and structural underbody modules. Powertrain systems consist of deep draw components, such as oil pans, transmission pans and valve covers. Additionally, the Company provides a variety of intermediate steel processing services, such as oiling, cutting-to-length, slitting and edge trimming of hot and cold-rolled steel coils for automotive and steel industry customers. The Company has sixteen wholly owned subsidiaries at locations in Ohio, Michigan, Georgia, Tennessee and Mexico.

The majority of the Company’s stamping and engineered welded blank operations purchase steel through the customers’ steel programs. Under these programs, the Company pays the steel suppliers and passes on to the customers the steel price the customers negotiated with the steel suppliers. Although the Company takes ownership of the steel, the customers are responsible for all steel price fluctuations. The Company also purchases steel directly from domestic primary steel producers and steel service centers. Domestic steel pricing has generally been increasing recently for several reasons, including capacity restraints, higher raw material costs and the weakening of the U.S. dollar in relation to foreign currencies. Finally, the Company blanks and processes steel for some of its customers on a toll processing basis. Under these arrangements, the Company charges a tolling fee for the operations that it performs without acquiring ownership of the steel and being burdened with the attendant costs of ownership and risk of loss.

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Toll processing operations result in lower revenues but higher gross margins than operations where the Company takes ownership of the steel. Revenues from operations involving directly owned steel include a component of raw material cost whereas toll processing revenues do not.

Changes in the price of scrap steel can have a significant effect on the Company’s results of operations because substantially all of its operations generate engineered scrap steel. Engineered scrap steel is a planned by-product of the Company’s processing operations. Changes in the price of steel, however, can also impact the Company’s results of operations because raw material costs are by far the largest component of cost of sales in processing directly owned steel. The Company actively manages its exposure to changes in the price of steel, and, in most instances, passes along the rising price of steel to its customers.

Critical Accounting Policies

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

Allowance for Doubtful Accounts. The Company evaluates the collectibility of accounts receivable based on several factors. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, a specific allowance for doubtful accounts is recorded against amounts due to reduce the net recognized receivable to the amount the Company reasonably believes will be collected. Additionally, the allowance for doubtful accounts is estimated based on historical experience of write-offs and the current financial condition of customers. The financial condition of the Company’s customers is dependent on, among other things, the general economic environment, which may substantially change, thereby affecting the recoverability of amounts due to the Company from its customers.

Inventory Reserves. Inventories are valued at the lower of cost or market. Cost is determined on the first-in, first-out basis. Where appropriate, standard cost systems are used to determine cost and the standards are adjusted as necessary to ensure they approximate actual costs. Estimates of lower of cost or market value of inventory are based upon current economic conditions, historical sales quantities and patterns, and in some cases, the specific risk of loss on specifically identified inventories.

The Company values inventories on a regular basis to identify inventories on hand that may be obsolete or in excess of current future projected market demand. For inventory deemed to be obsolete, the Company provides a reserve for the full value net of estimated scrap value of the inventory. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates future demand. Additional inventory reserves may be required if actual market conditions differ from management’s expectations.

Deferred Tax Assets. Deferred taxes are recognized at currently enacted tax rates for temporary differences between the financial reporting and income tax bases of assets and liabilities and operating loss and tax credit carryforwards. In assessing the realizability of deferred tax assets, the Company established a valuation allowance to record its deferred tax assets at an amount that is more likely than not to be realized. While future projections for taxable income and ongoing prudent and feasible tax planning strategies have been considered in assessing the need for the valuation allowance, in the event the Company were to determine that it would be able to realize its deferred tax assets in the future in excess of their recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made. Likewise, should the Company determine that it would not be able to realize all or part of its net deferred tax assets in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made. At October 31, 2003, a valuation allowance of $6,303 was recorded and the Company believes that amount remains appropriate at July 31, 2004.

Impairment of Long-lived Assets. The Company’s long-lived assets include primarily property, plant and equipment. If an indicator of impairment exists for certain groups of property, plant and equipment, the Company will compare the forecasted undiscounted cash flows attributable to the assets to their carrying value. If the carrying values exceed the undiscounted cash flows, the Company then determines the fair values of the assets. If the carrying value exceeds the fair value of the assets, then an impairment charge is recognized for the difference.

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The Company cannot predict the occurrence of future impairment-triggering events. Such events may include, but are not limited to, significant industry or economic trends and strategic decisions made in response to changes in the economic and competitive conditions impacting the Company’s business. Based on current facts, the Company believes there is currently no impairment to the Company’s long-lived assets.

Group Insurance and Workers’ Compensation Accruals. The Company reviews the group insurance and workers’ compensation accruals on a monthly basis and adjusts the balance as determined necessary. The Company reviews claims data and lag analysis as the primary indicators of the accruals. Additionally, the Company reviews specific large insurance claims to determine whether there is a need for additional accrual on a case-by-case basis. Changes in the claim lag periods and the specific occurrences could materially impact the required accrual balance period-to-period.

Pension and Other Post-retirement Costs and Liabilities. The Company has recorded significant pension and other post-retirement benefit liabilities that are developed from actuarial valuations. The determination of the Company’s pension liabilities requires key assumptions regarding discount rates used to determine the present value of future benefit payments and the expected return on plan assets. The discount rate is also significant to the development of other post-retirement liabilities. The Company determines these assumptions in consultation with, and after input from, its actuaries.

The discount rate reflects the estimated rate at which the pension and other post-retirement liabilities could be settled at the end of the year. When determining the discount rate, the Company considers the most recent available interest rates on Moody’s Aa Corporate bonds with maturities of at least ten years late in the fourth quarter and then factors into this rate its expectations for change by year-end. Based upon this analysis, the Company reduced the discount rate used to measure its pension and post-retirement liabilities to 6.25% at October 31, 2003 from 7.00% at October 31, 2002.

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

The Company’s investment policy for assets of the plans is to maintain an allocation generally of 40 to 60 percent in equity securities and 40 to 60 percent in debt securities. Additionally real estate investments are permitted to range between zero to ten percent. Equity security investments are structured to achieve an equal balance between growth and value stocks. The Company determines the annual rate of return on pension assets by first analyzing the composition of its asset portfolio. Historical rates of return are applied to the portfolio. The Company’s investment advisors and actuaries review this computed rate of return. Industry comparables and other outside guidance is also considered in the annual selection of the expected rates of return on pension assets.

For the twelve months ended December 31, 2003, the actual return on pension plans’ assets for three of the Company’s plans approximated 11.0 to 20.5% and for the twelve months ended March 31, 2004, the actual return on the Company’s fourth pension plan’s assets was approximately 24.0%, which compared favorably to the 7.25 to 8.00% expected rates of return on plan assets used to derive pension expense. The higher actual return on plans assets reflects the recovery of the equity markets experienced in 2003 from the depressed levels, which have existed since the end of 2001. Based on recent and projected market and economic conditions, the Company maintained its estimate for the expected long-term return on its plan assets at 7.25 to 8.00%, the same assumption used to derive fiscal 2003 expense.

If the fair value of the pension plans’ assets are below the plans’ accumulated benefit obligation (“ABO”), the Company is required to record a minimum liability. If the amount of the ABO in excess of the fair value of plan assets is large enough, the Company may be required, by law, as is currently true for fiscal 2004, to make additional contributions to the pension plans. Actual results that differ from these estimates may result in more or less future Company funding into the pension plans than is planned by management.

The Company instituted per participant caps on the amounts of retiree medical benefits it will provide to the small number of future retirees at the time it adopted SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pension,” to mitigate the impact of medical cost inflation on the Company’s retiree medical obligations. The caps do not apply to individuals who retired prior to certain specified dates. Plan participants will pay costs in excess of these caps. The medical care cost trend rate has a significant impact on the liabilities recorded by the Company.

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Results of Operations

Three Months Ended July 31, 2004 Compared to Three Months Ended July 31, 2003

REVENUES. As noted above, the Company is a supplier of numerous parts to both automobile OEMs and, as a Tier II supplier, to Tier I automotive part manufacturers who in turn supply OEMs. The parts that the Company produces supply many models of vehicles manufactured by nearly all vehicle manufacturers that produce vehicles in North America. As a result, the Company’s revenues are very dependent upon the North American production of automobiles and light trucks. According to industry statistics, North American car and light truck production for the third quarter of fiscal 2004 was 4.1% behind the production of the third quarter of fiscal 2003. For the Company’s full fiscal 2004, North American car and light truck production is forecast to be 0.5% less than the production of fiscal 2003.

Another significant factor affecting the Company’s revenues is the Company’s ability to successfully bid on the production and supply of parts for models that will be newly introduced to the market by the Company’s customers. These new model introductions typically go through a start of production phase with build levels that are higher than normal because the consumer supply network is filled to ensure adequate supply to the market, resulting in an increase in the Company’s revenues at the beginning of the cycle.

The Company’s revenues in the third quarter of fiscal 2004 were $146,493, an increase of $12,847, or 9.6% ahead of sales of $133,646 in the third quarter of fiscal 2003. The Company’s sales increased over last year’s third quarter because of the favorable build levels of the models for which the Company supplies products in spite of the decline in the North American car and light truck production of 4.1% for the third quarter of fiscal 2004. The remainder of the Company’s sales increase was attributable to the production of new vehicle models that were introduced at the beginning of fiscal 2004. The Company did not previously provide parts for the predecessors of these new models. The third quarter of fiscal 2004 was also favorably affected by sales of parts for the heavy truck market, as heavy truck industry build increased year over year in the third quarter.

GROSS PROFIT. For the third quarter of fiscal 2004, gross profit of $16,995 was 11.6% of sales. This compares to gross profit of $13,743, or 10.3% of sales in the prior fiscal year third quarter. In the third quarter of fiscal 2004, gross margin was favorably affected by approximately $3,300 due to the effect of the increase in sales volume experienced during the quarter. In addition, the quarter was favorably affected by reduced manufacturing expenses of approximately $2,525 related to temporary work force reductions during the period. Offsetting these favorable factors was the increase in material contents of parts produced and the rising cost of materials, primarily steel, net of material cost increases recovered, in the amount of approximately $2,480.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses of $8,910 for the third quarter of fiscal 2004 were 6.1% of sales and $303 less than the selling, general and administrative expenses of the prior fiscal year third quarter. A year ago, these expenses were 6.9% of sales. This decrease in expenses on a dollar basis and percentage basis resulted from lower personnel and related benefit costs and no unusual or non-routine expenses being incurred, and this decrease on a percentage basis also resulted from increased revenues.

OTHER. Interest expense for the third quarter of fiscal 2004 was $2,007 compared to $2,666 in the previous fiscal year third quarter. Interest expenses declined as borrowed funds have been reduced between periods. Borrowed funds a year ago averaged $183,422 during the third quarter and the average borrowed funds of the third quarter of fiscal 2004 were $138,465. The effective interest rate increased from a weighted average rate of 4.83% a year ago to 4.86% in the third quarter of fiscal 2004. The decrease in borrowings was slightly offset by the increase in the effective rate of interest, which was a result of the completion of the Company’s new credit facility in January 2004.

Other income in the third quarter of fiscal 2004 amounted to $225 and represented primarily foreign currency translation gains experienced by the Company’s Mexican subsidiary while other expense in the third quarter of fiscal 2003 of $370 represented primarily foreign currency transaction losses experienced by the Company’s Mexican subsidiary.

The Company’s effective tax rate for the third quarter of fiscal 2004 was 39.3%. In the third quarter of fiscal 2003, the effective rate was 42.0%, which was higher due primarily to a dividend received by the Company in fiscal 2003 from the Company’s Mexican subsidiary.

Net income for the third quarter of fiscal 2004 was $3,841, or $.24 per share basic, and $.23 per share diluted. In the prior year third quarter, net income was $895, or $.05 per share, both basic and diluted.

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Nine Months Ended July 31, 2004 Compared to Nine Months Ended July 31, 2003

REVENUES. For the first nine months of fiscal 2004, the Company’s sales were $467,192 compared to $430,556 in the first nine-month period of fiscal 2003. Sales increased 8.5%, or $36,636 from sales in the first nine months of fiscal 2003. The Company’s sales increased in spite of a 0.6% decrease in North American car and light truck production during the first nine-month period of fiscal 2004 compared to fiscal 2003. The increase in sales was attributable to the new model introductions and their impact on production and Company sales for the first nine months of fiscal 2004 compared to the first nine months of fiscal 2003, the build level and sales of parts for the vehicles that the Company currently supplies and the sales of parts for the strengthening heavy truck industry.

GROSS PROFIT. For the first nine months of fiscal 2004, gross profit was $56,245 or 12.0% of sales. Gross profit increased by $14,319 from the fiscal 2003 first nine-month gross profit of $41,926, which was 9.7% of sales. For the first nine months of fiscal 2004, gross margin improved by approximately $8,920 due to the increased sales volume. Margins were also aided by approximately $2,400 as a result of the net recovery of material cost increases, primarily raw materials. In spite of the increased level of manufacturing activity, manufacturing expenses declined by $2,600, primarily in the third quarter, compared to manufacturing expenses of the nine-month period of fiscal 2003. Work force adjustments and related personnel costs contributed to the decline in manufacturing costs.

SELLING, GENERAL AND ADMINSTRATIVE EXPENSES. For the first nine months of fiscal 2004, selling, general and administrative expenses were $27,354 compared to $29,139 in the comparable period of fiscal 2003. As a percentage of sales, these expenses were 5.9% for the first nine months of fiscal 2004 versus 6.8% in the previous year nine-month period. During the first nine months of fiscal 2004, the Company has gradually reduced manning and related personnel benefit costs from the levels incurred in the prior year nine-month period. The decrease in expenses on a dollar basis and percentage basis resulted from lower personnel costs in the first nine months of fiscal 2004 combined with spending controls, and the decrease on a percentage basis also resulted from increased revenues.

OTHER. Interest expense for the first nine months of fiscal 2004 was $6,930 compared to $9,244 in the first nine months of fiscal 2003, a decrease of $2,314. Consistent with the third quarter, interest expense declined as a result of the decline in borrowed funds and the decline in the effective interest rate incurred during the periods.

Other income for the first nine months of fiscal 2004 of $117 was comparable to $256 of other income recorded in the prior year nine-month period. No significant variations occurred.

In the first quarter of fiscal 2003, the Company adopted Statement of Financial Accounting Standard No. 142, “Goodwill and Other Intangible Assets.” As a result of the impairment of the Company’s goodwill, the Company recorded a charge of $1,963, net of income tax benefit of $1,058, representing the entire recorded value of goodwill that the Company had previously recorded. A similar charge was not recorded in fiscal 2004.

In the first nine months of fiscal 2004, the Company’s effective tax rate was 39.8% compared to 42.0% in the first nine months of fiscal 2003. The prior year effective tax rate was greater than that of the current year primarily because of the aforementioned dividend that the Company received from its Mexican subsidiary.

Net income for the first nine months of fiscal 2004 was $13,311, or $.84 per share basic and $.81 per share diluted. In the prior year first nine months, the Company’s income before cumulative effect of accounting change was $2,273, or $.14 per share, basic and diluted. The cumulative effect of accounting change was $(1,963), or $(.13) per share basic and diluted, resulting in net income of $310, or $.01 per share, basic and diluted.

Liquidity and Capital Resources

On January 15, 2004, the Company entered a new Credit and Security Agreement (the “Credit Agreement”) with a syndicate of lenders. The proceeds from the borrowings under the Credit Agreement were used to repay the borrowings of the former revolving credit facility and to fund the fees and related expenses of the new Credit Agreement.

The Credit Agreement provides the Company with borrowing capacity of $185,000 in the form of a $60,000 three-year revolving credit facility maturing January 2007 and two five-year term loans of $75,000 and $50,000 maturing January 2009. Borrowings at July 31, 2004 were $8,400 under the revolving credit facility and $117,500 under the term loans.

The Credit Agreement requires the Company to observe several financial covenants. At July 31, 2004, the covenants required a minimum fixed coverage ratio of 1.25 to 1.00, a maximum leverage ratio of 3.50 to 1.00 and a minimum net worth equal to the sum of $95,000 plus 50% of consolidated net income since January 30, 2004. During the term of the Credit

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Agreement, the covenant requirements become less restrictive as the Company achieves certain defined improvements in financial performance. The Credit Agreement also establishes limits for additional borrowings, dividends, investments, acquisitions or mergers and sales of assets. At July 31, 2004, the Company was in compliance with the covenants of the Credit Agreement.

Borrowings under the revolving credit facility must be repaid in full in January 2007. Repayments of borrowings under the $50,000 term loan began in June 2004 and are due quarterly thereafter at $250 per quarter. A final payment of $47,500 is required at maturity. In March 2004, the Company began repaying its borrowings under the $75,000 term loan with a quarterly installment of $3,625. Quarterly payments continue thereafter increasing annually until year five when the payments decline until maturity. The Company may prepay the borrowings under the revolving credit facility and the $75,000 term loan without penalty. A prepayment of the $50,000 term loan during the first twelve months subsequent to closing requires a premium of 1% of the prepayment. At the conclusion of each fiscal year, the Company will be required to make mandatory prepayments equal to 50% of the Company’s excess cash flow, as defined in the Credit Agreement, if the Company’s leverage ratio is greater than 2.00 to 1.00. The Company does not anticipate a mandatory prepayment will be required for fiscal 2004.

The Credit Agreement specifies that upon the occurrence of an event or condition that the administrative agent of the lending syndicate or the required lenders, as defined, of 51% of the aggregate commitment under the Credit Agreement deem to have a material adverse effect on the business or operations of the Company, the borrowings outstanding at the time become due and payable. However, the Company does not anticipate at this time any change in business conditions or operations that could be deemed as a material adverse change under the Credit Agreement.

In June 2004, the Company issued a $2,000 promissory note to the State of Ohio related to specific machinery and equipment at one of the Company’s Ohio divisions. The promissory note bears interest at 1% for the first year of the term and 3% per annum for the balance of the term, with interest only payments for the first year of the term . Principal payments begin in August 2005 in the amount of $25, and monthly principal payments continue thereafter increasing annually until July 2011, when the loan matures. The Company may prepay this promissory note without penalty.

Scheduled repayments under the terms of the Credit Agreement plus repayments of other debt for the next five years are listed below:

At July 31, 2004, total debt was $129,034 and total equity was $125,480, resulting in a capitalization rate of 51% debt, 49% equity. Current assets were $112,654 and current liabilities were $119,761, resulting in a working capital deficit of $7,107, which did not significantly affect the Company’s liquidity.

For the first nine months of fiscal 2004, net cash provided by operating activities was $48,811 compared to $56,182 in the first nine months of fiscal 2003. The decline in cash from operating activities resulted from the net result of the improvement of net income and non-cash items, offset by the impact of working capital changes described below. Net income of $13,311 in the first nine-months of fiscal 2004 compared to net income of $310 a year ago represents an improvement of $13,001. As the Company continues to generate net income, the tax provision represents, in part, the realization of deferred tax assets associated with the operating losses for prior fiscal years. Deferred taxes represent $6,488 of improvement in cash provided by operating activities.

Working capital changes provided funds of $1,276 in the first nine months of fiscal 2004 versus $28,265 in the previous fiscal year first nine months. Accounts receivable balances declined slightly since October 31, 2003 generating funds of $470. However, the Company changed the collection process for a portion of the receivables. Formerly, the Company accelerated the collection of certain of its accounts receivable through a discount program that resulted in collection of funds for certain customers approximately 30 days sooner than the Company’s standard credit terms with those customers. Beginning in February 2004, and coincidental with the Company entering into the Credit Agreement, the Company gradually returned to standard payment terms for a portion of these receivables. After a period of adjustment to these new terms, accounts receivable have stabilized as collections under the revised terms have been processed. In the first nine months of fiscal 2004, inventories continued to decline as the Company continues to emphasize improved inventory management techniques. Prepaids and other assets increased routinely as insurance contracts were renewed. Payables and other liabilities have decreased by $1,097 as a result of payments made. The prior fiscal year comparable period realized cash flow benefits from dramatically reducing both accounts receivable and inventory levels.

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Capital expenditures in the first nine months fiscal 2004 were $11,117 compared to $17,036 in prior fiscal year nine-month period.

Financing activity cash flow in the first nine months of fiscal 2004 included the borrowings under the Credit Agreement and the use of proceeds of the borrowings to repay the former revolving credit agreement and to fund the financing costs associated with the Credit Agreement.

In March 2004, the Company began repaying its borrowings under the $75,000 term loan with a quarterly installment of $3,625. Quarterly payments continue thereafter increasing annually until year five when the payments decline until maturity. Repayments of the $50,000 term loan began in June 2004 and are due quarterly thereafter at $250 per quarter. A final payment of $47,500 is required at maturity. Additionally, the Company will be funding $1,185 in pension plan contributions during the remaining three months of fiscal 2004, making total pension plan contributions in fiscal 2004 approximately $7,331. Fiscal year 2004 pension plan contributions have declined from the $16,935 levels funded in the prior fiscal year. The funding levels of fiscal 2003, combined with improved investment performance, have resulted in improved funding ratios of pension plan assets to liabilities, which has lowered the contribution levels being experienced in fiscal year 2004. The Company believes that it has the financial resources to fund these obligations in fiscal 2004. In the first nine months of fiscal 2004, the Company had capital expenditures of $11,117, and the Company believes that its remaining estimated capital budget of $8,883 is reasonable.

After considering letters of credit of $5,146 that the Company has issued, available funds under the Credit Agreement were $41,830 at July 31, 2004. The Company believes that funds available under the Credit Agreement and cash flow from operations will provide sufficient liquidity to meet its cash requirements through July 31, 2005 and until the expiration of the revolving credit facility in January 2007, including capital expenditures, pension obligations and scheduled repayments of $15,500 in the aggregate under the Credit Agreement in accordance with the repayment terms. Furthermore, the Company does not anticipate at this time any change in business conditions or operations of the Company that could be deemed as a material adverse change by the agent bank or required lenders, as defined, and thereby result in declaring borrowed amounts as immediately due and payable.

Effect of Inflation

Inflation generally affects the Company by increasing the interest expense of floating rate indebtedness and by increasing the cost of labor, equipment and raw materials. The general level of inflation has not had a material effect on the Company’s financial results.

FORWARD-LOOKING STATEMENTS

The statements contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements. The forward-looking statements are made on the basis of management’s assumptions and expectations. As a result, there can be no guarantee or assurance that these assumptions and expectations will in fact occur. The forward-looking statements are subject to risks and uncertainties that may cause actual results to materially differ from those contained in the statements. Some, but not all of the risks, include the ability of the Company to accomplish its strategic objectives with respect to implementing its sustainable business model; the ability to obtain future sales; changes in worldwide economic and political conditions, including adverse effects from terrorism or related hostilities; costs related to legal and administrative matters; the Company’s ability to realize cost savings expected to offset price concessions; inefficiencies related to production and product launches that are greater than anticipated; changes in technology and technological risks; increased fuel costs; work stoppages and strikes at the Company’s facilities and that of the Company’s customers; the Company’s dependence on the automotive and heavy truck industries, which are highly cyclical; the dependence of the automotive industry on consumer spending, which is subject to the impact of domestic and international economic conditions and regulations and policies regarding international trade; financial and business downturns of the Company’s customers or vendors; increases in the price of, or limitations on the availability, of steel, the Company’s primary raw material, or decreases in the price of scrap steel; the occurrence of any event or condition that may be deemed a material adverse effect under the Credit Agreement; pension plan funding requirements; and other factors, uncertainties, challenges and risks detailed in Shiloh’s other public filings with the Securities and Exchange Commission. Any or all of these risks and uncertainties could cause actual results to differ materially from those reflected in the forward-looking statements. These forward-looking statements reflect management’s analysis only as of the date of the filing of this Quarterly Report on Form 10-Q. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s major market risk exposure is primarily due to possible fluctuations in interest rates as they relate to its variable rate debt. The Company does not enter into derivative financial investments for trading or speculation purposes. As a result, the Company believes that its market risk exposure is not material to the Company’s financial position, liquidity or results of operations.

Interest Rate Risk

The Company is exposed to market risk through variable rate debt instruments. As of July 31, 2004, the Company had $125.9 million outstanding under the Credit Agreement. Based on July 31, 2004 debt levels, a 0.5% annual change in interest rates would have impacted interest expense by approximately $.2 million and $.4 million for the three and nine months ended July 31, 2004, respectively. The Company monitors its interest rate risk, but has not engaged in any hedging activities using derivative financial instruments to mitigate such risk at this time.

Foreign Currency Exchange Rate Risk

In order to reduce the impact of changes in foreign exchange rates on the consolidated results of operations, the Company enters into foreign currency contracts periodically. There were no foreign currency forward exchange contracts outstanding as of July 31, 2004. The intent of any contracts entered into by the Company is to reduce exposure to currency movements affecting foreign currency purchase commitments. Changes in the fair value of forward exchange contracts are recorded in the consolidated statements of operations. The Company’s risks related to commodity price and foreign currency exchange risks have historically not been material. The Company does not expect the effects of these risks to be material in the future based on current operating and economic conditions in the countries and markets in which it operates.

Item 4. Controls and Procedures

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. As of the end of the period covered by the Quarterly Report, an evaluation of the effectiveness of the Company’s disclosure controls and procedures was carried out under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective.

There have been no changes in the Company’s internal control over financial reporting during the third quarter of fiscal 2004 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II. OTHER INFORMATION

Item 6. Exhibit and Reports on Form 8-K

On May 25, 2004, the Company furnished a Current Report on Form 8-K under Item 12 regarding the second quarter 2004 earnings release.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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EXHIBIT INDEX