# EDGAR Filing Document

**Accession Number:** 0000006176
**File Stem:** 0000950170-23-008972
**Filing Date:** 2023-3
**Character Count:** 494365
**Document Hash:** 9644fe9d438f72b026c5bffa10a66375
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000950170-23-008972.hdr.sgml**: 20230321

**ACCESSION NUMBER**: 0000950170-23-008972

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 147

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230321

**DATE AS OF CHANGE**: 20230321

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** AMPCO PITTSBURGH CORP
- **CENTRAL INDEX KEY:** 0000006176
- **STANDARD INDUSTRIAL CLASSIFICATION:** PUMPS & PUMPING EQUIPMENT [3561]
- **IRS NUMBER:** 251117717
- **STATE OF INCORPORATION:** PA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-00898
- **FILM NUMBER:** 23750466

**BUSINESS ADDRESS:**
- **STREET 1:** 726 BELL AVENUE
- **STREET 2:** SUITE 301
- **CITY:** CARNEGIE
- **STATE:** PA
- **ZIP:** 15106
- **BUSINESS PHONE:** 412-456-4400

**MAIL ADDRESS:**
- **STREET 1:** 726 BELL AVENUE
- **STREET 2:** SUITE 301
- **CITY:** CARNEGIE
- **STATE:** PA
- **ZIP:** 15106

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SCREW & BOLT CORP OF AMERICA
- **DATE OF NAME CHANGE:** 19710518

?xml version="1.0" encoding="ASCII"? 10-K

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549** 

**FORM** 10-K

☒ **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** 

**For the fiscal year ended** **December 31,** 2022

**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** 1-898

**AMPCO-PITTSBURGH CORPORATION**

![img136350235_0.jpg](img136350235_0.jpg)

---

| | | |
|:---|:---|:---|
| Pennsylvania |  | 25-1117717 |
| **(State of Incorporation)** |  | **(I.R.S. Employer Identification No.)** |
|  | 726 Bell Avenue**,** Suite 301 <br>Carnegie**,** Pennsylvania 15106 <br>**(Address of principal executive offices)** <br>**(**412**)** 456-4400 <br>**(Registrant's telephone number)**  |  |

---

**Securities registered pursuant to Section 12(b) of the Act:**

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| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, $1 par value<br>| AP | &nbsp;&nbsp;New York Stock Exchange |
| Series A Warrants to purchase shares of Common Stock<br>| AP WS | NYSE American Exchange |

---

**Securities registered pursuant to Section 12(g) of the Act: None**

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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 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, a 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 filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller 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. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting stock of Ampco-Pittsburgh Corporation held by non-affiliates on June 30, 2022 (based upon the closing price of the Registrant's Common Stock on the New York Stock Exchange on that date) was approximately $47 million.

As of March 15, 2023, 19,403,519 common shares were outstanding.

Documents Incorporated by Reference: Part III of this report incorporates by reference certain information from the Proxy Statement for the 2023 Annual Meeting of Shareholders.

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**TABLE OF CONTENTS**

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| | |
|:---|:---|
| [**<u>PART I</u>**](#part_i) |  |
| [<u>Item 1. Business</u>](#item_1_business) | &nbsp;&nbsp;2 |
| [<u>Item 1A. Risk Factors</u>](#item_1a_risk_factors) | &nbsp;&nbsp;5 |
| [<u>Item 1B. Unresolved Staff Comments</u>](#item_1b_unresolved_staff_comments) | &nbsp;&nbsp;13 |
| [<u>Item 2. Properties</u>](#item_2_properties) | &nbsp;&nbsp;13 |
| [<u>Item 3. Legal Proceedings</u>](#item_3_legal_proceedings) | &nbsp;&nbsp;15 |
| [<u>Item 4. Mine Safety Disclosures</u>](#item_4_mine_safety_disclosures) | &nbsp;&nbsp;15 |
| [**<u>PART II</u>**](#part_ii) |  |
| [<u>Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities</u>](#item_5_market_for_registrants_common_equ) | &nbsp;&nbsp;16 |
| [<u>Item 6. Reserved</u>](#item_6_reserved) | &nbsp;&nbsp;16 |
| [<u>Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation</u>](#item_7_managements_discussion_analysis_f)<u>s</u> | &nbsp;&nbsp;16 |
| [<u>Item 7A. Quantitative and Qualitative Disclosures about Market Risk</u>](#item_7a_quantitative_qualitative_disclos) | &nbsp;&nbsp;25 |
| [<u>Item 8. Financial Statements and Supplementary Data</u>](#item_8_financial_statements_supplementar) | &nbsp;&nbsp;26 |
| [<u>Item 9. Changes In and Disagreements With Accountants On Accounting and Financial Disclosure</u>](#item_9_changes_in_disagreements_with_acc) | &nbsp;&nbsp;70 |
| [<u>Item 9A. Controls and Procedures</u>](#item_9a_controls_procedures) | &nbsp;&nbsp;70 |
| [<u>Item 9B. Other Information</u>](#item_9b_other_information) | &nbsp;&nbsp;71 |
| [<u>Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections</u>](#item_9c) | &nbsp;&nbsp;71 |
|  <br>[**<u>PART III</u>**](#part_iii) |  |
| [<u>Item 10. Directors, Executive Officers and Corporate Governance</u>](#item_10_directors_executive_ficers_corpo) | &nbsp;&nbsp;72 |
| [<u>Item 11. Executive Compensation</u>](#item_11_executive_compensation) | &nbsp;&nbsp;72 |
| [<u>Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</u>](#item_12_security_ownership_certain_benef) | &nbsp;&nbsp;72 |
| [<u>Item 13. Certain Relationships and Related Transactions, and Director Independence</u>](#item_13_certain_relationships_related_tr) | &nbsp;&nbsp;72 |
| [<u>Item 14. Principal Accountant Fees and Services</u>](#item_14_principal_accountant_fees_servic) | &nbsp;&nbsp;72 |
| [**<u>Part IV</u>**](#part_iv) |  |
| [<u>Item 15. Exhibits and Financial Statement Schedules</u>](#item_15_exhibits_financial_statement_sch) | &nbsp;&nbsp;73 |
| [<u>Item 16. Form 10-K Summary</u>](#item_16_form_10k_summary) | &nbsp;&nbsp;75 |
| [<u>Signatures</u>](#signatures) | 76 |

---

i

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**FORWARD-LOOKING STATEMENTS** 

The Private Securities Litigation Reform Act of 1995 (the "Act") provides a safe harbor for forward-looking statements made by us or on our behalf. Management's Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Annual Report on Form 10-K, as well as the consolidated financial statements and notes hereto, may include, but are not limited to, statements about operating performance, trends and events that we expect or anticipate will occur in the future, statements about sales and production levels, restructurings, the impact from global pandemics, profitability and anticipated expenses, inflation, the global supply chain, future proceeds from the exercise of outstanding warrants, and cash outflows. All statements in this document other than statements of historical fact are statements that are, or could be, deemed "forward-looking statements" within the meaning of the Act and words such as "may," "will," "intend," "believe," "expect," "anticipate," "estimate," "project," "forecast" and other terms of similar meaning that indicate future events and trends are also generally intended to identify forward-looking statements. Forward-looking statements speak only as of the date on which such statements are made, are not guarantees of future performance or expectations, and involve risks and uncertainties. For us, these risks and uncertainties include, but are not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•economic downturns, cyclical demand for our products and insufficient demand for our products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•excess global capacity in the steel industry;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•fluctuations in the value of the U.S. dollar relative to other currencies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•increases in commodity prices or insufficient hedging against increases in commodity prices, reductions in electricity and natural gas supply or shortages of key production materials for us or our customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•limitations in availability of capital to fund our strategic plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•inability to maintain adequate liquidity in order to meet our operating cash flow requirements, repay maturing debt and meet other financial obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•inability to obtain necessary capital or financing on satisfactory terms in order to acquire capital expenditures that may be necessary to support our growth strategy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•inoperability of certain equipment on which we rely and/or our inability to execute our capital expenditure plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•liability of our subsidiaries for claims alleging personal injury from exposure to asbestos-containing components historically used in certain products of our subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in the existing regulatory environment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•inability to successfully restructure our operations and/or invest in operations that will yield the best long-term value to our shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•consequences of global pandemics and international conflicts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•work stoppage or another industrial action on the part of any of our unions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•inability to satisfy the continued listing requirements of the New York Stock Exchange or the NYSE American Exchange;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•potential attacks on information technology infrastructure and other cyber-based business disruptions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•failure to maintain an effective system of internal control; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•those discussed more fully elsewhere in this report, particularly in Item 1A, Risk Factors, in Part I of this Annual Report on Form 10-K.

We cannot guarantee any future results, levels of activity, performance or achievements. In addition, there may be events in the future that we are not able to predict accurately or control which may cause actual results to differ materially from expectations expressed or implied by forward-looking statements. Except as required by applicable law, we assume no obligation, and disclaim any obligation, to update forward-looking statements whether as a result of new information, events or otherwise.

------

**– PART I –** 

**ITEM 1. BUSINESS** 

**GENERAL DEVELOPMENT OF BUSINESS** 

Ampco-Pittsburgh Corporation (the "Corporation") was incorporated in Pennsylvania in 1929. The Corporation, individually or together with its consolidated subsidiaries, is also referred to herein as the "Registrant." The Corporation manufactures and sells highly engineered, high-performance specialty metal products and customized equipment utilized by industry throughout the world. It operates in two business segments – the Forged and Cast Engineered Products ("FCEP") segment and the Air and Liquid Processing ("ALP") segment. This segment presentation is consistent with how the Corporation's chief operating decision-maker evaluates financial performance and makes resource allocation and strategic decisions about the business.

While the Corporation operated at normal levels in 2022, it continues to be challenged by lingering global economic effects of a post-pandemic environment and repercussions from the Russia-Ukraine conflict, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Periodic disruptions to the global supply chain for the Corporation, its vendors and its customers,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Global inflationary pressures,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•European energy crisis, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Delays in receiving and shipping product due to lack of transportation.

The Corporation is actively monitoring, and will continue to actively monitor, the geopolitical and economic consequence of these events and the potential impact on its operations, financial condition, liquidity, suppliers, industry, and workforce.

**NARRATIVE DESCRIPTION OF BUSINESS** 

**Forged and Cast Engineered Products Segment** 

The FCEP segment produces forged hardened steel rolls, cast rolls and forged engineered products ("FEP"). Forged hardened steel rolls are used primarily in hot and cold rolling mills by producers of steel, aluminum and other metals. Cast rolls, which are produced in a variety of iron and steel qualities, are used mainly in hot strip mills, medium/heavy section mills, roughing mills, and plate mills. FEP principally are sold to customers in the steel distribution market, oil and gas industry and the aluminum and plastic extrusion industries. The segment has operations in the United States, England, Sweden, Slovenia, and an equity interest in three joint venture companies in China. Collectively, the segment primarily competes with European, Asian and North and South American companies in both domestic and foreign markets and distributes a significant portion of its products through sales offices located throughout the world.

Union Electric Steel Corporation ("UES") produces forged hardened steel rolls and FEP. It is headquartered in Carnegie, Pennsylvania, with three manufacturing facilities in Pennsylvania and one in Indiana. The following entities are direct or indirect operating subsidiaries of UES:

Union Electric Steel UK Limited produces cast rolls in a variety of iron and steel qualities for hot strip mills, medium/heavy section mills and plate mills. It is located in Gateshead, England.

Åkers Sweden AB produces cast rolls in a variety of iron and steel qualities for hot strip mills, medium/heavy section mills, roughing mills, and plate mills. It is located in Åkers Styckebruk, Sweden.

Åkers Valji Ravne d.o.o. produces forged rolls for cluster mills and Z-Hi mills, work rolls for narrow and wide strip and aluminum mills, back-up rolls for narrow strip mills, and leveling rolls and shafts. It is located in Ravne, Slovenia.

Alloys Unlimited Processing, LLC is a distributor of tool steels and alloys and carbon round bar. It is located in Austintown, Ohio.

The segment's three joint venture companies in China include:

Shanxi Åkers TISCO Roll Co., Ltd. is a joint venture between Taiyuan Iron and Steel Co. Ltd. and Åkers AB, a non-operating subsidiary of UES, that produces cast rolls for hot strip mills, steckel mills and medium plate mills. It is located in Taiyuan, Shanxi Province, China. Åkers AB holds a 59.88% interest in the joint venture.

Anhui Baochang Roll Co., Ltd., previously known as Magong Gongchang United Rollers Co., Ltd., is a joint venture among UES, Magang (Group) Holding Co., Ltd. and Jiangsu Gong-Chang Roll Co., Ltd. that produces large forged backup rolls for hot and cold strip mills. It is located in Maanshan, Anhui Province, China. Union Electric Steel (Hong Kong) Limited, a non-operating subsidiary of UES, holds a 33% interest in the joint venture.

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Jiangsu Gong-Chang Roll Co., Ltd. is a joint venture that produces cast rolls for hot strip mills, medium/heavy section mills and plate mills. It is located in Xinjian Town Yixing City, Jiangsu Province, China. Union Electric Steel UK Limited holds a 24.03% interest in the joint venture.

**Air and Liquid Processing Segment** 

The ALP segment includes Aerofin, Buffalo Air Handling and Buffalo Pumps, all divisions of Air & Liquid Systems Corporation ("Air & Liquid"), a wholly owned subsidiary of the Corporation. The segment has operations in Virginia and New York with headquarters in Carnegie, Pennsylvania. The segment distributes a significant portion of its products through a common independent group of sales offices located throughout the United States and has several major competitors.

Aerofin Division of Air & Liquid Systems Corporation produces custom-engineered finned tube heat exchange coils and related heat transfer products for a variety of industries including OEM/commercial, nuclear power generation and industrial manufacturing. It is located in Lynchburg, Virginia.

Buffalo Air Handling Division of Air & Liquid Systems Corporation produces large custom-designed air handling systems for institutional (e.g., hospital, university), pharmaceutical and general industrial building markets. It is located in Amherst, Virginia.

Buffalo Pumps Division of Air & Liquid Systems Corporation manufactures centrifugal pumps for the fossil fueled power generation, marine defense and industrial refrigeration industries. It is located in North Tonawanda, New York.

**Products**

In both segments, the products are dependent on engineering, principally custom designed, and are sold to sophisticated commercial and industrial users located throughout the world. Products are delivered directly to the customer via third-party carriers or customer-arranged transportation. For the FCEP segment, one customer accounted for 10% of its net sales in 2022, the loss of which could have a material adverse effect on the segment, and no customers exceeded 10% of its net sales in 2021. For the ALP segment, no customers exceeded 10% of its net sales in 2022 or 2021. For additional information on the products produced and financial information about each segment, see [<u>Note 17</u>](#note_17), Revenue, and [<u>Note 24</u>](#note_24), Business Segments, to the Consolidated Financial Statements.

**Raw Materials** 

Raw materials used in both segments are generally available from many sources, and neither segment is dependent upon any single supplier for any raw material. Substantial volumes of raw materials used by each segment are subject to significant variations in price. The Corporation's subsidiaries generally do not purchase or commit for the purchase of a major portion of raw materials significantly in advance of the time they require such materials but periodically make forward commitments for natural gas, electricity and certain commodities (copper and aluminum). See [<u>Note 15</u>](#note_15), Derivative Instruments, to the Consolidated Financial Statements.

**Patents and Trademarks** 

While the Corporation and its subsidiaries hold certain patents, trademarks and licenses, in the opinion of the Corporation, they are not material to either segment.

**Backlog**

The backlog of orders at December 31, 2022 was approximately $369.0 million compared to a backlog of $292.6 million at year-end 2021. Both segments contributed to the improvement in backlog. Backlog for the FCEP segment increased by approximately $28.8 million year over year due to the net of improved demand and sale price increases for mill rolls offset by lower FEP backlog and foreign exchange rates used to translate the backlog of the Corporation's foreign subsidiaries into the U.S. dollar. Backlog for the ALP segment increased by approximately $47.6 million and benefited from improved order intake for each of its product lines. Approximately 6% of the backlog is expected to be released after 2023.

**Competition** 

The Corporation faces considerable competition from a large number of companies in both segments. The Corporation believes, however, that its subsidiaries are significant participants in each of the niche markets that they serve. Competition in both segments is based on quality, service, price, and delivery.

**Environmental Protection Compliance Costs** 

Expenditures for environmental control matters were not material to either segment in 2022 and are not expected to be material in 2023.

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**Employees and Human Capital Management**

Employees

On December 31, 2022, the Corporation and its subsidiaries had 1,565 active employees worldwide (substantially all full-time), of which approximately 54% were employed in the United States. Approximately 34% of the Corporation's employees are covered by collective bargaining agreements or agreements with works councils.

Oversight

The Compensation Committee of the Board of Directors maintains oversight of the Corporation's human capital management strategies that it may deem important to the long-term sustainability of the Corporation.

Key Areas of Focus for the Corporation

Health and Safety – The Corporation's health and safety program is designed around the regulations associated with the specific hazards and unique working environments of the Corporation's manufacturing and headquarter operations. The Corporation requires all of its locations to perform regular safety audits to ensure compliance with the safety program. Leading indicators, such as reporting and training of all near-miss events, are used to identify risks for potential future incidents. Lagging indicators, such as OSHA recordable rates and lost-time incidence rates, are used to measure achievement of safety metrics.

Diversity and Inclusion – The Corporation tracks various metrics such as turnover, absenteeism and diversity. The Corporation has developed strategies to ensure that employees of diverse backgrounds and perspectives enjoy a culture of mutual respect, inclusiveness and teamwork in an environment which values diversity.

**AVAILABLE INFORMATION** 

The Corporation files annual, quarterly and current reports; amendments to those reports; proxy statements; and other information with the Securities and Exchange Commission ("SEC"). You may access and read the Corporation's filings without charge through the SEC's website at www.sec.gov. The Corporation's internet address is www.ampcopittsburgh.com. The Corporation makes available, free of charge on its website, access to these reports as soon as reasonably practicable after such material is filed with, or furnished to, the SEC. The information on the Corporation's website is not part of this Annual Report on Form 10-K.

**EXECUTIVE OFFICERS** 

The name, age, position with the Corporation, and business experience for at least the past five years of the Executive Officers<sup>(1)</sup> of the Corporation are as follows:

**J. Brett McBrayer** (age 57). Mr. McBrayer has served as the Corporation's Chief Executive Officer since July 2018. He previously served as President and Chief Executive Officer at Airtex Products and ASC Industries, a global manufacturer and distributor of automotive after-market and OEM fuel and water pumps from 2012 to 2017. Airtex Products and ASC Industries, together with its parent company, UCI International LLC, and affiliated companies, filed for bankruptcy protection in June 2016, and successfully emerged in December 2016. Mr. McBrayer also served as Vice President and General Manager of the Alcan Cable business at Rio Tinto Alcan, as Vice President and General Manager of the Specialty Metals Division at Precision Cast Parts Corporation, and held positions of various responsibility and leadership during his 20 years with Alcoa, Inc. Mr. McBrayer received a Bachelor of Science in Industrial Engineering from the University of Tennessee and a Master of Arts in Applied Behavioral Science from Bastyr University.

**Michael G. McAuley** (age 59). Mr. McAuley has served as Senior Vice President, Chief Financial Officer and Treasurer of the Corporation since March 2018 and as Vice President, Chief Financial Officer and Treasurer since April 2016. Previously, he served as Senior Vice President and Chief Financial Officer of RTI International Metals, Inc., a producer of titanium mill products and fabricated metal components from July 2014 to October 2015.

**Samuel C. Lyon** (age 54). Mr. Lyon has served as President of Union Electric Steel Corporation since February 2019. He previously served as Vice President and Group President of Performance Engineered Products at Carpenter Technology Corporation, a developer, manufacturer and distributor of stainless steels and corrosion-resistant alloys from July 2017 to January 2019. Prior to that, he served as Vice President and General Manager of Dynamet Incorporated, the titanium business unit of Carpenter Technology Corporation from October 2016 to June 2017, and as Chief Operating Officer of UCI-Pumps business of UCI-Fram, an OEM and after-market automotive parts supplier from March 2013 to September 2016.

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**David G. Anderson** (age 55). Mr. Anderson has been employed by the Corporation since 2010 and has served as President of Air & Liquid Systems Corporation since January 2022. He previously served as Vice President of Finance for Union Electric Steel Corporation from October 2018 to December 2021, and as Vice President of Air & Liquid Systems Corporation from May 2016 to October 2018.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Officers serve at the discretion of the Board of Directors of the Corporation and none of the listed individuals serves as a director of another public company.

**ITEM 1A. RISK FACTORS** 

Our business, financial condition, results of operations, liquidity, and the value of any investment in our securities are subject to a number of risks. The risks and uncertainties described below are those that we have identified as material, but are not the only risks and uncertainties we face. Additional risks and uncertainties not currently known to us or that we currently believe are not material also may impair our business, financial condition, results of operations, liquidity, and the value of any investment in our securities.

**RISKS RELATED TO OUR BUSINESS AND INDUSTRY**

**Cyclical demand for products and economic downturns could reduce the demand for, and sales of, our products, which could adversely affect our margins and profitability.** 

A significant portion of the FCEP segment's sales consists of mill rolls to customers in the global steel and aluminum industry that can be periodically impacted by economic or cyclical downturns. Such downturns, the timing and length of which are difficult to predict, may reduce the demand for, and sales of, our forged and cast rolls both in the United States and the rest of the world. Lower demand for rolls may also adversely impact profitability as other competing roll producers lower selling prices in the marketplace in order to fill their manufacturing capacity. Cancellation of orders or deferral of delivery of rolls may occur and produce an adverse impact on our financial results. In addition, sales of FEP, specifically open-die forged products for the oil and gas industry and steel distribution markets, are impacted by fluctuations in global energy prices, which also could adversely affect our margins and profitability.

**Excess global capacity in the steel industry could lower prices for our products, which could adversely affect our sales, margins and profitability, as well as the collectability of our receivables and the salability of our in-process inventory.** 

The global steel manufacturing capacity continues to exceed global consumption of steel products. Such excess capacity often results in manufacturers in certain countries exporting steel at prices significantly below their home market prices (often due to local government assistance or subsidies), which leads to global market destabilization and reduced sales and profitability of some of our customers which, in turn, affects our sales and profit margins, as well as the collectability of our receivables and the salability of our in-process inventory. Excess capacity in the global roll industry and cyclicality in end-market demand also pose risks of potential impairment of our long-lived assets, which could be material to our results of operations and the carrying value of our assets.

**A reduction in the level of our export sales, as well as other economic factors in foreign countries, could have an adverse impact on our financial results.** 

Exports are a significant portion of our sales. Historically, changes in foreign exchange rates, particularly in respect of the U.S. dollar, British pound, Swedish krona, and euro, have impacted the export of our products and may do so again in the future. Other factors that may adversely impact our export sales and our operating results include political and economic instability, export controls, changes in tax laws and tariffs, and new indigenous producers in overseas markets. A reduction in the level of our export sales may have an adverse impact on our financial results. In addition, changes in foreign currency exchange rates may provide foreign roll suppliers with advantages based on those lower foreign currency exchange rates and, therefore, permit them to compete in our home markets.

**Fluctuation in the value of the U.S. dollar relative to other currencies could adversely affect our business, results of operations and financial condition.** 

Certain of our subsidiaries operate in foreign jurisdictions and, accordingly, earn revenues, pay expenses, own assets, and incur liabilities in countries using currencies other than the U.S. dollar. Since our consolidated financial statements are presented in U.S. dollars, we must translate revenues and expenses into U.S. dollars at the average exchange rate during each reporting period and assets and liabilities into U.S. dollars at the exchange rate in effect at the end of each reporting period. Therefore, increases or decreases in the value of the U.S. dollar against other major currencies will affect the translated value for revenue, expenses and balance sheet items denominated in foreign currencies and could materially affect our financial results expressed in U.S. dollars.

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**Increases in energy and commodity prices, reductions in electricity and natural gas supply or shortage of key production materials could adversely impact our production, which could result in lower profitability or higher losses.** 

Our subsidiaries use certain commodities in the manufacture of their products. These include steel scrap, ferroalloys and energy. Any unexpected, sudden or prolonged price increase may cause a reduction in our profit margins or losses where beneficial fixed-priced contracts do not exist, unfavorable fixed-price contracts cannot be modified or increases cannot be obtained in our selling prices. In addition, there could be a time lag between when we incur such price increases and when we are able to recover such increases in our selling prices. Global increases in transportation costs and more limited availability of freight carriers may impact timely delivery of supplies to our subsidiaries and product to our customers, which may be accentuated during pandemics, and may negatively impact our sales, production and profitability. There also may be curtailment in electricity or natural gas supply or availability of key production materials, which may be accentuated during global conflict: all of which could adversely impact our production. Increases in energy and commodity prices, and/or reductions in electricity and natural gas supply could adversely impact our production or result in lower profitability or higher losses or impairment of our long-lived assets. Shortage of key production materials, while driving up costs, may be of such severity as to disrupt our production, all of which may impact our sales and profitability. Geopolitical factors or wars could exacerbate these risks. In particular, the Russia-Ukraine conflict may intensify the inflationary effect for the cost of natural gas, electricity, raw materials and other production components which are difficult to predict given the fluidity of the military conflict, the novelty of Western sanctions against Russia and possibility of yet harsher ones.

**We could face limitations in availability of capital to fund our strategic plans. Additionally, deterioration in our credit profile or increases in interest rates could increase our costs of borrowing and further limit our access to capital markets and commercial credit.**

We are parties to a senior secured asset-based revolving credit facility with a consortium of banks. The credit facility is collateralized by a first priority perfected security interest in substantially all of our assets. The credit facility provides for borrowings not to exceed $100 million and an allowance of $20 million for new capital equipment financing (which was accessed in September 2022) but otherwise restricts us from incurring additional indebtedness outside of the agreement, unless approved by the banks. The credit facility is subject to various affirmative and negative covenants and contains various sub-limits, including those based on the type of collateral and borrowings by geographic region. If the financial covenants become difficult to meet or if our borrowing needs increase beyond the prescribed limits, our financial position, results of operations and liquidity may be materially adversely affected. In addition, changes in our credit profile could cause less favorable commercial terms for the procurement of materials required to manufacture our products, which also could have a negative impact on our financial position, results of operations and liquidity. Further, our access to public and private debt markets is limited based on our size, credit profile and not being a well-known seasoned issuer, which may result in limitations in availability of capital to fund our strategic plans.

**We have entered into sale-leaseback transactions, which create the risk of loss if we default.**

UES and Air & Liquid have entered into sale and leaseback financing transactions with Store Capital Acquisitions, LLC ("STORE") relating to certain properties utilized by segments of the Corporation. Pursuant to such sale and leaseback, UES has entered into a lease with STORE, through which it will sublease properties to Air & Liquid. Such lease entered into by UES contains certain representations, warranties, covenants, obligations, conditions, indemnification provisions and termination provisions customary for that type of agreement. If the Corporation defaults on the terms of such transaction, the Corporation could lose the properties.

**We need to maintain adequate liquidity to meet our operating cash flow requirements, debt service costs and other financial obligations. If we fail to comply with the covenants contained in our revolving credit facility or our equipment financing facilities, it may adversely affect our liquidity, results of operations and financial condition.**

Our liquidity is a function of our cash on-hand, our ability to successfully generate cash flows from a combination of efficient operations and continuing operating improvements, availability from our revolving credit facility, access to capital markets, and funding from other third parties. We believe our liquidity (including operating and other cash flows that we expect to generate and revolving credit availability) should be sufficient to meet our operating requirements as they occur; however, our ability to maintain sufficient liquidity going forward is subject to the general liquidity of and ongoing changes in the credit markets as well as general economic, financial, competitive, legislative, regulatory, and other market factors that are beyond our control. If we are not able to maintain adequate liquidity, we may not be able to meet our operating cash flow requirements; debt service costs; future required contributions to our employee benefit plans (which are expected to increase in 2024/2025 primarily due to lower than expected pension asset performance in 2022); and other financial obligations.

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Our revolving credit facility is subject to various affirmative and negative covenants and our equipment financing facilities include various affirmative covenants. Failure to comply with material provisions or covenants in these facilities could have a material adverse effect on our liquidity, results of operations and financial condition. We may seek to renegotiate or replace a facility, or may determine not to replace a facility at all and may instead pursue other forms of liquidity. Any new credit agreement or these other forms of liquidity may result in higher borrowing costs and contain non-investment grade covenants that are less advantageous to us than our existing revolving credit and equipment financing facilities.

**Our growth strategy has required substantial capital expenditures, which have been funded by the incurrence of additional debt. If we are unable to repay debt service costs, we may be unable to obtain alternative financing on satisfactory terms and our liquidity, results of operations and financial conditions may be adversely affected.** 

To support our growth strategy, we have made and expect to continue to make substantial capital expenditures. We expect to continue to fund these capital expenditures with our equipment financing facilities. The incurrence of additional indebtedness would require that a portion of our cash flows from operations be used for the payment of interest and principal, thereby reducing our ability to use our cash flows from operations to fund working capital, other capital expenditures and acquisitions. Furthermore, raising equity capital generally would dilute existing shareholders. If additional capital is needed, we may not be able to obtain debt or equity financing on terms acceptable to us, if at all.

**Dependence on certain equipment may cause an interruption in our production if such equipment is out of operation for an extended period of time, which could result in lower sales and profitability.** 

Our principal business relies on certain unique equipment such as an electric arc furnace and a spin cast work roll machine. Although a comprehensive critical spare inventory of key components for this equipment is maintained, if any such unique equipment is out of operation for an extended period of time, it may result in a significant reduction in our sales and earnings.

**The ultimate liability of our subsidiaries for claims alleging personal injury from exposure to asbestos-containing components historically used in certain products of our subsidiaries could have a material adverse effect on our financial condition, results of operations or liquidity in the future.** 

Certain of our subsidiaries and, in some cases, we, are defendants in numerous claims alleging personal injury from exposure to asbestos-containing components historically used in certain products of these subsidiaries. Through the current year end, our insurance has covered a majority of our settlement and defense costs. We believe that the estimated costs, net of anticipated insurance recoveries, of our pending and future asbestos legal proceedings should not have a material adverse effect on our financial condition or liquidity. However, there can be no assurance that our subsidiaries or we will not be subject to significant additional claims in the future or that our subsidiaries' ultimate liability with respect to asbestos claims will not present significantly greater and longer lasting financial exposure than provided in our consolidated financial statements. The ultimate net liability with respect to such pending and any unasserted claims is subject to various uncertainties, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the number and nature of claims in the future;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the costs of defending and settling these claims;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•insolvencies among our insurance carriers and the risk of future insolvencies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the possibility that adverse jury verdicts could require damage payments in amounts greater than the amounts for which we have historically settled claims;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•possible changes in the litigation environment or federal and state law governing the compensation of asbestos claimants; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the risk that the bankruptcies of other asbestos defendants may increase our costs.

Because of the uncertainties related to such claims, it is possible that our ultimate liability could have a material adverse effect on our financial condition, results of operations or liquidity in the future.

**A change in the existing regulatory environment could negatively affect our operations and financial performance.** 

We are subject to a wide variety of complex domestic and foreign laws, rules and regulations, including trade policies and tax regimes. We are affected by new laws and regulations and changes to existing laws and regulations, including interpretations by the courts and regulators, whether prompted by changes in government administrations or otherwise. These laws, regulations and policies, and changes thereto, may result in restrictions or limitations to our current operational practices and processes and product/service offerings which could negatively impact our current cost structure, revenue streams, future tax obligations, the value of our deferred income tax assets, cash flows, and overall financial position.

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In addition, our tax filings are subject to audits by tax authorities in the various jurisdictions in which we do business. These audits may result in assessments of additional taxes that are subsequently resolved with the taxing authorities or through the courts. Currently, we believe there are no outstanding assessments whose resolution would result in a material adverse financial result. However, we cannot offer assurances that unasserted or potential future assessments would not have a material adverse effect on our financial condition or results of operations.

In 2018, the United States imposed tariffs of 25% on primary steel imports and 10% on primary aluminum imports into the United States. As consumers of steel and aluminum in some of our products, our cost base is exposed to the impact of this action, or similar actions, which could reduce our margins, and we could potentially lose market share to foreign competitors not subject to similar tariff increases. Our financial condition, results of operations and liquidity may be affected by these tariffs, or similar actions. Moreover, these new tariffs, or other changes in U.S. trade policy, have resulted in, and may continue to trigger, retaliatory actions by affected countries which could adversely impact demand for our products, as well as impact our costs, customers, suppliers, and/or the U.S. economy or certain sectors thereof and, thus, may adversely impact our business, operations and financial performance.

**Pandemics may cause disruptions to our business and the industries in which we operate.**

Pandemics may increase economic and demand uncertainty and could cause a sustained global recession. We may experience episodic disruptions to our operations or to the operations of our customers and suppliers; global supply chain issues causing global inflationary pressures; customer-requested delays of deliveries or cancellation of orders; lower order intake resulting from customers postponing projects; the inability to obtain raw materials and supplies critical to the manufacturing process; delays in receiving and shipping product due to the lack of transportation; higher cost of production and transportation; long-term disruptions to our operations resulting from changes in government policy or guidance; quarantines of employees, customers and suppliers in areas affected by a pandemic; closures of businesses or manufacturing facilities that are critical to our business or our supply chains; and higher write-offs of accounts receivables and impairment charges on our asset values, including property, plant and equipment and intangible assets, which, individually or in the aggregate, may impact, our financial condition, results of operations and liquidity. Further, local governmental measures may be implemented to control the spread of the virus, including restrictions on manufacturing and the movement of employees in many regions and countries, and may be significant.

A pandemic may adversely affect our liquidity and our ability to access the capital markets. Additionally, government stimulus programs available to us, our customers or our suppliers, if any, may prove to be insufficient or ineffective. Furthermore, in the event that the impact from a pandemic causes us to be unable to maintain a certain level of excess availability under our revolving credit facility, our availability of funds may become limited, or we may be required to renegotiate the facility on less favorable terms. If we are unable to access additional credit at the levels we require, or the cost of credit is greater than expected, it could materially adversely affect our financial condition, results of operations and liquidity.

We have significant international operations. A pandemic could negatively affect our workforce, both domestically and abroad, requiring some or all of our employees to work from home on a longer-term or permanent basis, thereby requiring new processes, procedures and controls to respond to changes in our business environment. We may be susceptible to increased litigation related to, among other things, the financial impacts of the pandemic on our business, our ability to meet contractual obligations due to the pandemic, employment practices or policies adopted during the health crisis, or litigation related to individuals contracting any disease as a result of alleged exposures on our premises.

The impact of a pandemic also may have the effect of exacerbating many of the other risks described herein.

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**Uncertainty related to environmental regulation and industry standards, as well as the physical risks of climate change, could impact our results of operations and financial position.**

Increased public awareness and concern regarding environmental risks, including global climate change, may result in more international, regional and/or federal requirements or industry standards to reduce or mitigate global warming and other environmental risks. New climate change laws and regulations could require us to change our manufacturing processes or obtain substitute materials that may cost more or be less available for our manufacturing operations. Various jurisdictions in which we do business have implemented, or in the future could implement or amend, restrictions on emissions of carbon dioxide or other greenhouse gases, limitations or restrictions on water use, changes from traditional fossil fuel sources to renewables, regulations on energy management and waste management, and other climate change-based rules and regulations, which may increase our costs and adversely affect our operating results. In addition, the physical risks of climate change may impact the availability and cost of materials, sources and supply of energy, product demand and manufacturing and could increase our insurance and other operating costs. The expected future increased worldwide regulatory activity relating to climate change could expand the nature, scope and complexity of matters that we are required to control, assess and report. If environmental laws or regulations or industry standards are either changed or adopted and impose significant operational restrictions and compliance requirements upon us, our suppliers, our customers, or our products, or if our operations are disrupted due to the physical impacts of climate change on us, our suppliers, our customers or our business, our results of operations and financial condition could be adversely impacted.

**A work stoppage or another industrial action on the part of any of our unions could be disruptive to our operations.** 

Our subsidiaries have several key operations which are subject to multi-year collective bargaining agreements or agreements with works councils with their hourly work forces. While we believe we have good relations with our unions, there is the risk of industrial action or work stoppage at the expiration of an agreement if contract negotiations fail, which may disrupt our manufacturing processes and impact our results of operations.

**The Corporation may not realize the expected benefits from any restructuring and improvement efforts that we have taken or may take in the future.**

We periodically evaluate our segments and we have and continue to undertake restructuring and realignment initiatives to reduce our overall cost basis and improve efficiency. There can be no assurance that we will fully realize the benefits of such efforts as anticipated, and we may incur additional and/or unexpected costs to realize them. These actions could yield other unintended consequences, such as distraction of management and employees, business disruption, reduced employee morale and productivity, and unexpected employee attrition, including the inability to attract or retain key personnel. If we fail to achieve the expected benefits of any restructuring or realignment initiatives and improvement efforts, or if other unforeseen events occur in conjunction with such efforts, our business, results of operations and financial condition could be negatively impacted.

**RISKS RELATED TO OWNERSHIP OF OUR SECURITIES**

**If we fail to maintain an effective system of internal control, we may not be able to accurately determine our financial results or prevent fraud. As a result, our shareholders could lose confidence in our financial results, which could harm the business and the value of our securities.**

Effective internal control is necessary to provide reliable financial reports and effectively prevent fraud. Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate and report on our internal control over financial reporting. Our internal control over financial reporting is not subject to attestation by our independent registered public accounting firm pursuant to the exemption provided to issuers that are not "large accelerated filers" or "accelerated filers" under the Dodd-Frank Act of 2010. We cannot be certain that we will be successful in maintaining adequate internal control over our financial reporting and financial processes in the future. We may in the future discover areas of our internal control that need improvement. Furthermore, to the extent our business grows, our internal control may become more complex, and we would require significantly more resources to ensure our internal control remains effective.

We assessed the effectiveness of internal control over financial reporting as of December 31, 2022. In making this assessment, we used the criteria set forth in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on those criteria and our assessment, we concluded that our internal control over financial reporting was not effective as of December 31, 2022, because of the material weaknesses as described below. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements, including footnotes to the annual or interim financial statements, will not be prevented or detected on a timely basis.

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As of December 31, 2022, we had material weaknesses related to (i) the accounting for claims asserted alleging personal injury from exposure to asbestos-containing components historically used in some products manufactured by predecessors of Air & Liquid ("Asbestos Liability") and (ii) management review control activities related to the tax accounting of a non-routine transaction. The material weakness related to the Asbestos Liability is a result of the aggregation of the following control deficiencies: insufficient design and business process controls surrounding a new asbestos claims management database, insufficient testing of data migration from the previous asbestos claims management database to the new asbestos claims management database, and inadequate information technology ("IT") general controls which ensure the integrity of the data and processes that the new asbestos claims management system supports. The material weakness related to management review control activities of the non-routine transaction is a result of management review control activities not operating at a sufficient level of precision to detect errors related to the income tax footnote disclosures of the non-routine transaction. See Part II, Item 9A, Controls and Procedures, for further discussion.

Our remediation efforts have and will continue to require significant resources and attention. If we are unable to remediate these material weaknesses or other identified deficiencies in our internal control over financial reporting, or if we identify additional material weaknesses in our internal control over financial reporting, we will be unable to assert in future reports that our disclosure controls and procedures and our internal control over financial reporting are effective. This could cause investors, counterparties and customers to lose confidence in the accuracy and completeness of our financial statements and reports and have a material adverse effect on our liquidity, access to capital markets and perceptions of our creditworthiness, and/or a decline in the market price of our common stock. Additionally, the existence of any material weakness could require us to devote significant time and incur significant expense to identify and remediate any such material weaknesses, and we may not be able to remediate any such material weaknesses in a timely manner. We also may become subject to investigations by the New York Stock Exchange, the SEC or other regulatory authorities, which could require additional financial and management resources. These events could have a material adverse effect on our business, financial condition and results of operations.

**Actions of activist shareholders with respect to us or our securities could be disruptive and potentially costly and the possibility that activist shareholders may contest, or seek changes that conflict with, our strategic direction could cause uncertainty about the strategic direction of our business.**

Activist shareholders may from time-to-time attempt to effect changes in our strategic direction and, in furtherance thereof, may seek changes in how we are governed. While our Board of Directors and management team strive to maintain constructive, ongoing communications with all of our shareholders, including activist shareholders, and welcome their views and opinions with the goal of working together constructively to enhance value for all shareholders, activist campaigns that contest, or conflict with, our strategic direction could have an adverse effect on us because: (i) responding to actions by activist shareholders can disrupt our operations, be costly and time-consuming and divert the attention of our Board of Directors and senior management from the pursuit of business strategies, which could adversely affect our results of operations and financial condition; (ii) perceived uncertainties as to our future direction may lead to the perception of a change in the direction of the business, instability or lack of continuity which may be exploited by our competitors, cause concern to our current or potential customers, result in the loss of potential business opportunities and make it more difficult to attract and retain qualified personnel and business partners; and (iii) these types of actions could cause significant fluctuations in our stock price due to factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

**We may not be able to satisfy the continued listing requirements of the New York Stock Exchange and the NYSE American Exchange for our common stock and Series A warrants, respectively.** 

Our common stock is currently listed on the New York Stock Exchange, and our Series A warrants are listed on the NYSE American Exchange, with each imposing objective and subjective requirements for continued listing.

Continued listing criteria of the New York Stock Exchange include maintaining prescribed levels of financial condition, market capitalization and shareholders' equity. Specifically, the New York Stock Exchange requires a company with common equity listed on its exchange to maintain average global market capitalization over a consecutive 30 trading-day period of at least $50 million or maintain shareholders' equity of at least $50 million and maintain a share price of at least $1.00. Our common stock's average-global market capitalization over the 30 trading-day period ended December 31, 2022 was $54.6 million, and our total Ampco-Pittsburgh shareholders' equity was $104.3 million as of December 31, 2022. Should we receive a notice of non-compliance, the New York Stock Exchange may allow up to an 18-month cure period if we present a plan to become compliant with adequate strategic actions and progress reporting satisfactory to the New York Stock Exchange. If the New York Stock Exchange determines that our common stock fails to satisfy the requirements for continued listing, or we continue to fail to meet listing criteria, our common stock could be de-listed from the New York Stock Exchange, which could impact potential liquidity for our shareholders.

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Continued listing criteria of the NYSE American Exchange include maintaining prescribed levels of financial condition, market capitalization and shareholders' equity. Among other requirements, there must be an aggregate of at least 50,000 Series A warrants. Satisfaction of the NYSE American Exchange's listing requirements therefore depends upon the extent to which warrant holders elect to exercise their Series A warrants. We cannot provide assurance that we will continue to meet these, or other, listing standards of the NYSE American Exchange with respect to the Series A warrants. If we fail to meet the listing criteria, our warrants could be de-listed from the NYSE American Exchange, which could impact potential liquidity for our shareholders.

**Holders of Series A warrants will have no rights as holders of our common stock until they exercise their Series A warrants and acquire our common stock.**

Until holders of our Series A warrants acquire shares of our common stock upon exercise of such Series A warrants, they will have no rights with respect to the shares of our common stock underlying such Series A warrants. Upon exercise of the Series A warrants, the holders thereof will be entitled to exercise the rights of holders of our common stock only as to matters for which the record date occurs after the warrant exercise date.

**The market price of our common stock may not exceed the exercise price of the Series A warrants at such time as the holder desires to exercise such Series A warrants and, accordingly, the Series A warrants may have no value.**

The Series A warrants are exercisable through August 1, 2025. The market price of our common stock may not exceed the exercise price of the Series A warrants at such times prior to their date of expiration that the holder desires to exercise such warrants. Any Series A warrants not exercised by their date of expiration will expire without residual value to the holders. Additionally, the price of the Series A warrants may fluctuate, and liquidity may be limited. Holders of Series A warrants may be unable to resell their Series A warrants at a favorable price, or at all.

**Because the Series A warrants are executory contracts, they may have no value in a bankruptcy or reorganization proceeding.**

In the event a bankruptcy or reorganization proceeding is commenced by or against us, a bankruptcy court may hold that any unexercised Series A warrants are executory contracts subject to rejection by us with the approval of a bankruptcy court. As a result, even if we have sufficient funds, holders may not be entitled to receive any consideration for their Series A warrants or may receive an amount less than they would be entitled to if they had exercised their Series A warrants prior to the commencement of any such bankruptcy or reorganization proceeding.

**GENERAL RISK FACTORS**

**Potential attacks on information technology infrastructure and other cyber-based business disruptions could have a material adverse effect on our financial condition, results of operations and liquidity.**

We depend on integrated IT systems to conduct our business. IT systems failures, including risks associated with upgrading our systems or in successfully integrating IT and other systems to common platforms, network disruptions and breaches of data security could disrupt our operations by impeding our processing of transactions, our ability to protect customer or company information and our financial reporting. Our computer systems, including our back-up systems, could be damaged or interrupted by power outages; computer and telecommunications failures; computer viruses; internal or external security breaches; events such as fires, earthquakes, floods, tornadoes, and hurricanes; and errors by our employees. Cyber-based risks, in particular, are evolving and include potential attacks to our IT infrastructure and to the IT infrastructure of third parties in attempts to gain unauthorized access to our confidential or other proprietary information or information relating to our employees, customers and other third parties or to seek ransom. Although we have taken steps to address these concerns, there can be no assurance that a system failure or data security breach will not have a material adverse effect on our financial condition, results of operations and liquidity.

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**Our By-laws designate the state and federal courts sitting in the judicial district of the Commonwealth of Pennsylvania as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our shareholders and the federal courts as the sole and exclusive forum for claims arising under the Securities Act of 1933, as amended, which could discourage lawsuits against us and our directors and officers but may be found to be inapplicable or unenforceable.**

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**ITEM 1B. UNRESOLVED STAFF COMMENTS** 

The Corporation has no unresolved staff comments.

**ITEM 2. PROPERTIES** 

The location and general character of the principal locations in each segment are included in the below summary. All domestic locations are leased and foreign locations are owned, unless otherwise noted. In addition, the Corporation has sales offices located in several foreign countries. See [<u>Note 4</u>](#note_4), Property, Plant and Equipment, and [<u>Note 9</u>](#note_9), Debt, to the Consolidated Financial Statements for disclosure of properties held as collateral.

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| | | | |
|:---|:---|:---|:---|
| **Company and Location** | **Principal Use** | **Approximate**<br>**Square Footage** | **Type of Construction** |
| **FORGED AND CAST ENGINEERED PRODUCTS SEGMENT** | **FORGED AND CAST ENGINEERED PRODUCTS SEGMENT** | **FORGED AND CAST ENGINEERED PRODUCTS SEGMENT** | **FORGED AND CAST ENGINEERED PRODUCTS SEGMENT** |
| Union Electric Steel Corporation |  |  |  |
| Route 18<br>Burgettstown, PA 15021\*<br>| Manufacturing facilities | 296,800 on 55 acres | Metal and steel |
| 726 Bell Avenue<br>Carnegie, PA 15106\*<br>| Manufacturing facilities and offices | 165,900 on 8.7 acres | Metal and steel |
| U.S. Highway 30<br>Valparaiso, IN 46383\*<br>| Manufacturing facilities | 88,000 on 20 acres | Metal and steel |
| 1712 Greengarden Road<br>Erie, PA 16501\*<br>| Manufacturing facilities | 40,000 on 1 acre | Metal and steel |
| Union Electric Steel UK Limited |  |  |  |
| Coulthards Lane<br>Gateshead, England<br>| Manufacturing facilities and offices | 274,000 on 10 acres | Steel framed, metal and brick |
| Åkers Sweden AB |  |  |  |
| Bruksallén 12SE-647 51<br>Åkers Styckebruk, Sweden<br>| Manufacturing facilities and offices | 394,000 on 162 acres | Steel framed, metal and brick |
| Åkers Valji Ravne d.o.o. |  |  |  |
| Koroška c. 14<br>SI-2390 Ravne na Koroškem, Slovenia<br>| Manufacturing facilities and offices | 106,000 on 2.1 acres | Brick |
| Shanxi Åkers TISCO Roll Co., Ltd. |  |  |  |
| No. 2 Jian Cao Ping<br>Taiyuan, Shanxi, China<br>| Manufacturing facilities and offices | 338,000 on 14.6 acres | Metal, steel and brick |
| Alloys Unlimited and Processing, LLC |  |  |  |
| 3760 Oakwood Avenue<br>Austintown, OH 44515\*<br>| Manufacturing facilities and offices | 69,800 on 1.5 acres | Steel framed and cement block |

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| | | | |
|:---|:---|:---|:---|
| **Company and Location** | **Principal Use** | **Approximate**<br>**Square Footage** | **Type of Construction** |
| **AIR AND LIQUID PROCESSING SEGMENT** | **AIR AND LIQUID PROCESSING SEGMENT** | **AIR AND LIQUID PROCESSING SEGMENT** | **AIR AND LIQUID PROCESSING SEGMENT** |
| Air & Liquid Systems Corporation |  |  |  |
| Aerofin Division<br>4621 Murray Place<br>Lynchburg, VA 24506\*<br>| Manufacturing facilities and offices | 146,000 on 15.3 acres | Brick, concrete and steel |
| Buffalo Air Handling Division |  |  |  |
| Zane Snead Drive<br>Amherst, VA 24531\*<br>| Manufacturing facilities and offices | 89,000 on 19.5 acres | Metal and steel |
| <br>Buffalo Pumps Division |  |  |  |
| 874 Oliver Street<br>N. Tonawanda, NY 14120\* | Manufacturing facilities and offices | 94,000 on 9 acres | Metal, brick and<br>cement block |

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\* Facility is leased.

During 2022, Air & Liquid completed sale and leaseback financing transactions with STORE for its real property, including its manufacturing facilities, located in Lynchburg, Virginia; Amherst, Virginia and North Tonawanda, New York (collectively, the "ALP Properties"). Previously, in 2018, UES completed a sale and leaseback financing transaction with STORE for certain of its real property, including its manufacturing facilities in Valparaiso, Indiana and Burgettstown, Pennsylvania, and its manufacturing facility and corporate headquarters located in Carnegie, Pennsylvania (the "UES Properties"), and simultaneously entered into a lease agreement with STORE whereby UES would lease the properties from STORE. In connection with the sale and leaseback financing transactions in 2022, UES and STORE amended their existing lease whereby UES will lease the UES Properties and the ALP Properties with UES subleasing the ALP Properties to Air & Liquid.

UES subleases office space to the Corporation. The Corporation further subleases a portion of its office space to Air & Liquid for use as its headquarters.

All of the owned facilities are adequate and suitable for their respective purposes.

The facilities of the FCEP segment operated within 85% to 90% of their normal capacity during 2022. The facilities of the ALP segment operated within 60% to 70% of their normal capacity. Normal capacity is defined as capacity under approximately normal conditions with allowances made for unavoidable interruptions, such as lost time for repairs, maintenance, breakdowns, set-up, failure, supply delays, labor shortages and absences, Sundays, holidays, vacation, and inventory taking. The number of work shifts is also taken into consideration.

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**ITEM 3. LEGAL PROCEEDINGS** 

**LITIGATION** 

The Corporation and its subsidiaries may become involved in various claims and lawsuits incidental to their businesses. In addition, claims been asserted alleging personal injury from exposure to asbestos-containing components historically used in some products manufactured by predecessors of Air & Liquid. Air & Liquid and, in some cases, the Corporation, are defendants (among a number of defendants, often in excess of 50) in cases filed in various state and federal courts. See [<u>Note 20</u>](#note_20), Litigation, to the Consolidated Financial Statements.

**ENVIRONMENTAL** 

The Corporation is currently performing certain remedial actions in connection with the sale of real estate previously owned and periodically incurs costs to maintain compliance with environmental laws and regulations. Environmental exposures are difficult to assess and estimate for numerous reasons, including lack of reliable data, the multiplicity of possible solutions, the years of remedial and monitoring activity required, and identification of new sites. The Corporation believes appropriate reserves have been established. See [<u>Note 22</u>](#note_22), Environmental Matters, to the Consolidated Financial Statements.

**ITEM 4. MINE SAFETY DISCLOSURES** 

Not applicable.

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**– PART II –** 

**ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES** 

The shares of common stock of Ampco-Pittsburgh Corporation are traded on the New York Stock Exchange (symbol AP). The Corporation paid cash dividends on common shares in every year since 1965 through mid-2017. In June 2017, the Corporation announced that it would suspend quarterly cash dividends, beginning with the second quarter of 2017.

The Series A warrants are traded on the NYSE American Exchange (symbol AP WS). Each warrant entitles the holder with the right to purchase 0.4464 shares of common stock of Ampco-Pittsburgh Corporation.

The number of registered shareholders at December 31, 2022 and 2021 equaled 356 and 364, respectively.

The number of registered warrant holders equaled 21 at December 31, 2022 and 2021, respectively.

**ITE** **M 6. RESERVED** 

**ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** 

(in thousands, except per share amounts)

**THE BUSINESS**

Ampco-Pittsburgh Corporation and its subsidiaries (collectively, the "Corporation") manufacture and sell highly engineered, high-performance specialty metal products and customized equipment utilized by industry throughout the world. It operates in two business segments – the Forged and Cast Engineered Products ("FCEP") segment and the Air and Liquid Processing ("ALP") segment. This segment presentation is consistent with how the Corporation's chief operating decision-maker evaluates financial performance and makes resource allocation and strategic decisions about the business.

The FCEP segment produces forged hardened steel rolls, cast rolls and forged engineered products ("FEP"). Forged hardened steel rolls are used primarily in hot and cold rolling mills by producers of steel, aluminum and other metals. Cast rolls, which are produced in a variety of iron and steel qualities, are used mainly in hot strip mills, medium/heavy section mills and plate mills. FEP principally are sold to customers in the steel distribution market, oil and gas industry and the aluminum and plastic extrusion industries. The segment has operations in the United States, England, Sweden, Slovenia, and an equity interest in three joint venture companies in China. Collectively, the segment primarily competes with European, Asian and North and South American companies in both domestic and foreign markets and operates several sales offices located throughout the world.

The ALP segment includes Aerofin, Buffalo Air Handling and Buffalo Pumps, all divisions of Air & Liquid Systems Corporation ("Air & Liquid"), a wholly owned subsidiary of the Corporation. Aerofin produces custom-engineered finned tube heat exchange coils and related heat transfer products for a variety of industries including OEM/commercial, nuclear power generation and industrial manufacturing. Buffalo Air Handling produces large custom-designed air handling systems for institutional (e.g., hospital, university), pharmaceutical and general industrial building markets. Buffalo Pumps manufactures centrifugal pumps for the fossil-fueled power generation, marine defense and industrial refrigeration industries. The segment has operations in Virginia and New York with headquarters in Carnegie, Pennsylvania. The segment utilizes a common independent group of sales offices located throughout the United States and Canada.

**EXECUTIVE OVERVIEW**

While the Corporation operated at normal levels in 2022, it continues to be challenged by lingering global economic effects of a post-pandemic environment and repercussions from the Russia-Ukraine conflict, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Periodic disruptions to the global supply chain for the Corporation, its vendors and its customers,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Global inflationary pressures,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•European energy crisis, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Delays in receiving and shipping product due to lack of transportation.

The Corporation is actively monitoring, and will continue to actively monitor, the geopolitical and economic consequence of these events and the potential impact on its operations, financial condition, liquidity, suppliers, industry, and workforce.

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For the FCEP segment, the forged roll market in North America has stabilized while the cast roll market has softened due to economic uncertainty in the European markets, primarily linked to the Russia-Ukraine conflict and resulting European energy crisis. The FEP market was strong in the first part of the year, as distributors began inventory re-stocking programs and as the oil and gas market demands increased on rising oil prices, but stabilized in the latter part of the year. The FCEP segment experienced higher costs for direct and indirect materials, energy and transportation in 2022. Although the segment continues to be adversely impacted by escalating costs, particularly for raw and ancillary materials, energy and transportation, price increases and changes to surcharge policies announced in the fourth quarter of 2021 are absorbing a significant portion of these costs. In addition, in February 2023, UES announced a price increase on all new quotations and new orders for forged and cast roll products. Approximately 80% of customer orders include a commodity surcharge. The primary focus for this segment is to maintain a strong position in the roll market; continue diversification and development of FEP for use in other industries; improve operational efficiency at its facilities; and complete its capital equipment investment to upgrade existing equipment with a goal of reducing operating costs, improving reliability and increasing FEP capacity and capabilities.

The ALP businesses are benefiting from steady demand, but are facing increasing production and transportation costs and supply chain issues. The segment has been implementing price increases for certain of its products to help mitigate these inflationary effects. The focus for this segment is to grow revenues, strengthen engineering and manufacturing capabilities, and continue to improve its sales distribution network.

**CONSOLIDATED RESULTS OF OPERATIONS OVERVIEW** 

**Change in Accounting Principle**

During the fourth quarter of 2022, the Corporation changed its method of accounting for valuing domestic inventories from the last-in, first-out ("LIFO") basis to the first-in, first-out ("FIFO") basis. Foreign inventories have historically been maintained on the FIFO basis. The Corporation believes changing to the FIFO method of inventory valuation is preferable as it provides a better matching of costs with the physical flow of goods, standardizes the Corporation's inventory valuation methodology, and improves comparability with industry peers. The Corporation has retrospectively applied this change to its prior year consolidated financial statements, footnotes and other financial information. (See [<u>Note 2</u>](#note_2), Change in Method of Accounting for Inventory Valuation, to the Consolidated Financial Statements for further information.)

**The Corporation**

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | 2021 - as adjusted (1) | 2021 - as adjusted (1) |
| Net Sales: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Forged and Cast Engineered Products | $**299484** | **77%** | $260204 | 75% |
| &nbsp;&nbsp;&nbsp;Air and Liquid Processing | **90705** | **23%** | 84716 | 25% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated | $**390189** | **100%** | $344920 | 100% |
| Income (Loss) from Operations: (1) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Forged and Cast Engineered Products | $**444** |  | $5073 |  |
| &nbsp;&nbsp;&nbsp;Air and Liquid Processing (2) | **13686** |  | 2601 |  |
| &nbsp;&nbsp;&nbsp;Corporate costs | **(11352)** |  | (12456) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated | $**2778** |  | $(4782) |  |
| Backlog: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Forged and Cast Engineered Products | $**252165** | **68%** | $223321 | 76% |
| &nbsp;&nbsp;&nbsp;Air and Liquid Processing | **116853** | **32%** | 69233 | 24% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated | $**369018** | **100%** | $292554 | 100% |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Income (loss) from operations for 2022 and 2021 includes inventory costs using the FIFO method of inventory valuation as more fully explained in [<u>Note 2</u>](#note_2), Change in Method of Accounting for Inventory Valuation, to the Consolidated Financial Statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)Income from operations for the ALP segment includes a (benefit) charge for asbestos-related items of $(2,226) and $6,661 in 2022 and 2021, respectively, as more fully explained in [<u>Note 20</u>](#note_20), Litigation, to the Consolidated Financial Statements.

<u>Net sales</u> equaled $390,189 and $344,920 for 2022 and 2021, respectively. While both segments contributed to the $45,269 increase in net sales, the majority of the increase is attributable to the FCEP segment which benefited from improved pricing, including a higher variable-index surcharge, and increasing demand. A discussion of sales by segment is included below.

<u>Operating income (loss)</u> equaled $2,778 and $(4,782) for 2022 and 2021, respectively, an improvement of $7,560. Included in income from operations for 2022, is a:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Credit for asbestos-related costs of $2,226 representing the benefit from the change in the estimated defense-to-indemnity cost ratio from 70% to 65% based on ongoing experience and improvements in defense costs which are expected to continue (the "Asbestos-Related Credit");

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Benefit of approximately $1,431 resulting from a change in how certain employees earn certain benefits (the "Change in Employee Benefit Policy"); offset by

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Charge of approximately $664 for excess COVID-19 subsidies received in 2020 but returned in 2022 ("the Refund of Excess COVID-19 Subsidies").

By comparison, included in loss from operations for 2021 is a:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Charge for asbestos-related costs of $6,661 representing the expense associated with changes in the estimated costs of pending and future asbestos claims, net of additional insurance recoveries through the estimated final date by which the Corporation expects to have settled all asbestos-related claims ("the Asbestos-Related Charge"); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Charge for costs associated with early-retirement incentives for two executive officers, employee terminations at one of the Corporation's cast roll facilities and costs associated with the closing of a foreign sales office of approximately $1,600 (the "Reorganization-Related Costs").

A discussion of income (loss) from operations for the Corporation's two segments is included below. Corporate costs decreased in 2022, when compared to 2021, by $1,104 due to lower employee-related costs including lower incentive compensation and a portion of the benefit from the Change in Employee Benefit Policy being attributable to Corporate employees, offset by higher professional fees.

<u>Backlog</u> equaled $369,018 at December 31, 2022, versus $292,554 as of December 31, 2021. Backlog represents the accumulation of firm orders on hand which: (i) are supported by evidence of a contractual arrangement, (ii) include a fixed and determinable sales price, (iii) have collectability that is reasonably assured, and (iv) generally are expected to ship within two years from the backlog reporting date. Backlog at a certain date may not be a direct measure of future revenue for a particular order because price increases, negotiated subsequently to the original order, are not included in backlog until the updated contract is received from the customer and certain surcharges are not determinable until the order is completed and ready for shipment to the customer. Approximately 6% of the backlog is expected to be released after 2023. A discussion of backlog by segment is included below.

<u>Gross margin, excluding depreciation and amortization</u>, as a percentage of net sales was 15.9% and 19.2% for 2022 and 2021, respectively. The decrease from the prior year is primarily attributable to the FCEP segment which experienced higher costs, particularly for direct and indirect materials, energy and transportation, when compared to the prior year. Although a portion of these costs are recovered via the variable-index surcharge, the variable-index surcharge does not cover all elements of all costs. In addition, in 2022, gross margin, excluding depreciation and amortization, includes a benefit from the Change in Employee Benefit Policy of $331 and, for the FCEP segment, expense associated with the Refund of Excess COVID-19 Subsidies. For the ALP segment, gross margin, excluding depreciation and amortization, as a percentage of net sales improved slightly as a result of a higher volume of sales, changes in product mix and savings generated from process improvements offset, in part, by higher costs.

<u>Selling and administrative expenses</u> were comparable, totaling $43,527 (11.2% of net sales) and $45,998 (13.3% of net sales) for 2022 and 2021, respectively. The decrease of $2,471 is principally due to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower exchange rates used to translate the selling and administrative costs of the Corporation's foreign subsidiaries into the U.S. dollar, which reduced expense in 2022 when compared to 2021 by approximately $1,900; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Benefit from the Change in Employee Benefit Policy, which reduced expense in 2022 when compared to 2021 by approximately $1,100; offset by

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher professional fees, which increased expense in 2022 when compared to 2021 by approximately $1,000; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher employee-related costs as key positions were filled, including positions within the ALP sales distribution network.

In addition, the prior year included the Reorganization-Related Costs of $1,600.

<u>Depreciation and amortization expense</u> was comparable, equaling $17,408 and $17,877 for 2022 and 2021, respectively.

<u>(Credit) charge for asbestos-related costs</u> equaled $(2,226) and $6,661 in 2022 and 2021, respectively. The credit in 2022 represents a change in the estimated defense-to-indemnity cost ratio from 70% to 65% based on ongoing experience and improvements in defense costs which are expected to continue. The charge in 2021 represents changes in the estimated costs of pending and future asbestos claims, net of additional insurance recoveries through the estimated final date by which the Corporation expects to have settled all asbestos-related claims. See [<u>Note 20</u>](#note_20), Litigation, to the Consolidated Financial Statements.

<u>Investment-related income</u> equaled $519 and $1,084 for 2022 and 2021, respectively, and represents primarily dividends received from one of the Corporation's Chinese joint ventures.

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<u>Interest expense</u> equaled $5,434 and $3,599 for 2022 and 2021, respectively. The increase of $1,835 is principally due to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•New debt transactions entered into in 2022, including the equipment financing and sale-leaseback transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher interest rates year-over-year; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher average borrowings outstanding under the revolving credit facility in 2022 compared to 2021.

<u>Other income – net</u> is comprised of the following:

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| | | | |
|:---|:---|:---|:---|
|  | **2022** | 2021 | Change |
| Net pension and other postretirement income | $**6552** | $6694 | $(142) |
| Unrealized (loss) gain on Rabbi trust investments | **(1144)** | 661 | (1805) |
| Gain (loss) on foreign exchange transactions | **2293** | (1134) | 3427 |
| Other | **(8)** | 81 | (89) |
|  | $**7693** | $6302 | $1391 |

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Other income – net fluctuated primarily due to changes in foreign exchange gains and losses and, as a result of volatility in the financial markets during 2022, unrealized losses in the market value of the Rabbi trust investments.

<u>Income tax provision</u> equaled $(1,576) and $(2,305) for 2022 and 2021, respectively, and includes income taxes associated with the Corporation's profitable operations. An income tax benefit is not able to be recognized on losses of certain of the Corporation's entities since it is "more likely than not" the asset will not be realized. Accordingly, changes in the income tax provision for each period includes the effects of changes in the pre-tax income of the Corporation's profitable operations. In addition, the income tax provision for 2022 includes $165 of expense resulting from the revaluation of the deferred income tax assets of the ALP segment following new legislation enacted in 2022, which will decrease the Pennsylvania state income tax rate from 9.99% to 4.99% in 2031. By comparison, the income tax provision for 2021 includes $452 of expense associated with the (i) restructuring of a foreign sales office and (ii) revaluation of the deferred income tax liabilities of the Corporation's U.K. entity following new legislation enacted in 2021, which will increase the U.K. corporate tax rate from 19% to 25% in 2023.

<u>Net income (loss) attributable to Ampco-Pittsburgh</u> was approximately $3,416 or $0.18 per common share for 2022 and $(3,861) or $(0.20) per common share for 2021.

Net income attributable to Ampco-Pittsburgh and income per common share attributable to Ampco-Pittsburgh for 2022, include a net benefit of $2,727 or $0.14 per common share associated with the net benefit from the Asbestos-Related Credit, the Change in Employee Benefit Policy, the Refund of Excess COVID-19 Subsidies and the additional tax of $165 resulting from the revaluation of the deferred income tax assets of the ALP segment following new legislation enacted in 2022, which will reduce the Pennsylvania state income tax rate from 9.99% to 4.99% in 2031.

Net (loss) attributable to Ampco-Pittsburgh and (loss) per common share attributable to Ampco-Pittsburgh for 2021, include net expense of $8,444 or $0.45 per common share for the Asbestos-Related Charge, the Reorganization-Related Costs and additional income tax expense of $452 associated with the (i) restructuring of a foreign sales office and (ii) resulting from the revaluation of the deferred income taxes of the Corporation's U.K. entity following new legislation enacted in 2021, which will increase the U.K. corporate tax rate from 19% to 25% in 2023.

**Non-GAAP Financial Measures**

The Corporation presents non-GAAP adjusted (loss) income from operations, which is calculated as income (loss) from operations excluding the Asbestos-Related (Credit) Charge, the Change in Employee Benefit Policy, the Refund of Excess COVID-19 Subsidies, and the Reorganization-Related Costs for each of the years, as applicable. This non-GAAP financial measure is not based on any standardized methodology prescribed by accounting principles generally accepted in the United States of America ("GAAP") and may not be comparable to similarly-titled measures presented by other companies.

The Corporation has presented non-GAAP adjusted (loss) income from operations because it is a key measure used by the Corporation's management and Board of Directors to understand and evaluate the Corporation's operating performance and to develop operational goals for managing its business. This non-GAAP financial measure excludes significant charges or credits that are one-time charges or credits, or unrelated to the Corporation's ongoing results of operations, or beyond its control. Additionally, a portion of the incentive and compensation arrangements for certain employees is based on the Corporation's business performance. The Corporation believes this non-GAAP financial measure helps identify underlying trends in its business that otherwise could be masked by the effect of the items that it excludes from adjusted (loss) income from operations. In particular, the Corporation believes that the exclusion of the Asbestos-Related (Credit) Charge, the Change in Employee Benefit Policy, the Refund of Excess COVID-19 Subsidies, and the Reorganization-Related Costs can provide a useful measure for period-to-period comparisons of the Corporation's

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core business performance. The Corporation also believes this non-GAAP financial measure provides useful information to management, shareholders and investors, and others in understanding and evaluating its operating results, enhancing the overall understanding of its past performance and future prospects and allowing for greater transparency with respect to key financial metrics used by the Corporation's management in its financial and operational decision-making.

Adjusted (loss) income from operations is not prepared in accordance with GAAP and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are limitations related to the use of adjusted (loss) income from operations rather than income (loss) from operations, which is the nearest GAAP equivalent. Among other things, there can be no assurance that additional benefits similar to the Asbestos-Related (Credit) and the Change in Employee Benefit Policy or additional expenses similar to the Asbestos-Related Charge, the Refund of Excess COVID-19 Subsidies, and the Reorganization-Related Costs will not occur in future periods.

The adjustments reflected in adjusted (loss) income from operations are pre-tax. The tax impact associated with these adjustments would be additional income tax expense of $101 for 2022 and an income tax benefit of $132 for 2021.

The following is a reconciliation of income (loss) from operations to non-GAAP adjusted (loss) income from operations for 2022 and 2021, respectively:

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| | | |
|:---|:---|:---|
|  | **2022** | 2021 - as adjusted(1) |
| Income (loss) from operations, as reported (GAAP) | $**2778** | $(4782) |
| Asbestos-Related (Credit) Charge (2) | **(2226)** | 6661 |
| Change in Employee Benefit Policy (3) | **(1431)** |  |
| Refund of Excess COVID-19 Subsidies (4) | **664** |  |
| Reorganization-Related Costs (5) | **—** | 1600 |
| (Loss) income from operations, as adjusted (Non-GAAP) | $**(215)** | $3479 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Income (loss) from operations, as reported (GAAP) and (Loss) income from operations, as adjusted (Non-GAAP) for 2021 include inventory costs using the FIFO method of inventory valuation as more fully explained in [<u>Note 2</u>](#note_2), Change in Method of Accounting for Inventory Valuation, to the Consolidated Financial Statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)For 2022, represents a credit for a change is the estimated defense-to-indemnity cost ratio from 70% to 65%. For 2021, represents a charge for changes in the estimated costs of pending and future asbestos claims, net of additional insurance recoveries through the estimated final date by which the Corporation expects to have settled all asbestos-related claims. See [<u>Note 20</u>](#note_20), Litigation, to the Consolidated Financial Statements for further information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)Represents a benefit resulting from a change in how certain employees earn certain benefits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)Represents excess COVID-19 subsidies received in 2020 and returned in 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5)Represents severance costs associated with early-retirement incentives for two executive officers, employee terminations at one of the Corporation's cast roll facilities and costs associated with the closing of a foreign sales office.

**Forged and Cast Engineered Products** 

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| | | | |
|:---|:---|:---|:---|
|  | **2022** | 2021 | Change |
| Net sales: |  |  |  |
| &nbsp;&nbsp;&nbsp;Forged and cast mill rolls | $**256559** | $234926 | $21633 |
| &nbsp;&nbsp;&nbsp;FEP | **42925** | 25278 | 17647 |
|  | $**299484** | $260204 | $39280 |
| Operating income (1) | $**444** | $5073 | $(4629) |
| Backlog: |  |  |  |
| &nbsp;&nbsp;&nbsp;Forged and cast mill rolls | $**243648** | $197476 | $46172 |
| &nbsp;&nbsp;&nbsp;FEP | **8517** | 25845 | (17328) |
|  | $**252165** | $223321 | $28844 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Operating income includes inventory costs determined using the FIFO method of inventory valuation as more fully explained in [<u>Note 2</u>](#note_2), Change in Method of Accounting for Inventory Valuation, to the Consolidated Financial Statements.

Net sales increased by $39,280 in 2022 from 2021 principally due to the net of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Improved pricing and higher variable-index surcharges passed through to customers as a result of higher raw material, energy and transportation costs, which increased net sales in 2022 when compared to 2021 by approximately $37,500;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher volume of mill roll shipments primarily from improved demand, which increased net sales in 2022 when compared to 2021 by approximately $10,400;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Changes in product mix, which increased net sales in 2022 when compared to 2021 by approximately $6,400; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher volume of FEP as a result of increased demand from the steel distribution and oil and gas markets in early 2022, which increased net sales in 2022 when compared to 2021 by approximately $800; offset by

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Changes in exchange rates used to translate net sales of the segment's foreign subsidiaries into the U.S. dollar, which decreased net sales in 2022 when compared to 2021 by approximately $15,800.

Operating results decreased by $4,629 in 2022 when compared to 2021 primarily as a result of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher costs of raw materials, energy and other production costs, net of improved pricing and higher variable-index surcharges, which reduced operating results in 2022 when compared to 2021 by approximately $7,800;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Changes in exchange rates used to translate operating results of the segment's foreign subsidiaries into the U.S. dollar, which reduced operating results in 2022 when compared to 2021 by approximately $1,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Refund of Excess COVID-19 Subsidies of $664;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher losses on disposal of property, plant and equipment associated with equipment being replaced in connection with the segment's strategic capital expenditure program of $350; offset by

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher sales volumes and changes in sales product mix, which increased operating results in 2022 when compared to 2021 by approximately $3,300; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower selling and administrative costs due, in part, to the benefit from the Change in Employee Benefit Policy and lower bad debt expense, which improved operating results in 2022 when compared to 2021 by approximately $1,900.

Backlog equaled $252,165 at December 31, 2022, compared to $223,321 at December 31, 2021, with the improvement in current year-end backlog of $28,844 principally due to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Increased mill roll backlog associated with improved demand and better pricing, which increased backlog at December 31, 2022 when compared to December 31, 2021 by $56,900; offset by

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower FEP backlog as a result of distributors replenishing their inventories in the first half of the year and not yet issuing replacement orders, which reduced FEP backlog at December 31, 2022 when compared to December 31, 2021 by $17,300;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower foreign exchange rates used to translate the backlog of the Corporation's foreign subsidiaries into the U.S. dollar, which reduced backlog at December 31, 2022 when compared to December 31, 2021 by approximately $10,700.

At December 31, 2022, approximately 3% of the backlog is expected to ship after 2023.

**Air and Liquid Processing**

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| | | | |
|:---|:---|:---|:---|
|  | **2022** | 2021 | Change |
| Net sales |  |  |  |
| &nbsp;&nbsp;&nbsp;Heat exchange coils | $**31395** | $24372 | $7023 |
| &nbsp;&nbsp;&nbsp;Air handling systems | **29436** | 26477 | 2959 |
| &nbsp;&nbsp;&nbsp;Centrifugal pumps | **29874** | 33867 | (3993) |
|  | $**90705** | $84716 | $5989 |
| Operating income (1), (2) | $**13686** | $2601 | $11085 |
| Backlog | $**116853** | $69233 | $47620 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Operating income for 2022 includes the Asbestos-Related Credit of $2,226 and operating income for 2021 includes the Asbestos-Related Charge of $6,661. See [<u>Note 20</u>](#note_20), Litigation, to the Consolidated Financial Statements for further information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)Operating income includes inventory costs determined using the FIFO method of inventory valuation, as more fully explained in [<u>Note 2</u>](#note_2), Change in the Method of Accounting for Inventory Valuation, to the Consolidated Financial Statements.

Net sales for 2022 increased from the prior year by $5,989. Sales of heat exchange coils and air handling units increased when compared to the prior year as a result of the expansion and strengthening of the segment's sales distribution network. Sales of air handling units improved further due to additional demand, particularly in the hospital/healthcare market. Sales of centrifugal pumps declined when compared to the prior year as a result of project delays associated with ongoing supply chain issues at U.S. Navy shipbuilders.

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Operating income improved by $11,085 in 2022 when compared to 2021 primarily as a result of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Asbestos-related items of $8,887 whereby operating income for 2022 includes the Asbestos-Related Credit of $2,226 and 2021 includes the Asbestos-Related Charge of $6,661 (see [<u>Note 20</u>](#note_20), Litigation, to the Consolidated Financial Statements);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher volume of shipments, changes in product mix and savings generated from process improvements offset, in part, by higher costs, which increased operating income by approximately $3,100; offset by

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher selling and administrative costs due, in part, to expansion of the segment's sales distribution network.

Backlog at December 31, 2022 increased $47,620 from December 31, 2021, with backlog for each product line improving as a result of record-level order intake. At December 31, 2022, approximately 12% of the backlog is expected to ship after 2023.

**LIQUIDITY AND CAPITAL RESOURCES** 

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| | | | |
|:---|:---|:---|:---|
|  | **2022** | 2021 | Change |
| Net cash flows used in operating activities | $**(27208)** | $(15866) | $(11342) |
| Net cash flows used in investing activities | **(16308)** | (14734) | (1574) |
| Net cash flows provided by financing activities | **42587** | 24402 | 18185 |
| Effect of exchange rate changes on cash and cash equivalents | **(673)** | (307) | (366) |
| Net decrease in cash and cash equivalents | **(1602)** | (6505) | 4903 |
| Cash and cash equivalents at beginning of period | **10337** | 16842 | (6505) |
| Cash and cash equivalents at end of period | $**8735** | $10337 | $(1602) |

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Net cash flows used in operating activities equaled $27,208 and $15,866 for 2022 and 2021, respectively. The change between the years is primarily attributable to the ongoing investment in trade working capital due to a higher level of business activity resulting from increased demand and, for inventories, higher costs associated with inflation and supply chain disruptions. Although the Corporation recorded the Asbestos-Related (Credit) Charge in 2022 and 2021, these were non-cash (credits) charges and, accordingly, did not impact net cash flows used in operating activities. Instead, net asbestos-related payments equaled $9,126 and $9,903 in 2022 and 2021, respectively, and are expected to approximate $8,000 in 2023.

Contributions to the defined benefit pension and other postretirement benefits plans equaled $2,199 and $1,658 in 2022 and 2021, respectively, and are expected to approximate $2,484 in 2023. Contributions beyond 2023 are expected to increase primarily as a result of lower than expected pension asset performance in 2022.

Net cash flows used in investing activities primarily represented expenditures for the FCEP segment. The Corporation has undertaken a significant capital program approximating $27,000 to upgrade existing equipment at certain of its FCEP locations, which is anticipated to be substantially completed by December 31, 2023. At December 31, 2022, commitments for future capital expenditures, including those associated with the FCEP capital program, approximated $16,400.

Net cash flows provided by financing activities increased by $18,185 in 2022 when compared to 2021 primarily due to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Proceeds from sale and leaseback financing transactions in 2022 equaling $20,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Proceeds from an equipment financing facility in 2022 equaling $6,388; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower principal repayments of $1,174;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower debt and equity issuance costs of $148; offset by

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower net borrowings from the Corporation's revolving credit facility of $6,410; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower proceeds from shareholders exercising warrants for the Corporation's common stock of $3,115.

The effect of exchange rate changes on cash and cash equivalents is primarily attributable to the fluctuation of the British pound and Swedish krona against the U.S. dollar.

As a result of the above, cash and cash equivalents decreased by $1,602 during 2022 and ended the period at $8,735 in comparison to $10,337 at December 31, 2021. The majority of the Corporation's cash and cash equivalents is held by its foreign operations. Domestic customer remittances are used to pay down borrowings under the Corporation's revolving credit facility daily, resulting in minimal cash maintained by the Corporation's domestic operations. Cash held by the Corporation's foreign operations is considered to be permanently re-invested; accordingly, a provision for estimated local and withholding tax has not been made. If the Corporation were to remit any foreign earnings to it or any of its U.S. entities, the estimated tax impact would be insignificant.

------

Funds on hand, funds generated from future operations and availability under the Corporation's revolving credit facility are expected to be sufficient to finance the Corporation's operational requirements and debt service costs. The maturity date for the revolving credit facility is June 29, 2026 and, subject to the other terms and conditions of the revolving credit agreement, will become due on that date. As of December 31, 2022, remaining availability under the revolving credit facility approximated $28,420, net of standard availability reserves.

Availability under the Corporation's equipment financing facility and disbursement agreement is expected to be sufficient to finance the capital program for the FCEP segment in the time frame currently anticipated. At December 31, 2022, availability under the equipment financing facility and disbursement agreements approximated $16,112. Each borrowing on the equipment financing facility will constitute a secured loan transaction (each, a "Term Loan"). Each Term Loan will convert to a Term Note on the earlier of (i) the date in which the associated equipment is placed in service or (ii) December 29, 2023. Each Term Note will have a term of 84 months in arrears fully amortizing and will commence on the date of the Term Note. Borrowings under the disbursement agreement will be repaid over an initial term of 20 years – through August 2042. For a more thorough description of the Corporation's debt and credit documents see [<u>Note 9</u>](#note_9), Debt, to the Consolidated Financial Statements.

With respect to litigation, see [<u>Note 20</u>](#note_20), Litigation, to the Consolidated Financial Statements. With respect to environmental matters, see [<u>Note 22</u>](#note_22), Environmental Matters, to the Consolidated Financial Statements.

**OFF-BALANCE SHEET ARRANGEMENTS** 

The Corporation's off-balance sheet arrangements include the previously mentioned expected future capital expenditures and letters of credit unrelated to the Industrial Revenue Bonds. See [<u>Note 12</u>](#note_12), Commitments and Contingent Liabilities, to the Consolidated Financial Statements. These arrangements are not considered significant to the liquidity, capital resources, market risk, or credit risk of the Corporation.

**EFFECTS OF INFLATION** 

Inflationary and market pressures on costs are likely to continue to be experienced. Product pricing is reflective of current costs. For the FCEP segment, approximately 80% of customer orders include a commodity surcharge; the ability to pass on future increases in the price of commodities for the balance of the customer orders will be negotiated on a contract-by-contract basis. To minimize the effect of future increases, the Corporation has entered into pricing for a portion of the electricity and natural gas for certain of its FCEP operating entities and has long-term labor agreements at each of the key locations. Certain of these agreements will expire in 2023. As is consistent with past practice, the Corporation will negotiate with the intent to secure mutually beneficial arrangements covering multiple years. See [<u>Note 12</u>](#note_12), Commitments and Contingent Liabilities, and [<u>Note 15</u>](#note_15), Derivative Instruments, to the Consolidated Financial Statements.

**APPLICATION OF CRITICAL ACCOUNTING ESTIMATES** 

The Corporation has identified critical accounting estimates that are important to the presentation of its financial condition, changes in financial condition and results of operations and involve the most complex or subjective assessments. Critical accounting estimates relate to assessing recoverability of property, plant and equipment and accounting for pension and other postretirement benefits, litigation and loss contingencies, and income taxes.

Property, plant and equipment is reviewed for recoverability whenever events or circumstances indicate the carrying amount of the long-lived assets may not be recoverable. If the undiscounted cash flows generated from the use and eventual disposition of the assets are less than their carrying value, then the asset value may not be fully recoverable, resulting in a write-down of the asset value. Estimates of future cash flows are based on expected market conditions over the remaining useful life of the primary asset(s). Accordingly, assumptions are made about pricing, volume and asset-resale values. The potential significant change brought about by the Russia-Ukraine conflict resulting in the European energy crisis was deemed to be a triggering event under ASC 360, Property, Plant and Equipment, causing the Corporation to evaluate whether the property, plant and equipment of an asset group within the FCEP segment was deemed to be impaired. Accordingly, in connection with preparation of its 2023 business plan in the fourth quarter of 2022, the Corporation completed a quantitative analysis of the long-lived assets for the asset group and determined the assets were not impaired. The Corporation continues to evaluate the uncertainty associated with the Russia-Ukraine conflict and, at December 31, 2022, there were no additional triggering events identified. Additionally, there have been no triggering events for the asset groups within the ALP segment. The Corporation believes the amounts recorded in the accompanying consolidated financial statements for property, plant and equipment are recoverable and are not impaired as of December 31, 2022.

------

Accounting for pension and other postretirement benefits involves estimating the cost of benefits to be provided well into the future and attributing that cost over the time period each employee works. To accomplish this, input from the Corporation's actuaries is evaluated and extensive use is made of assumptions about inflation, long-term rate of return on plan assets, longevity, employee turnover and discount rates. The curtailment of the majority of the Corporation's defined benefit pension plans and the amendment of various other postretirement benefit plans has helped to mitigate the volatility in net periodic pension and other postretirement benefit costs resulting from changes in these assumptions.

The expected long-term rate of return on plan assets is an estimate of the average rates of earnings expected to be earned on funds invested, or to be invested, to provide for the benefits included in the projected benefit obligation. Since these benefits will be paid over many years, the expected long-term rate of return is reflective of current investment returns and investment returns over a longer period. Consideration is also given to target and actual asset allocations, inflation and real risk-free return. The Corporation believes the expected long-term rate of return of 6.94% for its domestic plans and 3.00% for its foreign plans to be reasonable. Although, as a result of volatility in the financial markets during the year, actual returns on plan assets approximated -20.81% for the domestic plans and -38.93% for the foreign plans for 2022; however, approximated 8.70% for the domestic plans and 10.76% for the foreign plans for 2021 and averaged 9.30% for the domestic plans and 8.76% for the foreign plans for 2017 - 2021. A percentage point decrease in the expected long-term rate of return would increase annual pension expense by approximately $2,600. Conversely, a percentage point increase in the expected long-term rate of return would decrease annual pension expense by approximately $2,600.

The discount rates used in determining future pension obligations and other postretirement benefits for each of the plans are based on rates of return for high-quality fixed-income investments currently available and expected to be available during the period to maturity of the pension and other postretirement benefits. High-quality fixed-income investments are defined as those investments which have received one of the two highest ratings given by a recognized rating agency with maturities of 10+ years. With the increase in interest rates during 2022 and the resulting impact on bond yields, the discount rate rose significantly at December 31, 2022 when compared to December 31, 2021. Assumed discount rates range between 5.48% and 5.49% for the Corporation's domestic plans, 5.49% for its other postretirement benefits plans, and 4.85% for its foreign plans at December 31, 2022. A 1/4 percentage point increase in the discount rate would decrease projected and accumulated benefit obligations by approximately $5,800. Conversely, a 1/4 percentage point decrease in the discount rate would increase projected and accumulated benefit obligations by approximately $5,800.

The Corporation believes that the amounts recorded in the accompanying consolidated financial statements related to pension and other postretirement benefits are based on assumptions that are appropriate at December 31, 2022, although actual outcomes could differ.

Litigation and loss contingency accruals are made when it is determined that it is probable that a liability has been incurred and the amount can be reasonably estimated. Specifically, the Corporation and certain of its subsidiaries are involved in various claims and lawsuits incidental to its businesses. In addition, claims have been asserted alleging personal injury from exposure to asbestos-containing components historically used in some products manufactured by predecessors of Air & Liquid (the "Asbestos Liability"). To assist the Corporation in determining whether an estimate could be made of the potential liability for pending and unasserted future claims for the Asbestos Liability along with applicable insurance coverage, and the amounts of any estimates, the Corporation hires a nationally recognized asbestos-liability expert and an insurance consultant. Based on their analyses, reserves for probable and reasonably estimable costs for the Asbestos Liability, including defense costs, and receivables for the insurance recoveries that are deemed probable are established. These amounts rely on assumptions which are based on currently known facts and strategy.

The Corporation's policy is to evaluate the Asbestos Liability and related insurance receivables as well as the underlying assumptions on a regular basis. Key variables in these assumptions, including the ability to reasonably estimate the Asbestos Liability through the expected final date by which the Corporation expects to have settled all asbestos-related claims, are summarized in [<u>Note 20</u>](#note_20), Litigation, to the Consolidated Financial Statements. Key assumptions include the number and nature of new claims to be filed each year, the average cost of disposing of each new claim, average annual defense costs, and the solvency risk with respect to the relevant insurance carriers. Other factors that may affect the Asbestos Liability and the Corporation's ability to recover under its insurance policies include uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, reforms that may be made by state and federal courts and the passage of state or federal tort reform legislation. Actual expenses or insurance recoveries could be significantly higher or lower than those recorded if assumptions used in the calculations vary significantly from actual results.

The Corporation intends to continue to evaluate the Asbestos Liability and related insurance receivables as well as the underlying assumptions on a regular basis to determine whether further adjustments to the estimates are required. Due to the uncertainties surrounding asbestos litigation and insurance, these regular reviews may result in the incurrence of future charges or credits; however, the Corporation is currently unable to estimate such future changes. Adjustments, if any, to the Corporation's estimate of the Asbestos Liability and/or insurance receivables could be material to its operating results for the periods in which the adjustments to the liability or receivable are recorded, and to its liquidity and financial position when such liabilities are paid.

------

Accounting for income taxes includes the Corporation's evaluation of the underlying accounts, permanent and temporary differences, its tax filing positions and interpretations of existing tax law. A valuation allowance is recorded against deferred income tax assets to reduce them to the amount that is "more likely than not" to be realized. In doing so, assumptions are made about the future profitability of the Corporation and the nature of that profitability. Actual results may differ from these assumptions. If the Corporation determined it would not be able to realize all or part of the deferred income tax assets in the future, an adjustment to the valuation allowance would be established resulting in a charge to net income (loss). Likewise, if the Corporation determined it would be able to realize deferred income tax assets in excess of the net amount recorded, a portion of the existing valuation allowance would be released resulting in a credit to net income (loss). As of December 31, 2022, the valuation allowance approximates $31,981, reducing deferred income tax assets to $2,141, an amount the Corporation believes is "more likely than not" to be realized.

The Corporation does not recognize a tax benefit in the consolidated financial statements related to a tax position taken or expected to be taken in a tax return unless it is "more likely than not" that the tax authorities will sustain the tax position solely on the basis of the position's technical merits. Consideration is primarily given to legislation and statutes, legislative intent, regulations, rulings and case law as well as their applicability to the facts and circumstances of the tax position when assessing the sustainability of the tax position. In the event a tax position no longer meets the "more likely than not" criteria, the Corporation would reverse the tax benefit by recognizing a liability and recording a charge to earnings. Conversely, if the Corporation subsequently determined that a tax position met the "more likely than not" criteria, it would recognize the tax benefit by reducing the liability and recording a credit to earnings. As of December 31, 2022, based on information known to date, the Corporation believes the amount of unrecognized tax benefits for tax positions taken or expected to be taken in a tax return, which may be challenged by the tax authorities, not to be significant.

The Corporation's tax filings are subject to audits by tax authorities in the various jurisdictions in which it does business. These audits may result in assessments of additional taxes. At December 31, 2022, based on information known to date, the Corporation believes there are no pending or outstanding assessments whose resolution would require recognition in its consolidated financial statements.

See [<u>Note 21</u>](#note_21), Income Taxes, to the Consolidated Financial Statements.

**RECENTLY IMPLEMENTED AND ISSUED ACCOUNTING PRONOUNCEMENTS** 

See [<u>Note 1</u>](#note_1), Summary of Significant Accounting Policies, to the Consolidated Financial Statements.

**ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK** 

Not applicable.

------

**ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA** 

**CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
| (in thousands, except par value) | **2022** | 2021 - as adjusted(1) |
| **Assets** |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $8735 | $10337 |
| &nbsp;&nbsp;&nbsp;Receivables, less allowance for doubtful accounts of $763 in 2022 and $1,240 in 2021 | 77426 | 68829 |
| &nbsp;&nbsp;&nbsp;Receivables from related parties | 1066 |  |
| &nbsp;&nbsp;&nbsp;Inventories | 121739 | 108717 |
| &nbsp;&nbsp;&nbsp;Insurance receivable – asbestos | 15000 | 16000 |
| &nbsp;&nbsp;&nbsp;Other current assets | 7442 | 4933 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 231408 | 208816 |
| Property, plant and equipment, net | 154998 | 158563 |
| Operating lease right-of-use assets, net | 3522 | 4056 |
| Insurance receivable – asbestos | 90910 | 105297 |
| Deferred income tax assets | 2141 | 1985 |
| Intangible assets, net | 5194 | 6204 |
| Investments in joint ventures | 2175 | 2175 |
| Prepaid pensions | 7242 | 11963 |
| Other noncurrent assets | 5184 | 6901 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $502774 | $505960 |
| **Liabilities and Shareholders' Equity** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $43209 | $43105 |
| &nbsp;&nbsp;&nbsp;Accounts payable to related parties | 412 | 1125 |
| &nbsp;&nbsp;&nbsp;Accrued payrolls and employee benefits | 11796 | 15954 |
| &nbsp;&nbsp;&nbsp;Debt – current portion | 12410 | 20007 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities – current portion | 635 | 641 |
| &nbsp;&nbsp;&nbsp;Asbestos liability – current portion | 23000 | 23000 |
| &nbsp;&nbsp;&nbsp;Other current liabilities | 24763 | 21210 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 116225 | 125042 |
| Employee benefit obligations | 43431 | 62114 |
| Asbestos liability | 130575 | 157314 |
| Long-term debt | 93061 | 40912 |
| Noncurrent operating lease liabilities | 2886 | 3415 |
| Deferred income tax liabilities | 2518 | 3858 |
| Other noncurrent liabilities | 682 | 1171 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 389378 | 393826 |
| Commitments and contingent liabilities (Note 12) |  |  |
| Shareholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;Common stock – par value $1; authorized 40,000 shares; issued and <br>outstanding 19,404 shares at December 31, 2022 and 19,184 shares at December 31, 2021 | 19404 | 19184 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 175656 | 174561 |
| &nbsp;&nbsp;&nbsp;Retained deficit | **(**32322**)** | (35738) |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | **(**58412**)** | (55106) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Ampco-Pittsburgh shareholders' equity | 104326 | 102901 |
| &nbsp;&nbsp;&nbsp;Noncontrolling interest | 9070 | 9233 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity | 113396 | 112134 |
| Total liabilities and shareholders' equity | $502774 | $505960 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)The December 31, 2021 balance sheet was adjusted to present inventory using the FIFO basis of costing. See [<u>Note 2</u>](#note_2).

See Notes to Consolidated Financial Statements.

------

**CONSOLIDATED STATEMENTS OF OPERATIONS** 

---

| | | |
|:---|:---|:---|
|  | **For The Years Ended December 31,** | **For The Years Ended December 31,** |
| (in thousands, except per share amounts) | **2022** | 2021 - as adjusted(1) |
| Net sales: |  |  |
| &nbsp;&nbsp;&nbsp;Net sales | $380255 | $335078 |
| &nbsp;&nbsp;&nbsp;Net sales to related parties | 9934 | 9842 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total net sales | 390189 | 344920 |
| Operating costs and expenses: |  |  |
| &nbsp;&nbsp;&nbsp;Costs of products sold (excluding depreciation and amortization) | 327996 | 278805 |
| &nbsp;&nbsp;&nbsp;Selling and administrative | 43527 | 45998 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 17408 | 17877 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Credit) charge for asbestos-related costs | **(**2226**)** | 6661 |
| &nbsp;&nbsp;&nbsp;Loss on disposal of assets | 706 | 361 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operating costs and expenses | 387411 | 349702 |
| Income (loss) from operations | 2778 | (4782) |
| Other income (expense): |  |  |
| &nbsp;&nbsp;&nbsp;Investment-related income | 519 | 1084 |
| &nbsp;&nbsp;&nbsp;Interest expense | **(**5434**)** | (3599) |
| &nbsp;&nbsp;&nbsp;Other – net | 7693 | 6302 |
|  | 2778 | 3787 |
| Income (loss) before income taxes | 5556 | (995) |
| Income tax provision | **(**1576**)** | (2305) |
| Net income (loss) | 3980 | (3300) |
| Less: Net income attributable to noncontrolling interest | 564 | 561 |
| Net income (loss) attributable to Ampco-Pittsburgh | $3416 | $(3861) |
| Net income (loss) per share attributable to Ampco-Pittsburgh common shareholders: |  |  |
| &nbsp;&nbsp;&nbsp;Basic | $0.18 | $(0.20) |
| &nbsp;&nbsp;&nbsp;Diluted | $0.18 | $(0.20) |
| Weighted-average number of common shares outstanding: |  |  |
| &nbsp;&nbsp;&nbsp;Basic | 19319 | 18953 |
| &nbsp;&nbsp;&nbsp;Diluted | 19444 | 18953 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Costs of products sold (excluding depreciation and amortization) and subsequent subtotals and totals along with net loss per share for 2021 were adjusted to include inventory costs using the FIFO basis of costing. See [<u>Note 2</u>](#note_2).

See Notes to Consolidated Financial Statements.

------

**CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**

---

| | | |
|:---|:---|:---|
|  | **For The Years Ended December 31,** | **For The Years Ended December 31,** |
| (in thousands) | **2022** | 2021 - as adjusted(1) |
| Net income (loss) | $3980 | $(3300) |
| Other comprehensive (loss) income, net of income tax where applicable: |  |  |
| &nbsp;&nbsp;&nbsp;Adjustments for changes in: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign currency translation | **(**11848**)** | (2951) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unrecognized employee benefit costs (including effects of foreign currency translation) | 6825 | 15263 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair value of cash flow hedges | **(**512**)** | 774 |
| &nbsp;&nbsp;&nbsp;Reclassification adjustments for items included in net income (loss): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of unrecognized employee benefit costs | 1115 | 1826 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Settlement of cash flow hedges | 387 | (1086) |
| Other comprehensive (loss) income | **(**4033**)** | 13826 |
| Comprehensive (loss) income | **(**53**)** | 10526 |
| Less: Comprehensive (loss) income attributable to noncontrolling interest | **(**163**)** | 798 |
| Comprehensive income attributable to Ampco-Pittsburgh | $110 | $9728 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Net loss for 2021 and subsequent subtotals and totals were adjusted to include inventory costs using the FIFO basis of costing. See [<u>Note 2</u>](#note_2).

See Notes to Consolidated Financial Statements.

------

**CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| (in thousands) | **Common<br>Stock** | **Additional<br>Paid-in<br>Capital** | **Retained<br>Deficit(1)** | **Accumulated<br>Other<br>Comprehensive<br>Loss** | **Noncontrolling<br>Interest** | **Total(1)** |
| Balance January 1, 2021 | $18312 | $170318 | $(43371) | $(68695) | $8435 | $84999 |
| Impact from change in accounting principle (Note 2) |  |  | 11494 |  |  | 11494 |
| Adjusted balance at January 1, 2021 | 18312 | 170318 | (31877) | (68695) | 8435 | 96493 |
| Stock-based compensation |  | 2438 |  |  |  | 2438 |
| Comprehensive income: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net (loss) income(1) |  |  | (3861) |  | 561 | (3300) |
| &nbsp;&nbsp;&nbsp;Other comprehensive income |  |  |  | 13589 | 237 | 13826 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive income |  |  |  |  | 798 | 10526 |
| Shareholder exercise of warrants (Note 13) | 575 | 2733 |  |  |  | 3308 |
| Issuance of common stock including excess tax benefits of $0 | 297 | (928) |  |  |  | (631) |
| Balance December 31, 2021 | 19184 | 174561 | (35738) | (55106) | 9233 | 112134 |
| **Stock-based compensation** |  | 1665 |  |  |  | 1665 |
| **Comprehensive loss:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;**Net income** |  |  | 3416 |  | 564 | 3980 |
| &nbsp;&nbsp;&nbsp;**Other comprehensive loss** |  |  |  | **(**3306**)** | **(**727**)** | **(**4033**)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Comprehensive loss:** |  |  |  |  | **(**163**)** | **(**53**)** |
| **Shareholder exercise of warrants (Note 13)** | 48 | **(**48**)** |  |  |  | **-** |
| **Issuance of common stock including excess tax benefits of $**0 | 172 | **(**522**)** |  |  |  | **(**350**)** |
| **Balance December 31, 2022** | $19404 | $175656 | $**(**32322**)** | $**(**58412**)** | $9070 | $113396 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Retained deficit as of January 1, 2021, net loss for 2021 and retained deficit as of December 31, 2021 were adjusted to include inventory costs using the FIFO basis of costing. See [<u>Note 2</u>](#note_2).

See Notes to Consolidated Financial Statements.

------

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | |
|:---|:---|:---|
|  | **For The Years Ended December 31,** | **For The Years Ended December 31,** |
| (in thousands) | **2022** | 2021 - as adjusted(1) |
| Cash flows from operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) | $3980 | $(3300) |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net income (loss) from operations to net cash flows used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 17408 | 17877 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Credit) charge for asbestos-related costs | **(**2226**)** | 6661 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax expense | 468 | 1304 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Difference between net periodic pension and other postretirement costs and contributions | **(**9295**)** | (7489) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 1665 | 2438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-cash provisions – net | **(**2215**)** | 2193 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other – net | **(**729**)** | 658 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in assets/liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Receivables | **(**11626**)** | (8268) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | **(**17903**)** | (27618) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets | **(**3943**)** | (5918) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insurance receivable – asbestos | 10708 | 13312 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Asbestos liability | **(**19834**)** | (23215) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 1557 | 17601 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued payrolls and employee benefits | 3892 | 2048 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | 885 | (4150) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash flows used in operating activities | **(**27208**)** | (15866) |
| Cash flows from investing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of property, plant and equipment | **(**16688**)** | (15236) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of property, plant and equipment | 17 | 229 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of long-term marketable securities | **(**724**)** | (32) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of long-term marketable securities | 1088 | 304 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other – net | **(**1**)** | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash flows used in investing activities | **(**16308**)** | (14734) |
| Cash flows from financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from revolving credit facility | 44000 | 32244 |
| &nbsp;&nbsp;&nbsp;&nbsp;Payments on revolving credit facility | **(**26666**)** | (8500) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale and leaseback financing arrangements | 20000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Payments on sale and leaseback financing arrangements | **(**346**)** | (245) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from equipment financing facility | 6388 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from related party debt | 5776 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Repayment of related party debt | **(**5776**)** | (1056) |
| &nbsp;&nbsp;&nbsp;&nbsp;Repayment of debt | **(**645**)** | (864) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from shareholder exercise of warrants | 193 | 3308 |
| &nbsp;&nbsp;&nbsp;&nbsp;Debt and equity issuance costs | **(**337**)** | (485) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash flows provided by financing activities | 42587 | 24402 |
| Effect of exchange rate changes on cash and cash equivalents | **(**673**)** | (307) |
| Net decrease in cash and cash equivalents | **(**1602**)** | (6505) |
| Cash and cash equivalents at beginning of year | 10337 | 16842 |
| Cash and cash equivalents at end of year | $8735 | $10337 |
| Supplemental disclosures of cash flow information: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax payments (net of refunds) | $896 | $1633 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest payments (net of amounts capitalized) | 5923 | 2895 |
| Non-cash investing and financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of property, plant and equipment in accounts payable | $994 | $1676 |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance lease right-of-use assets exchanged for lease liabilities | 1105 | 1258 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease right-of-use assets exchanged for lease liabilities | 194 | 199 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Net loss and the change in inventories for 2021 were adjusted to include inventory costs using the FIFO basis of costing. See [<u>Note 2</u>](#note_2).

See Notes to Consolidated Financial Statements.

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

(dollars in thousands, except per share amounts)

**Description of Business** 

Ampco-Pittsburgh Corporation and its subsidiaries (collectively, the "Corporation") manufacture and sell highly engineered, high-performance specialty metal products and customized equipment utilized by industry throughout the world. It operates in two business segments, the Forged and Cast Engineered Products ("FCEP") segment and the Air and Liquid Processing ("ALP") segment. This segment presentation is consistent with how the Corporation's chief operating decision-maker evaluates financial performance and makes resource allocation and strategic decisions about the business.

<u>The Segments</u>

The FCEP segment produces forged hardened steel rolls, cast rolls and forged engineered products ("FEP"). Forged hardened steel rolls are used primarily in hot and cold rolling mills by producers of steel, aluminum and other metals. Cast rolls, which are produced in a variety of iron and steel qualities, are used mainly in hot strip mills, medium/heavy section mills and plate mills. FEP principally are sold to customers in the steel distribution market, oil and gas industry and the aluminum and plastic extrusion industries. The segment has operations in the United States, England, Sweden, and Slovenia and equity interests in three joint venture companies in China. Collectively, the segment primarily competes with European, Asian and North American and South American companies in both domestic and foreign markets and distributes a significant portion of its products through sales offices located throughout the world.

The ALP segment includes Aerofin, Buffalo Air Handling and Buffalo Pumps, all divisions of Air & Liquid Systems Corporation ("Air & Liquid"), a wholly owned subsidiary of the Corporation. Aerofin produces custom-engineered finned tube heat exchange coils and related heat transfer products for a variety of industries including OEM/commercial, nuclear power generation and industrial manufacturing. Buffalo Air Handling produces large custom-designed air handling systems for institutional (e.g., hospital, university), pharmaceutical and general industrial building markets. Buffalo Pumps manufactures centrifugal pumps for the fossil fueled power generation, marine defense and industrial refrigeration industries. The segment has operations in Virginia and New York with headquarters in Carnegie, Pennsylvania. The segment distributes a significant portion of its products through a common independent group of sales offices located throughout the United States and Canada.

While the Corporation operated at normal levels in 2022, it continues to be challenged by lingering global economic effects of a post-pandemic environment and repercussions from the Russia-Ukraine conflict, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Periodic disruptions to the global supply chain for the Corporation, its vendors and its customers,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Global inflationary pressures,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•European energy crisis, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Delays in receiving and shipping product due to lack of transportation.

The Corporation is actively monitoring, and will continue to actively monitor, the geopolitical and economic consequence of these events and the potential impact on its operations, financial condition, liquidity, suppliers, industry, and workforce.

**NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:** 

The Corporation's accounting policies conform to accounting principles generally accepted in the United States of America. The preparation of 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 reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to estimates and assumptions include assessing the carrying value of long-lived assets, valuing the assets and obligations related to employee benefit plans, accounting for loss contingencies associated with claims and lawsuits, and accounting for income taxes. Actual results could differ from those estimates. A summary of the significant accounting policies followed by the Corporation is presented below.

**Basis of Presentation**

The financial information included herein reflects the consolidated financial position of the Corporation as of December 31, 2022 and 2021, and the consolidated results of its operations and cash flows for the years then ended.

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**Consolidation** 

The accompanying consolidated financial statements include the assets, liabilities, revenues, and expenses of all majority-owned subsidiaries and joint ventures over which the Corporation exercises control and, when applicable, entities for which the Corporation has a controlling financial interest or is the primary beneficiary. Investments in joint ventures where the Corporation owns 20% to 50% of the voting stock and has the ability to exercise significant influence over the operating and financial policies of the joint venture are accounted for using the equity method of accounting. Investments in joint ventures where the Corporation does not have the ability to exercise significant influence over the operating and financial policies of the joint venture are accounted for using the cost method of accounting. Investments in joint ventures are reviewed for impairment whenever events or circumstances indicate the carrying amount of the investment may not be recoverable. If the estimated fair value of the investment is less than the carrying amount and such decline is determined to be "other than temporary," then the investment may not be fully recoverable, resulting in a write-down of the investment value. Intercompany accounts and transactions are eliminated.

**Cash and Cash Equivalents** 

Securities with purchased original maturities of three months or less are considered to be cash equivalents. The Corporation maintains cash and cash equivalents at various financial institutions which may exceed federally-insured amounts.

**Inventories** 

Inventories are valued at the lower of cost and net realizable value, which is defined as the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. Cost includes the cost of raw materials, direct labor and overhead for those items manufactured but not yet sold or for which control has not yet transferred to the customer. Fixed production overhead is allocated to inventories based on normal capacity of the production facilities. In periods of abnormally high production, the amount of fixed overhead allocated to each unit of production is decreased so that inventories are not measured above cost. The amount of fixed overhead allocated to inventories is not increased as a consequence of abnormally low production or plant idling. Costs for abnormal amounts of spoilage, handling costs and freight costs are charged to expense when incurred. Cost of inventories are primarily determined by the first-in, first-out ("FIFO") method. Prior to the fourth quarter of 2022, the last-in, first-out ("LIFO") method was used to determine the cost of significantly all the Corporation's domestic inventories. Effective December 31, 2022, the Corporation elected to change its method of accounting for domestic inventories costed on the LIFO basis to the FIFO basis. Foreign inventories have historically been maintained on the FIFO basis. Prior period financial statements and affected financial information have been adjusted to reflect results and information, as if the Corporation had always used the FIFO method of inventory valuation for domestic inventories.

**Property, Plant and Equipment** 

Property, plant and equipment purchased new is recorded at cost with depreciation computed using the straight-line method over the following estimated useful lives: land improvements – 15 to 20 years; buildings – 25 to 50 years; machinery and equipment – 3 to 25 years; and other (e.g., furniture and fixtures and vehicles) – 5 to 10 years. Assets under finance leases are depreciated on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term. Property, plant and equipment acquired as part of a business combination is recorded at its estimated fair value with depreciation computed using the straight-line method over the estimated remaining useful lives. Expenditures that extend economic useful lives are capitalized. Routine maintenance is charged to expense. Gains or losses are recognized on retirements or disposals. Proceeds from government grants are recorded as a reduction in the purchase price of the underlying assets and amortized against depreciation over the lives of the related assets.

Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the undiscounted cash flows generated from the use and eventual disposition of the assets are less than their carrying value, then the asset value may not be fully recoverable, resulting in a write-down of the asset value. Estimates of future cash flows are based on expected market conditions over the remaining useful life of the primary asset(s). In addition, the remaining depreciation period for the impaired asset would be re-assessed and, if necessary, revised.

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**Right-of-Use Assets**

A right-of-use ("ROU") asset represents the right to use an underlying asset for the term of the lease, and the corresponding liability represents an obligation to make periodic payments arising from the lease. A determination of whether an arrangement includes a lease is made at the inception of the arrangement. ROU assets and liabilities are recognized on the consolidated balance sheet, at the commencement date of the lease, in an amount equal to the present value of the lease payments over the term of the lease calculated using the interest rate implicit in the lease arrangement or, if not known, the Corporation's incremental borrowing rate. The present value of a ROU asset also includes any lease payments made prior to commencement of the lease and excludes any lease incentives received or to be received under the arrangement. The lease term includes options to extend or terminate the lease when it is reasonably certain that such options will be exercised. Operating leases that have original terms of less than 12 months, inclusive of options to extend that are reasonably certain to be exercised, are classified as short-term leases and are not recognized on the consolidated balance sheet.

ROU assets are recorded as a noncurrent asset on the consolidated balance sheet. The corresponding liabilities are recorded as an operating lease liability, either current or noncurrent, as applicable, on the consolidated balance sheet. Operating lease costs are recognized on a straight-line basis over the lease term within costs of products sold (excluding depreciation and amortization) or selling and administrative expenses based on the use of the related ROU asset.

**Intangible Assets** 

Intangible assets primarily consist of developed technology, customer relationships and trade name. Intangible assets with finite lives are amortized using the straight-line method over their estimated useful life, which is determined by identifying the period over which most of the cash flows are expected to be generated. Intangible assets with indefinite lives are not amortized but reviewed for impairment at least annually, as of October 1. Additionally, intangible assets, both finite- and indefinite-lived, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. For finite-lived intangible assets, if the undiscounted cash flows attributable to the assets are less than their carrying value, then the asset value may not be fully recoverable, resulting in a write-down of the asset value. For indefinite-lived intangible assets, if the discounted cash flows attributable to the assets are less than their carrying value, then the asset value may not be fully recoverable, resulting in a write-down of the asset value. Also, if the estimate of an intangible asset's remaining useful life changes, the remaining carrying value of the intangible asset will be amortized prospectively over the revised remaining useful life.

**Debt Issuance Costs** 

Debt issuance costs are amortized as interest expense over the scheduled maturity period of the debt. The costs related to a line-of-credit arrangement are amortized over the term of the arrangement, regardless of whether there are any outstanding borrowings. Unamortized debt issuance costs are either recognized as a direct deduction from the carrying amount of the related debt or, if related to a line-of-credit facility, as an other noncurrent asset on the consolidated balance sheet.

**Product Warranty** 

A warranty that ensures basic functionality is an assurance-type warranty. A warranty that goes beyond ensuring basic functionality is considered a service-type warranty. The Corporation provides assurance-type warranties; it does not provide service-type warranties. Provisions for assurance-type warranties are recognized at the time the underlying sale is recorded. The provision is based on historical experience as a percentage of sales adjusted for potential claims when a liability is probable and for known claims.

**Employee Benefit Plans** 

**Funded Status** 

If the fair value of the plan assets exceeds the projected benefit obligation, the over-funded projected benefit obligation is recognized as an asset (prepaid pensions) on the consolidated balance sheet. Conversely, if the projected benefit obligation exceeds the fair value of the plan assets, the under-funded projected benefit obligation is recognized as a liability (employee benefit obligations) on the consolidated balance sheet. Gains and losses arising from the difference between actuarial assumptions and actual experience and unamortized prior service costs are recorded as a separate component of accumulated other comprehensive loss.

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**Net Periodic Pension and Other Postretirement Benefit Costs** 

Net periodic pension and other postretirement benefit costs include service cost, interest cost, expected rate of return on the market-related value of plan assets, amortization of prior service costs, and recognized actuarial gains or losses. When actuarial gains or losses exceed 10% of the greater of the projected benefit obligation or the market-related value of plan assets, they are amortized to net periodic pension and other postretirement benefit costs over the average remaining service period of the employees expected to receive benefits under the plan or over the remaining life expectancy of the employees expected to receive benefits if "all or almost all" of the plan's participants are inactive. When actuarial gains or losses are less than 10% of the greater of the projected benefit obligation or the market-related value of plan assets, they are included in net periodic pension and other postretirement benefit costs indirectly as a result of lower/higher interest costs arising from a decrease/increase in the projected benefit obligation. The market-related value of plan assets is determined using a five-year moving average which recognizes gains or losses in the fair market value of assets at the rate of 20% per year.

**Warrants**

Accounting for warrants includes an initial assessment of whether the warrants qualify as debt or equity. The Corporation's warrants meet the definition of equity instruments and, accordingly, are recorded within shareholders' equity on the consolidated balance sheet. The fair value of the warrants is determined as of the measurement date. Incremental costs directly attributable to the offering of the securities are deferred and charged against the proceeds of the offering.

**Other Comprehensive Income (Loss)** 

Other comprehensive income (loss) includes changes in assets and liabilities from non-owner sources including foreign currency translation adjustments, unamortized prior service costs and unrecognized actuarial gains and losses associated with employee benefit plans, and changes in the fair value of derivatives designated and effective as cash flow hedges.

Certain components of other comprehensive income (loss) are presented net of income tax. Foreign currency translation adjustments exclude the effect of income tax since earnings of non-U.S. subsidiaries are deemed to be re-invested for an indefinite period of time.

Reclassification adjustments are amounts which are realized during the year and, accordingly, are deducted from other comprehensive income (loss) in the period in which they are included in net income (loss) or when a transaction no longer qualifies as a cash flow hedge. Foreign currency translation adjustments are included in net income (loss) upon sale or upon complete or substantially complete liquidation of an investment in a foreign entity. With respect to employee benefit plans, unamortized prior service costs are included in net income (loss) either immediately upon curtailment of the employee benefit plan or over the average remaining service period or life expectancy of the employees expected to receive benefits, and unrecognized actuarial gains and losses are included in net income (loss) indirectly as a result of lower/higher interest costs arising from a decrease/increase in the projected benefit obligation. Changes in the fair value of derivatives are included in net income (loss) when the projected sale occurs or, if a foreign currency purchase contract, over the estimated useful life of the underlying asset.

**Foreign Currency Translation** 

Assets and liabilities of the Corporation's foreign operations are translated at year-end exchange rates, and the consolidated statements of operations are translated at the average exchange rates for the year. Gains or losses resulting from translating foreign currency financial statements are accumulated as a separate component of accumulated other comprehensive loss until the entity is sold or substantially liquidated.

**Revenue Recognition** 

Revenue recognition requires determination of the sales price, allocation of the sales price to each performance obligation, and satisfaction of each performance obligation. The sales price and performance obligations are outlined in a contract with a customer. A contract is deemed to exist when there is persuasive evidence of an arrangement, the rights and obligations of the parties are identified, the sales price is identifiable, payment terms are known, the contract has commercial substance, and collectability of consideration is probable. A contract can be in the form of an executed purchase order from the customer, combined with an order acknowledgment from the Corporation, a sales agreement or a longer-term supply agreement between the customer and the Corporation, or a similar arrangement deemed to be a normal and customary business practice for that particular customer or class of customer.

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Contracts are short-term in nature with the time between commencement of production to shipment being a few months. A contract could have a single performance obligation or multiple performance obligations for the manufacturing of product(s). For contracts with a single performance obligation, the obligation is satisfied upon transfer of control of the product to the customer. For contracts with multiple performance obligations, the Corporation accounts for individual performance obligations separately if they are distinct. The sales price is allocated to each performance obligation based on the relative standalone selling price of each performance obligation to the total consideration of the contract. The standalone selling price is determined utilizing observable prices to the extent available. If the performance obligations are not distinct and the standalone selling price is not directly observable, the standalone selling price is estimated maximizing the use of observable inputs.

The sales price required to be paid by the customer is identifiable from the contract. It is not subject to refund or adjustment, except for a variable-index surcharge provision which is known at the time of shipment and increases or decreases, as applicable, the selling price of the product for corresponding changes in the published index cost of certain raw materials and energy. The variable-index surcharge is recognized as revenue when the corresponding inventory is revenue recognized.

Likelihood of collectability is assessed prior to acceptance of an order and requires the use of judgment. It considers the customer's ability and intention to pay based on a variety of factors including the customer's historical payment experience. In certain circumstances, the Corporation may require a deposit from the customer, a letter of credit or another form of assurance for payment. An allowance for doubtful accounts is maintained based on historical experience. Payment terms are standard to the industry and generally require payment 30 days after control transfers to the customer.

Transfer of control is assessed based on the terms of the contract. Transfer of control, and therefore revenue recognition, occurs when title, ownership and risk of loss pass to the customer. Typically, this occurs when the product is shipped to the customer (i.e., FOB shipping point), delivered to the customer (i.e., FOB destination) or, for foreign sales, in accordance with trading guidelines known as Incoterms. Incoterms are standard trade definitions used in international contracts and are developed, maintained and promoted by the ICC Commission on Commercial Law and Practice.

Certain customer contracts may include cancellation-for-convenience clauses that provide either (i) the customer with the right to acquire inventory while in-process or (ii) the Corporation with the right for reimbursement with an element of profit in the event the customer cancels. These cancellation-for-convenience clauses result in the recognition of revenue over time and prior to shipment. The amount of revenue and associated costs recognized at a reporting date is based on the costs incurred as of the reporting date in comparison to the estimated total costs to be incurred, which the Corporation believes is a faithful depiction of the transfer of control to the customer.

Shipping terms vary across the businesses and typically depend on the product, country of origin and type of transportation (truck or vessel). There are no customer-acceptance provisions other than, perhaps, customer inspection and testing prior to shipment. Post-shipment obligations are insignificant.

Amounts billed to the customer for shipping and handling are recorded within net sales and the related costs are recorded within costs of products sold (excluding depreciation and amortization). Amounts billed for taxes assessed by various government authorities (e.g., sales tax, value-added tax, etc.) are excluded from the determination of net income (loss) and, instead, are recorded as a liability until remitted to the government authority.

**Stock-Based Compensation** 

Stock-based compensation, such as stock options, restricted stock units and performance share units, is recognized over the vesting period based on the fair value of the award at the date of grant. For stock options, the fair value is determined by the Black-Scholes option pricing model and is expensed over the vesting period of three years. For restricted stock units, the fair value is equal to the closing price of the Corporation's common stock on the New York Stock Exchange ("NYSE") on the date of grant and is expensed over the service period, typically three years. For performance share unit awards that vest subject to a performance condition, the fair value is equal to the closing price of the Corporation's stock on the NYSE on the date of grant. For performance share unit awards that vest subject to a market condition, the fair value is determined using a Monte Carlo simulation model. The fair value of performance share unit awards is expensed over the performance period when it is probable that the performance condition will be achieved.

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**Asbestos-Related Costs**

The amounts recorded for asbestos-related liabilities and insurance receivables for asbestos-related matters rely on assumptions that are based on currently known facts and strategies. Asbestos-related liabilities are recognized when a liability is probable of occurrence and can be reasonably estimated. The liability includes an estimate of future claims as well as settlement or indemnity costs that would be incurred to resolve both pending and future unasserted claims over the period which such claims can be reasonably estimated. Insurance receivables for asbestos-related matters are recognized for the estimated amount of probable insurance recoveries attributable to the claims for which an asbestos-related liability has been recognized, including the portion of incurred defense costs expected to be reimbursed. Neither the asbestos-related liabilities nor the insurance receivables for asbestos-related matters are discounted to their present values due to the inability to reliably forecast the timing of future cash flows. The asbestos-related liabilities and insurance receivables for asbestos-related matters, as well as the underlying assumptions, are reviewed on a regular basis to determine whether any adjustments to the estimates are required. If it is determined there is an increase in asbestos-related liabilities net of insurance recoveries, then a charge to net income (loss) would be recorded. Similarly, if it is determined there is a decrease in asbestos-related liabilities net of insurance recoveries, then a credit to net income (loss) would be recorded.

**Derivative Instruments** 

Derivative instruments which include forward exchange (for foreign currency sales and purchases) and futures contracts are recorded on the consolidated balance sheet as either an asset or a liability measured at their fair value. The accounting for changes in the fair value of a derivative depends on the use of the derivative. To the extent that a derivative is designated and effective as a cash flow hedge of an exposure to future changes in value, the change in the fair value of the derivative is deferred in accumulated other comprehensive loss. Any portion considered to be ineffective, including that arising from the unlikelihood of an anticipated transaction to occur, is reported as a component of earnings (other income/expense) immediately.

Upon occurrence of the anticipated sale, the foreign currency sales contract designated and effective as a cash flow hedge is de-designated as a fair value hedge, and the change in fair value previously deferred in accumulated other comprehensive loss is reclassified to earnings (net sales) with subsequent changes in fair value recorded as a component of earnings (other income/expense). Upon occurrence of the anticipated purchase, the foreign currency purchase contract is settled, and the change in fair value deferred in accumulated other comprehensive loss is reclassified to earnings (depreciation and amortization expense) over the life of the underlying asset. Upon settlement of a futures contract, the change in fair value deferred in accumulated other comprehensive loss is reclassified to earnings (costs of products sold, excluding depreciation and amortization) when the corresponding inventory is sold and revenue is recognized. To the extent a derivative is designated and effective as a hedge of an exposure to changes in fair value, the change in the derivative's fair value will be offset in the consolidated statement of operations by the change in the fair value of the item being hedged and is recorded as a component of earnings (other income/expense). Cash flows associated with the derivative instruments are recorded as a component of operating activities on the consolidated statement of cash flows.

The Corporation does not enter into derivative transactions for speculative purposes and, therefore, holds no derivative instruments for trading purposes.

**Fair Value** 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. A hierarchy of inputs is used to determine fair value measurements with three levels. Level 1 inputs are quoted prices in active markets for identical assets or liabilities and are considered the most reliable evidence of fair value. Level 2 inputs are observable prices that are not quoted on active exchanges. Level 3 inputs are unobservable inputs used for measuring the fair value of assets or liabilities.

**Legal Costs** 

Legal costs expected to be incurred in connection with loss contingencies are accrued when such costs are probable and estimable.

**Income Taxes** 

Income taxes are recognized during the year in which transactions enter into the determination of financial statement income (loss). Any taxes on foreign income in excess of a deemed return on tangible assets of foreign corporations are accounted for as period costs. Deferred income tax assets and liabilities are recognized for the future tax consequences of temporary differences between the book carrying amount and the tax basis of assets and liabilities including net operating loss carryforwards. A valuation allowance is provided against a deferred income tax asset when it is "more likely than not" the asset will not be realized. Similarly, if a determination is made that it is "more likely than not" the deferred income tax asset will be realized, the related valuation allowance would be reduced and a benefit to earnings would be recorded. Penalties and interest are recognized as a component of the income tax provision.

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Tax benefits are recognized in the consolidated financial statements for tax positions taken or expected to be taken in a tax return when it is "more likely than not" the tax authorities will sustain the tax position solely on the basis of the position's technical merits. Consideration is given primarily to legislation and statutes, legislative intent, regulations, rulings, and case law as well as their applicability to the facts and circumstances of the tax position when assessing the sustainability of the tax position. In the event a tax position no longer meets the "more likely than not" criteria, the tax benefit is reversed by recognizing a liability and recording a charge to earnings. Conversely, if a tax position subsequently meets the "more likely than not" criteria, a tax benefit would be recognized by reducing the liability and recording a credit to earnings.

**Earnings Per Common Share** 

Basic earnings per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding for the period. The computation of diluted earnings per common share is similar to basic earnings per common share except the denominator is increased to include the dilutive effect of the net additional common shares that would have been outstanding assuming exercise of outstanding stock awards and warrants, calculated using the treasury stock method. The computation of diluted earnings per share would not assume the exercise of an outstanding stock award or warrant if the effect on earnings per common share would be antidilutive. Similarly, the computation of diluted earnings per share would not assume the exercise of outstanding stock awards and warrants if the Corporation incurred a net loss since the effect on earnings per common share would be antidilutive. The weighted-average number of common shares outstanding assuming exercise of dilutive stock awards and warrants was 19,444,083 for 2022 and 19,696,397 for 2021. Weighted-average outstanding stock awards and warrants excluded from the diluted earnings per common share calculation, since the effect would have been antidilutive, were 5,339,002 for 2022 and 359,940 for 2021. With respect to amounts attributable to Ampco-Pittsburgh common shareholders, net income (loss) attributable to Ampco-Pittsburgh common shareholders excludes net income (loss) attributable to noncontrolling interest.

**Recently Issued Accounting Pronouncements** 

In September 2016, the Financial Accounting Standards Board issued ASU 2016-13, Financial Instruments – Credit Losses, which adds a new impairment model, known as the current expected credit loss ("CECL") model, that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes an allowance for its estimate of expected credit losses at the initial recognition of an in-scope financial instrument and applies it to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments. The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss. The guidance originally became effective for the Corporation on January 1, 2020; however, since the Corporation meets the definition of a Smaller Reporting Company, as defined by the Securities Exchange Commission, the effective date was subsequently revised to fiscal years beginning after December 15, 2022. The Corporation is nearly complete in its assessment of ASU 2016-13 and estimates its impact to approximate $500 to $1,000, which will be recorded as an adjustment to opening retained earnings as of January 1, 2023.

**NOTE 2 - CHANGE IN METHOD OF ACCOUNTING FOR INVENTORY VALUATION**

Effective December 31, 2022, the Corporation changed its method of accounting for the cost of its domestic inventories from the LIFO method to the FIFO method. At December 31, 2021, approximately 35% of the Corporation's inventories were accounted for using the LIFO method and, at December 31, 2022, approximately 41% of the Corporation's inventories would have been accounted for using the LIFO method had the Corporation not changed.

The Corporation believes the change to the FIFO method of inventory valuation is preferable as it provides a better matching of costs with the physical flow of goods, standardizes the Corporation's inventory valuation methodology among the locations, and improves comparability with industry peers.

A change from the LIFO method to the FIFO method is considered a change in accounting principle requiring all prior periods to be restated as if the Corporation had used the FIFO method to value its domestic inventories for those periods and with a cumulative adjustment recorded to retained deficit, net of tax, of the earliest year presented (i.e., January 1, 2021). The cumulative impact decreased the Corporation's consolidated retained deficit on January 1, 2021, net of tax, by $11,494. There is no significant change to the Corporation's deferred income tax assets due to the Corporation having a valuation allowance recorded against those deferred income tax assets (See [<u>Note 21</u>](#note_21)).

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The following tables present the consolidated financial statement line items as of and for the year ended December 31, 2022, as if the Corporation had not changed its method of accounting for its domestic inventories from the LIFO method to the FIFO method:

**Consolidated Statement of Operations**

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| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** |
|  | **As reported - FIFO** | **Effect of Change** | **If adjusted - LIFO** |
| Costs of products sold (excluding depreciation and amortization) | $327996 | $2763 | $330759 |
| Total operating costs and expenses | 387411 | 2763 | 390174 |
| Income from operations | 2778 | (2763) | 15 |
| Income before income taxes | 5556 | (2763) | 2793 |
| Net income | 3980 | (2763) | 1217 |
| Net income attributable to Ampco-Pittsburgh | 3416 | (2763) | 653 |
| Net income per basic share attributable to Ampco-Pittsburgh common shareholders | $0.18 | (0.14) | $0.04 |
| Net income per diluted share attributable to Ampco-Pittsburgh common shareholders | $0.18 | (0.14) | $0.04 |

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**Consolidated Balance Sheet**

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| | | | |
|:---|:---|:---|:---|
|  | **As of December 31, 2022** | **As of December 31, 2022** | **As of December 31, 2022** |
|  | **As reported - FIFO** | **Effect of Change** | **If adjusted - LIFO** |
| Inventories | $121739 | $(23282) | $98457 |
| Total current assets | 231408 | (23282) | 208126 |
| Deferred income tax assets | 2141 | 191 | 2332 |
| Total assets | 502774 | (23091) | 479683 |
| Retained deficit | **(**32322**)** | (23091) | (55413) |
| Total liabilities and shareholders' equity | 502774 | (23091) | 479683 |

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**Consolidated Statement of Cash Flows**

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| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** |
|  | **As reported - FIFO** | **Effect of Change** | **If adjusted - LIFO** |
| Net income | $3980 | $(2763) | $1217 |
| Non-cash provisions - net | $**(**2215**)** | $893 | (1322) |
| Changes in assets/liabilities: |  |  |  |
| &nbsp;&nbsp;Inventories | **(**17903**)** | 1870 | (16033) |

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The following tables present the consolidated financial statement line items affected as of and for the year ended December 31, 2021, as a result of the Corporation changing its method of accounting for its domestic inventories from the LIFO method to the FIFO method.

**Consolidated Statement of Operations**

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| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** |
|  | **As originally reported - LIFO** | **Effect of Change** | **As adjusted - FIFO** |
| Costs of products sold (excluding depreciation and amortization) | $287639 | $(8834) | $278805 |
| Total operating costs and expenses | 358536 | (8834) | 349702 |
| Loss from operations | **(**13616**)** | 8834 | (4782) |
| Loss before income taxes | **(**9829**)** | 8834 | (995) |
| Net loss | **(**12134**)** | 8834 | (3300) |
| Net loss attributable to Ampco-Pittsburgh | **(**12695**)** | 8834 | (3861) |
| Net loss per basic share attributable to Ampco-Pittsburgh common shareholders | $**(**0.67**)** | 0.47 | $(0.20) |
| Net loss per diluted share attributable to Ampco-Pittsburgh common shareholders | $**(**0.67**)** | 0.47 | $(0.20) |

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**Consolidated Balance Sheet**

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| | | | |
|:---|:---|:---|:---|
|  | **As of December 31, 2021** | **As of December 31, 2021** | **As of December 31, 2021** |
|  | **As originally reported - LIFO** | **Effect of Change** | **As adjusted - FIFO** |
| Inventories | $88198 | $20519 | $108717 |
| Total current assets | 188297 | 20519 | 208816 |
| Deferred tax assets | 2176 | (191) | 1985 |
| Total assets | 485632 | 20328 | 505960 |
| Retained deficit | **(**56066**)** | 20328 | (35738) |
| Total liabilities and shareholders' equity | 485632 | 20328 | 505960 |

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**Consolidated Statement of Cash Flows**

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| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** |
|  | **As originally reported - LIFO** | **Effect of Change** | **As adjusted - FIFO** |
| Net loss | $**(**12134**)** | $8834 | $(3300) |
| Non-cash provisions - net | $1809 | $384 | $2193 |
| Changes in assets/liabilities: |  |  |  |
| &nbsp;&nbsp;Inventories | **(**18400**)** | (9218) | (27618) |

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The following tables present the unaudited interim consolidated financial statement line items affected for 2022 and 2021, as a result of the Corporation changing its method of accounting for its domestic inventories from the LIFO method to the FIFO method.

**Unaudited Condensed Consolidated Statements of Operations**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31, 2022** | **Three Months Ended March 31, 2022** | **Three Months Ended March 31, 2022** | **Three Months Ended March 31, 2021** | **Three Months Ended March 31, 2021** | **Three Months Ended March 31, 2021** |
|  | **As originally reported - LIFO** | **Effect of Change** | **As adjusted - FIFO** | **As originally reported - LIFO** | **Effect of Change** | **As adjusted - FIFO** |
| Costs of products sold (excluding depreciation and amortization) | $78820 | $1696 | $80516 | $69588 | $432 | $70020 |
| Total operating costs and expenses | 93183 | 1696 | 94879 | 85893 | 432 | 86325 |
| Income (loss) from operations | 1243 | (1696) | (453) | 907 | (432) | 475 |
| Income (loss) before income taxes | 1665 | (1696) | (31) | 695 | (432) | 263 |
| Net income (loss) | 1609 | (1696) | (87) | 314 | (432) | (118) |
| Net income (loss) attributable to Ampco-Pittsburgh | 1645 | (1696) | (51) | 167 | (432) | (265) |
| Net income (loss) per basic share attributable to Ampco-Pittsburgh common shareholders | $0.09 | (0.09) | $(0.00) | $0.01 | (0.02) | $(0.01) |
| Net income (loss) per diluted share attributable to Ampco-Pittsburgh common shareholders | $0.08 | (0.08) | $(0.00) | $0.01 | (0.02) | $(0.01) |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30, 2022** | **Three Months Ended June 30, 2022** | **Three Months Ended June 30, 2022** | **Three Months Ended June 30, 2021** | **Three Months Ended June 30, 2021** | **Three Months Ended June 30, 2021** |
|  | **As originally reported - LIFO** | **Effect of Change** | **As adjusted - FIFO** | **As originally reported - LIFO** | **Effect of Change** | **As adjusted - FIFO** |
| Costs of products sold (excluding depreciation and amortization) | $87487 | $(2404) | $85083 | $75433 | $(2391) | $73042 |
| Total operating costs and expenses | 102902 | (2404) | 100498 | 91959 | (2391) | 89568 |
| (Loss) income from operations | **(**320**)** | 2404 | 2084 | 469 | 2391 | 2860 |
| Income before income taxes | 911 | 2404 | 3315 | 2596 | 2391 | 4987 |
| Net income | 522 | 2404 | 2926 | 1224 | 2391 | 3615 |
| Net income attributable to Ampco-Pittsburgh | 403 | 2404 | 2807 | 1063 | 2391 | 3454 |
| Net income per basic share attributable to Ampco-Pittsburgh common shareholders | $0.02 | 0.13 | $0.15 | $0.06 | 0.12 | $0.18 |
| Net income per diluted share attributable to Ampco-Pittsburgh common shareholders | $0.02 | 0.12 | $0.14 | $0.05 | 0.11 | $0.16 |
|  | **Six Months Ended June 30, 2022** | **Six Months Ended June 30, 2022** | **Six Months Ended June 30, 2022** | **Six Months Ended June 30, 2021** | **Six Months Ended June 30, 2021** | **Six Months Ended June 30, 2021** |
|  | **As originally reported - LIFO** | **Effect of Change** | **As adjusted - FIFO** | **As originally reported - LIFO** | **Effect of Change** | **As adjusted - FIFO** |
| Costs of products sold (excluding depreciation and amortization) | $166307 | $(708) | $165599 | $145021 | $(1959) | $143062 |
| Total operating costs and expenses | 196085 | (708) | 195377 | 177852 | (1959) | 175893 |
| Income from operations | 923 | 708 | 1631 | 1376 | 1959 | 3335 |
| Income before income taxes | 2576 | 708 | 3284 | 3291 | 1959 | 5250 |
| Net income | 2131 | 708 | 2839 | 1538 | 1959 | 3497 |
| Net income attributable to Ampco-Pittsburgh | 2048 | 708 | 2756 | 1230 | 1959 | 3189 |
| Net income per basic share attributable to Ampco-Pittsburgh common shareholders | $0.11 | 0.03 | $0.14 | $0.07 | 0.10 | $0.17 |
| Net income per diluted share attributable to Ampco-Pittsburgh common shareholders | $0.11 | 0.03 | $0.14 | $0.06 | 0.09 | $0.15 |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended September 30, 2022** | **Three Months Ended September 30, 2022** | **Three Months Ended September 30, 2022** | **Three Months Ended September 30, 2021** | **Three Months Ended September 30, 2021** | **Three Months Ended September 30, 2021** |
|  | **As originally reported - LIFO** | **Effect of Change** | **As adjusted - FIFO** | **As originally reported - LIFO** | **Effect of Change** | **As adjusted - FIFO** |
| Costs of products sold (excluding depreciation and amortization) | $84378 | $(277) | $84101 | $67990 | $(1979) | $66011 |
| Total operating costs and expenses | 99721 | (277) | 99444 | 83546 | (1979) | 81567 |
| (Loss) income from operations | **(**74**)** | 277 | 203 | **(**2361**)** | 1979 | (382) |
| Income (loss) before income taxes | 2121 | 277 | 2398 | **(**1175**)** | 1979 | 804 |
| Net income (loss) | 1134 | 277 | 1411 | **(**1466**)** | 1979 | 513 |
| Net income (loss) attributable to Ampco-Pittsburgh | 846 | 277 | 1123 | **(**1589**)** | 1979 | 390 |
| Net income (loss) per basic share attributable to Ampco-Pittsburgh common shareholders | $0.04 | 0.02 | $0.06 | $**(**0.08**)** | 0.10 | $0.02 |
| Net income (loss) per diluted share attributable to Ampco-Pittsburgh common shareholders | $0.04 | 0.02 | $0.06 | $**(**0.08**)** | 0.10 | $0.02 |
|  | **Nine Months Ended September 30, 2022** | **Nine Months Ended September 30, 2022** | **Nine Months Ended September 30, 2022** | **Nine Months Ended September 30, 2021** | **Nine Months Ended September 30, 2021** | **Nine Months Ended September 30, 2021** |
|  | **As originally reported - LIFO** | **Effect of Change** | **As adjusted - FIFO** | **As originally reported - LIFO** | **Effect of Change** | **As adjusted - FIFO** |
| Costs of products sold (excluding depreciation and amortization) | $250685 | $(985) | $249700 | $213011 | $(3938) | $209073 |
| Total operating costs and expenses | 295806 | (985) | 294821 | 261398 | (3938) | 257460 |
| Income (loss) from operations | 849 | 985 | 1834 | **(**985**)** | 3938 | 2953 |
| Income before income taxes | 4697 | 985 | 5682 | 2116 | 3938 | 6054 |
| Net income | 3265 | 985 | 4250 | 72 | 3938 | 4010 |
| Net income (loss) attributable to Ampco-Pittsburgh | 2894 | 985 | 3879 | **(**359**)** | 3938 | 3579 |
| Net income (loss) per basic share attributable to Ampco-Pittsburgh common shareholders | $0.15 | 0.05 | $0.20 | $**(**0.02**)** | 0.21 | $0.19 |
| Net income (loss) per diluted share attributable to Ampco-Pittsburgh common shareholders | $0.15 | 0.05 | $0.20 | $**(**0.02**)** | 0.20 | $0.18 |

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**NOTE 3 – INVENTORIES:**

Inventories as of December 31, 2022 and 2021 were comprised of the following**:**

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| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Raw materials | $42736 | $28841 |
| Work-in-progress | 48809 | 47069 |
| Finished goods | 23231 | 22481 |
| Supplies | 6963 | 10326 |
| Inventories | $121739 | $108717 |

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**NOTE 4 – PROPERTY, PLANT AND EQUIPMENT:**

Property, plant and equipment as of December 31, 2022 and 2021 was comprised of the following:

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| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Land and land improvements | $9887 | $10377 |
| Buildings | 62102 | 63166 |
| Machinery and equipment | 339134 | 345118 |
| Construction-in-process | 16005 | 11019 |
| Other | 6706 | 6798 |
|  | 433834 | 436478 |
| Accumulated depreciation | **(**278836**)** | (277915) |
| Property, plant and equipment, net | $154998 | $158563 |

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The land and building of Union Electric Steel UK Limited, an indirect subsidiary of the Corporation ("UES-UK"), equal to approximately $2,565 (£2,122) at December 31, 2022, are held as collateral by the trustees of the UES-UK defined benefit pension plan (see [<u>Note 11</u>](#note_11)). Machinery and equipment purchased with proceeds from the equipment financing facility (see [<u>Note 9</u>](#note_9)), equal to $6,388 at December 31, 2022, are included in construction-in-process and pledged as collateral for the facility. The remaining assets, other than real property, are pledged as collateral for the Corporation's revolving credit facility (see [<u>Note 9</u>](#note_9)).

Certain land and land improvements and buildings were included in the sale and leaseback financing transactions (see [<u>Note 9</u>](#note_9)). Title to these assets lie with the lender; however, since the transactions qualified as financing transactions, versus sales, the assets remain recorded on the Corporation's consolidated balance sheet.

The gross value of assets under finance leases and the related accumulated amortization approximated $3,917 and $1,577 as of December 31, 2022, respectively, and $3,882 and $1,263 as of December 31, 2021, respectively. Depreciation expense approximated $17,040 and $17,336, including depreciation of assets under finance leases of approximately $496 and $473, for the years ended December 31, 2022 and 2021, respectively.

The potential significant change brought about by the Russia-Ukraine conflict resulting in the European energy crisis was deemed to be a triggering event under ASC 360, Property, Plant and Equipment, causing the Corporation to evaluate whether the property, plant and equipment of an asset group within the FCEP segment was deemed to be impaired. Accordingly, in connection with preparation of its 2023 business plan in the fourth quarter of 2022, the Corporation completed a quantitative analysis of the long-lived assets for the asset group and determined the assets were not impaired. The Corporation continues to evaluate the uncertainty associated with the Russia-Ukraine conflict and, at December 31, 2022, there were no additional triggering events identified. Additionally, there have been no triggering events for the asset groups within the ALP segment.

**NOTE 5 – OPERATING LEASE RIGHT-OF-USE ASSETS:**

The Corporation leases certain factory and office space and equipment. Additionally, the manufacturing facilities of one of the Corporation's cast roll joint ventures in China are located on land leased by the joint venture from the other partner. The land lease commenced in 2007, the date the joint venture was formed, and continues through 2054, the expected end date of the joint venture,

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and includes variable lease payment provisions based on the land standard price prevailing in Taiyuan, China, where the joint venture is located.

Right-of-use assets associated with operating leases as of December 31, 2022 and 2021 were comprised of the following:

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| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Land | $2729 | $2928 |
| Buildings | 1945 | 1953 |
| Machinery and equipment | 690 | 511 |
| Other | 367 | 429 |
|  | 5731 | 5821 |
| Accumulated amortization | **(**2209**)** | (1765) |
| Operating lease right-of-use assets, net | $3522 | $4056 |

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**NOTE 6 – INTANGIBLE ASSETS:** 

Intangible assets as of December 31, 2022 and 2021 were comprised of the following:

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| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Customer relationships | $5375 | $5850 |
| Developed technology | 3847 | 4201 |
| Trade name | 2167 | 2442 |
|  | 11389 | 12493 |
| Accumulated amortization | **(**6195**)** | (6289) |
| Intangible assets, net | $5194 | $6204 |

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The trade name is an indefinite-lived asset and, accordingly, is not subject to amortization. The fluctuation between the years is due to changes in foreign currency exchange rates. The following summarizes changes in intangible assets for the years ended December 31:

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| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Balance at the beginning of the year | $6204 | $7217 |
| Amortization of intangible assets | **(**368**)** | (541) |
| Other, primarily impact from changes in foreign currency exchange rates | **(**642**)** | (472) |
| Balance at the end of the year | $5194 | $6204 |

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Identifiable intangible assets are reviewed for impairment whenever events or circumstances indicate that the carrying values may not be recoverable. The potential significant change brought about by the Russia-Ukraine conflict resulting in the European energy crisis was deemed to be a triggering event causing the Corporation to evaluate whether the identifiable intangible assets of an asset group within the FCEP segment were deemed to be impaired. Accordingly, in connection with preparation of its 2023 business plan in the fourth quarter of 2022, the Corporation completed a quantitative analysis of the identifiable intangible assets for the asset group and determined the assets were not impaired. The Corporation continues to evaluate the uncertainty associated with the Russia-Ukraine conflict and, at December 31, 2022, there were no additional triggering events identified.

Identifiable intangible assets are expected to be amortized over a weighted-average period of approximately 12 years or $350 for 2023, $350 for 2024, $296 for 2025, $202 for 2026, $224 for 2027, and $1,605 thereafter.

**NOTE 7 – INVESTMENTS IN JOINT VENTURES:** 

The Corporation has interests in three joint ventures:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Shanxi Åkers TISCO Roll Co., Ltd. ("ATR") – a cast roll joint venture in China for which the Corporation accounts using the consolidated method of accounting. ATR principally manufactures and sells cast rolls for hot strip mills, steckel mills and medium plate mills.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Anhui Baochang Roll Co., Ltd., previously known as Magong Gongchang United Rollers Co., Ltd. ("MG") – a forged roll joint venture in China for which the Corporation accounts using the cost method of accounting. MG principally manufactures and sells large forged backup rolls for hot and cold strip mills.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Jiangsu Gong-Chang Roll Co., Ltd. ("Gongchang") – a cast roll joint venture in China for which the Corporation accounts using the cost method of accounting. Gongchang principally manufactures and sells cast rolls for hot strip mills, medium/heavy section mills and plate mills.

**ATR** 

In 2007, Åkers AB, a subsidiary of Union Electric Steel Corporation, a wholly owned subsidiary of the Corporation ("UES"), entered into an agreement with Taiyuan Iron & Steel Co., Ltd. ("TISCO") to form ATR, with Åkers AB owning 59.88% and TISCO owning 40.12%. Since Åkers AB is the majority shareholder, has voting rights proportional to its ownership interest and exercises control over TISCO, Åkers AB is considered the primary beneficiary and, accordingly, accounts for its investment in ATR using the consolidated method of accounting. The net assets and net income (loss) attributable to TISCO are reflected as noncontrolling interest in the consolidated financial statements.

**MG** 

The Corporation has a 33% interest in MG, which is recorded at cost, or $835. The Corporation does not participate in the management or daily operation of MG, has not guaranteed any of its obligations and has no ongoing responsibilities to it. Dividends may be declared by the Board of Directors of the joint venture after allocation of after-tax profits to various "funds" equal to the minimum amount required under Chinese law. No dividends were declared or received in 2022 or 2021.

**Gongchang** 

The Corporation has a 24.03% interest in Gongchang, which is recorded at cost, or $1,340. The Corporation does not participate in the management or daily operation of Gongchang, has not guaranteed any of its obligations and has no ongoing responsibilities to it. Dividends may be declared by the Board of Directors of the joint venture after allocation of after-tax profits to various "funds" equal to the minimum amount required under Chinese law. Dividends of $504 and $1,025 were declared and received in 2022 and 2021, respectively.

**NOTE 8 – OTHER CURRENT LIABILITIES:**

Other current liabilities as of December 31, 2022 and 2021 were comprised of the following:

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| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Customer-related liabilities | $16771 | $12548 |
| Accrued utilities | 2484 | 3098 |
| Accrued sales commissions | 1681 | 1864 |
| Accrued interest payable | 185 | 1772 |
| Other | 3642 | 1928 |
| Other current liabilities | $24763 | $21210 |

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Customer-related liabilities primarily include liabilities for product warranty claims and deposits received on future orders. Changes in the liability for product warranty claims for the years ended December 31, 2022 and 2021 consisted of the following:

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| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Balance at the beginning of the year | $7331 | $8105 |
| Satisfaction of warranty claims | **(**3020**)** | (3220) |
| Provision for warranty claims | 1438 | 2509 |
| Other, primarily impact from changes in foreign currency exchange rates | **(**556**)** | (63) |
| Balance at the end of the year | $5193 | $7331 |

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Customer deposits represent amounts collected from, or invoiced to, a customer in advance of revenue recognition and are recorded as an other current liability on the consolidated balance sheet. The liability for customer deposits is reversed when the Corporation satisfies its performance obligations and control of the inventory transfers to the customer, typically when title transfers. Performance obligations related to customer deposits are expected to be satisfied in less than one year.

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Changes in customer deposits for the years ended December 31, 2022 and 2021 consisted of the following:

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| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Balance at the beginning of the year | $4328 | $6507 |
| Satisfaction of performance obligations | **(**10735**)** | (12870) |
| Receipt of additional deposits | 17026 | 10729 |
| Other, primarily changes in foreign currency exchange rates | **(**166**)** | (38) |
| Balance at the end of the year | $10453 | $4328 |

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**NOTE 9 – DEBT:** 

Debt as of December 31, 2022 and 2021 was comprised of the following:

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| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Revolving credit facility | $47078 | $29744 |
| Sale and leaseback financing obligations | 41011 | 20546 |
| Industrial Revenue Bonds | 9191 | 9191 |
| Equipment financing facility | 6388 |  |
| Finance leases | 1803 | 1438 |
| Outstanding borrowings | 105471 | 60919 |
| &nbsp;&nbsp;&nbsp;Debt – current portion | **(**12410**)** | (20007) |
| &nbsp;&nbsp;&nbsp;Long-term debt | $93061 | $40912 |

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The current portion of debt includes primarily swing loans under the revolving credit facility and the Industrial Revenue Bonds ("IRBs"). By definition, swing loans are temporary advances under the revolving credit facility and short-term in nature. Accordingly, swing loans are classified as a current liability until the amount is either repaid, as customers remit payments, or, if elected by the Corporation, refinanced as a longer-term loan under the revolving credit facility. The swing loans balance was $2,078 and $8,744 at December 31, 2022 and 2021, respectively. Although the IRBs begin to become due in 2027, the bonds can be put back to the Corporation on short notice if they are not able to be remarketed, which is considered remote by the Corporation; accordingly, the IRBs are classified as a current liability. Future principal payments, assuming the swing loans are repaid in 2023 and the IRBs are called in 2023, are $12,410 for 2023, $1,509 for 2024, $1,615 for 2025, $46,617 for 2026, $1,801 for 2027, and $41,519 thereafter.

**Revolving Credit Facility**

The Corporation is a party to a revolving credit security agreement with a syndicate of banks that was amended on June 29, 2021 (as amended, the "First Amended and Restated Security Agreement"), and subsequently amended on December 17, 2021, and May 26, 2022. The First Amended and Restated Security Agreement, provides for a senior secured asset-based revolving credit facility of $100,000, that can be increased to $130,000 at the option of the Corporation and with the approval of the lenders, and an allowance of $20,000 for new equipment financing (see Equipment Financing Facility below) but, otherwise, restricts the Corporation from incurring additional indebtedness outside of the agreement, unless approved by the banks. The revolving credit facility includes sub-limits for letters of credit not to exceed $40,000 and European borrowings not to exceed $30,000, of which up to $7,500 may be allocated for Swedish borrowings. The maturity date for the revolving credit facility is June 29, 2026 and, subject to other terms and conditions of the agreement, would become due on that date.

Availability under the revolving credit facility is based on eligible accounts receivable, inventory and fixed assets. Domestic borrowings from the credit facility bear interest, at the Corporation's option, at either (i) LIBOR plus an applicable margin ranging between 2.00% to 2.50% based on the quarterly average excess availability or (ii) the alternate base rate plus an applicable margin ranging between 1.00% to 1.50% based on the quarterly average excess availability. European borrowings denominated in euros, pound sterling or krona bear interest at the Successor Rate as defined in the First Amended and Restated Security Agreement. As of December 31, 2022 and 2021, there were no European borrowings outstanding. Additionally, the Corporation is required to pay a commitment fee of 0.25% based on the daily unused portion of the credit facility.

As of December 31, 2022, the Corporation had outstanding borrowings under the First Amended and Restated Credit Agreement of $47,078. The average interest rate approximated 4.50% for 2022 and 4.00% for 2021. Additionally, the Corporation had utilized a portion of the credit facility for letters of credit (see [<u>Note 12</u>](#note_12)). As of December 31, 2022, the remaining availability under the First Amended and Restated Credit Agreement approximated $28,420, net of standard availability reserves. Deferred financing fees of $485 were incurred in 2021 related to the First Amended and Restated Security Agreement and are being amortized over the remaining term of the agreement.

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Borrowings outstanding under the First Amended and Restated Security Agreement are collateralized by a first priority perfected security interest in substantially all assets of the Corporation and its subsidiaries (other than real property). Additionally, the First Amended and Restated Security Agreement contains customary affirmative and negative covenants and limitations including, but not limited to, investments in certain of its subsidiaries, repurchase of the Corporation's shares, payment of dividends, incurrence of additional indebtedness and guaranties, and acquisitions and divestitures. In addition, the Corporation must maintain a certain level of excess availability or otherwise maintain a minimum fixed charge coverage ratio of not less than 1.05 to 1.00. The Corporation was in compliance with the applicable covenants under the First Amended and Restated Security Agreement as of December 31, 2022.

**Sale and Leaseback Financing Obligations**

In September 2018, UES completed a sale and leaseback financing transaction with Store Capital Acquisitions, LLC ("STORE") for certain of its real property, including its manufacturing facilities in Valparaiso, Indiana and Burgettstown, Pennsylvania, and its manufacturing facility and corporate headquarters located in Carnegie, Pennsylvania (the "UES Properties").

On August 30, 2022, Air & Liquid completed a sale and leaseback financing transaction with STORE, valued at $15,500, for certain of its real property, including its manufacturing facilities in Lynchburg, Virginia and Amherst, Virginia. Net proceeds, after transaction-related costs, approximated $15,396. On October 14, 2022, Air & Liquid completed a sale and leaseback financing transaction with STORE, valued at $4,500 for its real property, including its manufacturing facility, located in North Tonawanda, New York (collectively with the Virginia properties, the "ALP Properties"). Net proceeds, after transaction-related costs, approximated $4,460.

In connection with the August 2022 sale and leaseback financing transaction, and as modified by the October 2022 sale and leaseback financing transaction, UES and STORE entered into a Second Amended and Restated Master Lease Agreement (the "Restated Lease"), which amended and restated the existing lease agreement between UES and STORE. Pursuant to the Restated Lease, UES will lease the ALP Properties and the UES Properties (collectively, the "Properties"), subject to the terms and conditions of the Restated Lease, and UES will sublease the ALP Properties to Air & Liquid on the same terms as the Restated Lease. The Restated Lease provides for an initial term of 20 years; however, UES may extend the lease for the Properties for four successive periods of five years each. If fully extended, the Restated Lease would expire in August 2062. UES also has the option to repurchase the Properties, which it may, and intends to, exercise in 2032, for a price equal to the greater of (i) the Fair Market Value of the Properties, or (ii) 115% of Lessor's Total Investment, with such terms defined in the Restated Lease.

Annual payments for the Properties are equal to $3,347 (the "Base Annual Rent"), payable in equal monthly installments. On each anniversary date through August 2052, the Base Annual Rent will increase each anniversary date by an amount equal to the lesser of 2.04% or 1.25% of the change in the consumer price index, as defined in the Restated Lease. The Base Annual Rent during the remaining ten years of the Restated Lease will be equal to the Fair Market Rent, as defined in the Restated Lease.

In connection with the execution of the Restated Lease, UES and STORE entered into a Disbursement Agreement dated August 30, 2022 (the "Disbursement Agreement"), pursuant to which STORE agreed to provide up to $2,500 to UES towards certain improvements in the Carnegie, Pennsylvania manufacturing facility. As of December 31, 2022, no amounts were outstanding under the Disbursement Agreement. The Base Annual Rent under the Restated Lease will be adjusted to repay any amounts advanced under the Disbursement Agreement, at the time of the advance, with such advances to be repaid over the initial term of the Restated Lease of 20 years. Advances under the Disbursement Agreement will be secured by the capital improvements.

The Restated Lease and the Disbursement Agreement contain certain representations, warranties, covenants, obligations, conditions, indemnification provisions and termination provisions customary for those types of agreements.

The effective interest rate approximated 6.73% and 8.06% for 2022 and 2021, respectively. Deferred financing fees of $144 were incurred related to the sale and leaseback of the ALP Properties and are being amortized over the initial term of the Restated Lease of 20 years.

**Industrial Revenue Bonds** 

At December 31, 2022, the Corporation had the following IRBs outstanding: (i) $7,116 taxable IRB maturing in 2027, interest at a floating rate which averaged 1.83% and 0.19% for 2022 and 2021, respectively; and (ii) $2,075 tax-exempt IRB maturing in 2029, interest at a floating rate which averaged 2.32% and 0.09% for 2022 and 2021, respectively. The IRBs are secured by letters of credit of equivalent amounts and are remarketed periodically at which time the interest rates are reset. If the IRBs are not able to be remarketed, although considered remote by the Corporation, the bondholders can seek reimbursement immediately from the letters of credit which serve as collateral for the bonds. Accordingly, the IRBs are recorded as current debt on the consolidated balance sheets.

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**Equipment Financing Facility**

On September 29, 2022, UES and Clarus Capital Funding I, LLC ("Clarus") entered into a Master Loan and Security Agreement, pursuant to which UES can borrow up to $20,000 to finance certain equipment purchases associated with the FCEP capital program, including progress payments and reimbursement of deposits made to date. Each borrowing will constitute a secured loan transaction (each, a "Term Loan"). Each Term Loan will convert to a Term Note on the earlier of (i) the date in which the associated equipment is placed in service or (ii) December 29, 2023. Each Term Note will have a term of 84 months in arrears fully amortizing and will commence on the date of the Term Note.

Interest on each Term Loan will accrue at an annual fixed rate of 8%, payable monthly. Interest on each Term Note will accrue at a fixed rate to be calculated by Clarus equal to the like-term swap rate, as reported in ICE Benchmark, or such other information service available to Clarus, for the week ending immediately prior to the commencement date for such Term Note, plus 4.5%.

The Term Loans and Term Notes will be secured by a first priority security interest in and to all of UES's rights, title and interests in the underlying equipment.

At December 31, 2022, $6,388 was outstanding as Term Loans.

**Minority Shareholder Loan** 

In 2022, ATR periodically had loans outstanding with its minority shareholder. Amounts borrowed and repaid approximated $5,776 (RMB 38,471) in 2022. In addition, ATR repaid an existing loan in 2021 of approximately $1,056 (RMB 6,901). No loans are outstanding as of December 31, 2022 or 2021.

Interest on the borrowings equaled the three-to-five-year loan interest rate set by the People's Bank of China in effect at the time of the borrowing, which approximated 4.785% and 5% for 2022 and 2021, respectively. Interest paid in 2022, including interest accumulated on previous loans, approximated $1,766 (RMB 11,063). Interest paid in 2021 approximated $479 (RMB 3,046). Accrued interest as of December 31, 2021 approximated $1,713 (RMB 10,901), and was recorded in other current liabilities on the consolidated balance sheet. No interest was outstanding as of December 31, 2022.

**Finance Leases**

The Corporation leases equipment under various noncancelable lease agreements ending 2023 to 2028. Effective interest rates ranged between approximately 2% and 6% for 2022 and between 1% and 3% for 2021. The weighted-average remaining lease term approximated 5 years at December 31, 2022 and 2021. Cash paid for amounts included in the measurement of finance lease liabilities totaled $695 and $884 for the years ended December 31, 2022 and 2021, respectively, of which $55 and $29 were classified as operating cash flows and $640 and $855 were classified as financing cash flows in the consolidated statements of cash flows for each of the respective years. Interest on the finance lease liabilities was insignificant for both years.

**NOTE 10 – OPERATING LEASE LIABILITIES:**

The current and noncurrent portions of the Corporation's operating lease arrangements as of December 31, 2022 and 2021 were as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Operating lease liabilities – current portion | $635 | $641 |
| Noncurrent operating lease liabilities | 2886 | 3415 |
| Total operating lease liabilities | $3521 | $4056 |

---

Future operating lease payments as of December 31, 2022 were as follows:

---

| | |
|:---|:---|
| 2023 | $647 |
| 2024 | 589 |
| 2025 | 342 |
| 2026 | 176 |
| 2027 | 141 |
| 2028 and thereafter | 3417 |
| Total undiscounted payments | 5312 |
| Less: amount representing interest | (1791) |
| Present value of net minimum lease payments | $3521 |

---

------

At December 31, 2022 and 2021, the weighted-average remaining lease term approximated 7.86 years and 8.76 years, respectively, and the weighted-average discount rate approximated 3.97% and 4.66%, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities totaled $644 and $671 for the years ended December 31, 2022 and 2021, respectively, and was classified as operating cash flows in the consolidated statements of cash flows. The components of lease cost for the years ended December 31, 2022 and 2021, were as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Short-term operating lease costs | $15 | $29 |
| Long-term operating lease costs | 629 | 642 |
| Total operating lease costs | $644 | $671 |

---

**NOTE 11 – PENSION AND OTHER POSTRETIREMENT BENEFITS:** 

**U.S. Pension Benefits** 

The Corporation had two qualified domestic defined benefit pension plans that were merged as of December 31, 2022. The benefits for participants under either plan were not affected by the merger. The plan covers substantially all of the Corporation's U.S. employees. For all locations except one, benefit accruals and participation in the plan have been curtailed and replaced with a defined contribution pension plan. The defined benefit pension plan is covered by the Employee Retirement Income Security Act of 1974 ("ERISA"); accordingly, the Corporation's policy is to fund at least the minimum actuarially-computed annual contribution required under ERISA. Minimum contributions for 2022 were $444 and are expected to approximate $339 in 2023. No minimum contributions were due for 2021 due to relief provided by the American Rescue Plan Act. The fair value of the plan assets as of December 31, 2022 and 2021, approximated $161,374 and $214,937, respectively, in comparison to accumulated benefit obligations of $185,210 and $249,180 for the same periods. Employer contributions to the defined contribution plan totaled $3,064 and $2,893 for 2022 and 2021, respectively, and are expected to approximate $3,400 in 2023.

The Corporation also maintained nonqualified defined benefit pension plans for selected executive officers in addition to the benefits provided under the Corporation's qualified defined benefit pension plan. Benefit accruals and participation in the plans have been curtailed. The objectives of the nonqualified plans were to provide supplemental retirement benefits or restore benefits lost due to limitations set by the Internal Revenue Service. The assets of the nonqualified plans are held in a grantor tax trust known as a "Rabbi" trust and are subject to claims of the Corporation's creditors, but otherwise must be used only for purposes of providing benefits under the plans. The fair market value of the trust at December 31, 2022 and 2021, which is included in other noncurrent assets on the consolidated balance sheets, was $3,353 and $4,860, respectively. The plans are treated as non-funded pension plans for financial reporting purposes. Accordingly, benefit payments would represent employer contributions. Accumulated benefit obligations approximated $8,460 and $11,121 at December 31, 2022 and 2021, respectively.

Employees at one location participate in a multi-employer plan, I.A.M. National Pension Fund (employer identification number 51-6031295, plan number 002), in lieu of the Corporation's defined benefit pension plan. A multi-employer plan generally receives contributions from two or more unrelated employers pursuant to one or more collective bargaining agreements. The assets contributed by one employer may be used to fund the benefits provided to employees of other employers in the plan because the plan assets, once contributed, are not restricted to individual employers. The latest report of summary plan information (for the 2021 plan year) provided by I.A.M. National Pension Fund indicates:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Approximately 1,700 employer locations contribute to the plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Approximately 100,000 active employees participate in the plan; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Assets of approximately $13.4 billion and a funded status of approximately 83.7%.

Less than 100 of the Corporation's employees participate in the plan and contributions are based on a rate per hour. The Corporation's contributions to the plan were less than $300 for 2022 and 2021 and represent less than five percent of total contributions to the plan by all contributing employers. Contributions are expected to be less than $300 in 2023.

**Foreign Pension Benefits** 

Employees of UES-UK participated in a defined benefit pension plan that was curtailed effective December 31, 2004, and replaced with a defined contribution pension plan. The plans are non-U.S. plans and, therefore, are not covered by ERISA. Employer contributions to the defined benefit pension plan, when necessary, are agreed to by the Trustees and UES-UK, based on U.K. regulations, with the objective of maintaining the self-sufficiency of the plan. Accordingly, estimated contributions are subject to change based on the future investment performance of the plan's assets. Currently, the plan is fully funded and no contributions were required in 2022 or 2021, and none are expected in 2023. The fair value of the plan's assets as of December 31, 2022 and 2021, approximated $41,679 (£34,475) and $71,614 (£53,008), respectively, in comparison to accumulated benefit obligations of $34,438

------

(£28,485) and $59,651 (£44,153) for the same periods. Contributions to the defined contribution pension plan approximated $253 and $322 in 2022 and 2021, respectively, and are expected to approximate $250 in 2023.

The Corporation has two additional foreign defined benefit pension plans, which are not funded. Accordingly, benefit payments would represent employer contributions. Projected and accumulated benefit obligations approximated $4,881 and $7,356 at December 31, 2022 and 2021, respectively.

**Other Postretirement Benefits** 

The Corporation provides a monthly reimbursement of postretirement health care benefits for up to a 6-year period principally to the bargaining groups of two subsidiaries. The plans cover participants and their spouses who retire under an existing pension plan on other than a deferred vested basis and at the time of retirement also have rendered 10 or more years of continuous service irrespective of age. Retiree life insurance is provided to substantially all retirees. The Corporation's postretirement health care and life insurance plans are not funded or subject to any minimum regulatory funding requirements. Instead, benefit payments are made from the general assets of the Corporation at the time they are due.

**Significant Activity**

Actuarial (gains) losses were comprised of the following components:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **U.S. Pension<br>Benefits** | **U.S. Pension<br>Benefits** | **Foreign Pension<br>Benefits** | **Foreign Pension<br>Benefits** | **Other Postretirement<br>Benefits** | **Other Postretirement<br>Benefits** |
|  | **2022** | 2021 | **2022** | 2021 | **2022** | 2021 |
| Changes in assumptions | $**(**57439**)** | $(6234) | $**(**19804**)** | $(164) | $**(**2225**)** | $(365) |
| Other | 202 | 2027 | **(**190**)** | 167 | **(**536**)** | (442) |
| Total actuarial (gains) losses | $**(**57237**)** | $(4207) | $**(**19994**)** | $3 | $**(**2761**)** | $(807) |

---

Changes in actuarial assumptions principally include the effect of changes in discount rates which are used to estimate plan liabilities. A 1/4 percentage point decrease in the discount rate would increase projected and accumulated benefit obligations by approximately $5,800. Conversely, a 1/4 percentage point increase in the discount rate would decrease projected and accumulated benefit obligations by approximately $5,800.

------

**Reconciliations** 

The following tables provide a reconciliation of projected benefit obligations ("PBO"), plan assets and the funded status of the plans for the Corporation's defined benefit plans calculated using a measurement date as of the end of the respective years.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **U.S. Pension<br>Benefits(a)** | **U.S. Pension<br>Benefits(a)** | **Foreign Pension<br>Benefits(b)** | **Foreign Pension<br>Benefits(b)** | **Other Postretirement<br>Benefits** | **Other Postretirement<br>Benefits** |
|  | **2022** | 2021 | **2022** | 2021 | **2022** | 2021 |
| **Change in projected benefit obligations:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;PBO at January 1 | $260301 | $273776 | $67007 | $69923 | $10430 | $11410 |
| &nbsp;&nbsp;&nbsp;Service cost | 51 | 243 | 286 | 375 | 234 | 245 |
| &nbsp;&nbsp;&nbsp;Interest cost | 6185 | 5349 | 1079 | 829 | 220 | 182 |
| &nbsp;&nbsp;&nbsp;Foreign currency exchange rate changes | **—** |  | **(**6690**)** | (1354) | **—** |  |
| &nbsp;&nbsp;&nbsp;Actuarial (gains) losses | **(**57237**)** | (4207) | **(**19994**)** | 3 | **(**2761**)** | (807) |
| &nbsp;&nbsp;&nbsp;Participant contributions | **—** |  | **—** |  | 30 | 161 |
| &nbsp;&nbsp;&nbsp;Benefits paid from plan assets | **(**14860**)** | (14457) | **(**1863**)** | (2114) | **—** |  |
| &nbsp;&nbsp;&nbsp;Benefits paid by the Corporation | **(**770**)** | (403) | **(**506**)** | (655) | **(**509**)** | (761) |
| &nbsp;&nbsp;&nbsp;PBO at December 31 | $193670 | $260301 | $39319 | $67007 | $7644 | $10430 |
| **Change in plan assets:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Fair value of plan assets at January 1 | $214937 | $210880 | $71614 | $66957 | $**—** | $— |
| &nbsp;&nbsp;&nbsp;Actual return on plan assets | **(**39147**)** | 18514 | **(**21069**)** | 7550 | **—** |  |
| &nbsp;&nbsp;&nbsp;Foreign currency exchange rate changes | **—** |  | **(**7003**)** | (779) | **—** |  |
| &nbsp;&nbsp;&nbsp;Corporate contributions | 1214 | 403 | 506 | 655 | 479 | 600 |
| &nbsp;&nbsp;&nbsp;Participant contributions | **—** |  | **—** |  | 30 | 161 |
| &nbsp;&nbsp;&nbsp;Gross benefits paid | **(**15630**)** | (14860) | **(**2369**)** | (2769) | **(**509**)** | (761) |
| &nbsp;&nbsp;&nbsp;Fair value of plan assets at December 31 | $161374 | $214937 | $41679 | $71614 | $**—** | $— |
| **Funded status of the plans:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Fair value of plan assets | $161374 | $214937 | $41679 | $71614 | $**—** | $— |
| &nbsp;&nbsp;&nbsp;Less benefit obligations | 193670 | 260301 | 39319 | 67007 | 7644 | 10430 |
| &nbsp;&nbsp;&nbsp;Funded status at December 31 | $**(**32296**)** | $(45364) | $2360 | $4607 | $**(**7644**)** | $(10430) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Includes the nonqualified defined benefit pension plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Includes the over-funded U.K. defined benefit pension plan and two smaller unfunded defined benefit pension plans.

The following tables provide a summary of amounts recognized in the consolidated balance sheets at December 31, 2022 and 2021.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **U.S. Pension<br>Benefits** | **U.S. Pension<br>Benefits** | **Foreign Pension<br>Benefits** | **Foreign Pension<br>Benefits** | **Other Postretirement<br>Benefits** | **Other Postretirement<br>Benefits** |
|  | **2022** | 2021 | **2022** | 2021 | **2022** | 2021 |
| Employee benefit obligations: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Prepaid pensions(a) | $**—** | $— | $7242 | $11963 | $**—** | $— |
| &nbsp;&nbsp;&nbsp;Accrued payrolls and employee benefits(b) | **(**726**)** | (740) | **—** |  | **(**833**)** | (932) |
| &nbsp;&nbsp;&nbsp;Employee benefit obligations(c) | **(**31570**)** | (44624) | **(**4882**)** | (7356) | **(**6811**)** | (9498) |
| &nbsp;&nbsp;&nbsp;Total employee benefit obligations | $**(**32296**)** | $(45364) | $2360 | $4607 | $**(**7644**)** | $(10430) |
| Accumulated other comprehensive loss:(d) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net actuarial loss (gain) | $44361 | $51476 | $16963 | $16046 | $**(**3031**)** | $(405) |
| &nbsp;&nbsp;&nbsp;Prior service cost (credit) | 8 | 15 | **(**5952**)** | (6952) | **(**4767**)** | (5803) |
| &nbsp;&nbsp;&nbsp;Total accumulated other comprehensive loss | $44369 | $51491 | $11011 | $9094 | $**(**7798**)** | $(6208) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Represents the over-funded U.K. defined benefit pension plan which is recorded as a noncurrent asset in the consolidated balance sheets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Recorded as a current liability in the consolidated balance sheets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Recorded as a noncurrent liability in the consolidated balance sheets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Amounts are pre-tax.

------

As of December 31, 2022, estimated benefit payments for subsequent years are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **U.S. Pension<br>Benefits** | **Foreign Pension<br>Benefits** | **Other Postretirement<br>Benefits** |
| 2023 | $16017 | $2141 | $856 |
| 2024 | 15942 | 2293 | 865 |
| 2025 | 15782 | 2275 | 846 |
| 2026 | 15557 | 2369 | 656 |
| 2027 | 15320 | 2322 | 618 |
| 2028-2032 | 72418 | 12808 | 2610 |
| Total benefit payments | $151036 | $24208 | $6451 |

---

**Investment Policies and Strategies** 

The investment policies and strategies are determined by the Ampco-Pittsburgh Corporation Retirement Committee (the "Retirement Committee") and monitored by the Finance and Investment Committee of the Board of Directors of the Corporation for the U.S. pension plan and by the Trustees (as appointed by UES-UK and the employees of UES-UK) for the UES-UK pension plan, each of whom employ their own investment managers to manage the plan's assets in accordance with the policy guidelines. The U.S. defined benefit pension plan follows a glide-path strategy whereby target asset allocations are rebalanced based on projected payment obligations and the funded status of the plan. The U.K. defined benefit pension plan employs a liability-matching portfolio whereby a higher percentage of plan assets are invested in fixed-income securities. Pension assets of the UES-UK plan are invested with the objective of the plan maintaining self-sufficiency.

Attempts to minimize risk include allowing temporary changes to the allocation mix in response to market conditions, diversifying investments among asset categories (e.g., equity securities, fixed-income securities, alternative investments, cash and cash equivalents) and within these asset categories (e.g., economic sector, industry, geographic distribution, size) and consulting with independent financial and legal counsels to assure that the investments and their expected returns and risks are consistent with the goals of the Retirement and Finance and Investment Committees or Trustees.

Investments in equity securities are primarily in common stocks of publicly-traded U.S. and international companies across a broad spectrum of industry sectors. Investments in fixed-income securities are principally A-rated or better bonds with maturities of less than ten years, preferred stocks and convertible bonds. Investments in equity and fixed-income securities are either direct or through designated mutual funds. The Corporation believes there are no significant concentrations of risk associated with the plans' assets. With respect to the U.S. pension plan, the following investments are prohibited unless otherwise approved by the Board of Directors: stock of the Corporation, futures and options except for hedging purposes, unregistered or restricted stock, warrants, margin trading, short-selling, real estate excluding public or real estate partnerships, and commodities including art, jewelry and gold. The UES-UK pension plan invests in specific funds. Any investments other than those specifically identified would be considered prohibited.

The following table summarizes target asset allocations for 2022 (within +/-5% considered acceptable) and major asset categories. Certain investments are classified differently for target asset allocation purposes and external reporting purposes. The Corporation intends to continue to liquidate the alternative investments of the U.S. pension plan to provide additional flexibility with investment allocation.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **U.S. Pension Benefits** | **U.S. Pension Benefits** | **U.S. Pension Benefits** | **Foreign Pension Benefits** | **Foreign Pension Benefits** | **Foreign Pension Benefits** |
|  | **Target<br>Allocation** | **Percentage of Plan<br>Assets** | **Percentage of Plan<br>Assets** | **Target<br>Allocation** | **Percentage of Plan<br>Assets** | **Percentage of Plan<br>Assets** |
|  | **Dec. 31, 2022** | **2022** | 2021 | **Dec. 31, 2022** | **2022** | 2021 |
| Equity securities | 54<br>**%** | 45<br>**%** | 50% | 0<br>**%** | 0<br>**%** | 15% |
| Fixed-income securities | 43<br>**%** | 49<br>**%** | 43% | 89<br>**%** | 89<br>**%** | 44% |
| Alternative investments | 0<br>**%** | 4<br>**%** | 4% | 2<br>**%** | 2<br>**%** | 29% |
| Other (primarily cash and cash equivalents) | 3<br>**%** | 2<br>**%** | 3% | 9<br>**%** | 9<br>**%** | 12% |

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**Fair Value Measurement of Plan Assets** 

Equity securities, exchange-traded funds ("ETFs"), mutual funds and treasury bonds are actively traded on exchanges or broker networks and price quotes for these investments are readily available. While not quoted on active exchanges, price quotes for corporate and agency bonds are readily available. Similarly, certain commingled funds are not traded publicly, but the underlying assets (such as stocks and bonds) held in the funds are traded on active markets and the prices for the underlying assets are readily observable. For securities not actively traded, the fair value may be based on third-party appraisals, discounted cash flow analysis, benchmark yields, and inputs that are currently observable in markets for similar securities.

------

**Investment Strategies**

The significant investment strategies of the various funds are summarized below.

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**Fund** | &nbsp;&nbsp;**Investment Strategy** | &nbsp;&nbsp;**Primary Investment Objective** |
| &nbsp;&nbsp;Temporary Investment Funds | &nbsp;&nbsp;Invests primarily in a diversified portfolio of investment grade money market instruments. | &nbsp;&nbsp;Achieve a market level of current income while maintaining stability of principal and liquidity. |
| &nbsp;&nbsp;Various Equity Funds | &nbsp;&nbsp;Each fund maintains a diversified holding in common stock of applicable companies (e.g., common stock of small capitalization companies if a small-cap fund, common stock of medium capitalization companies if a mid-cap fund, common stock of foreign corporations if an international fund, etc.). | &nbsp;&nbsp;Outperform the fund's related index. |
| &nbsp;&nbsp;Various Fixed- Income Funds | &nbsp;&nbsp;Invests primarily in a diversified portfolio of fixed-income securities of varying maturities or in commingled funds which invest in a diversified portfolio of fixed-income securities of varying maturities. | &nbsp;&nbsp;Achieve a rate of return that matches or exceeds the expected growth in plan liabilities. <br>|
| &nbsp;&nbsp;Alternative Investments – Managed Funds | &nbsp;&nbsp;Invests in equities and equity-like asset classes and strategies (such as public equities, venture capital, private equity, real estate, natural resources, and <br>hedged strategies) and fixed-income securities approved by the Retirement Committee. | &nbsp;&nbsp;Generate a minimum annual inflation adjusted return of 5% and outperform a traditional 70/30 equities/bond portfolio. |
| &nbsp;&nbsp;Alternative Investments –Absolute Return Funds | &nbsp;&nbsp;Invests in a diversified portfolio of alternative investment styles and strategies approved by the Trustees of the UES-UK defined benefit pension plan. | &nbsp;&nbsp;Generate long-term capital appreciation while maintaining a low correlation with the traditional global financial markets. |

---

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**Categories of Plan Assets** 

Asset categories based on the nature and risks of the U.S. pension benefit plan's assets as of December 31, 2022 are summarized below.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Quoted Prices in<br>Active Markets for<br>Identical Inputs<br>(Level 1)** | **Significant Other<br>Observable Inputs<br>(Level 2)** | **Significant<br>Unobservable<br>Inputs<br>(Level 3)** | **Total** |
| Equity Securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumer discretionary | $2697 | $— | $— | $2697 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumer staples | 2454 |  |  | 2454 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Energy | 1112 |  |  | 1112 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial | 3165 |  |  | 3165 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Healthcare | 5967 |  |  | 5967 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Industrials | 4222 |  |  | 4222 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Information technology | 5631 |  |  | 5631 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Materials | 369 |  |  | 369 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mutual funds and ETFs | 43408 |  |  | 43408 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real estate | 279 |  |  | 279 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Telecommunications | 1183 |  |  | 1183 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Utilities | 324 |  |  | 324 |
| &nbsp;&nbsp;&nbsp;International |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumer discretionary | 66 |  |  | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial | 450 |  |  | 450 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Healthcare | 123 |  |  | 123 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Industrials | 463 |  |  | 463 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Information technology | 438 |  |  | 438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Materials | 646 |  |  | 646 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Equity Securities | 72997 |  |  | 72997 |
| Fixed-Income Securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate bonds |  | 39047 |  | 39047 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Treasury bonds | 26247 |  |  | 26247 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Agency bonds |  | 231 |  | 231 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mutual funds and ETFs | 6162 |  |  | 6162 |
| &nbsp;&nbsp;&nbsp;International |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate bonds |  | 5983 |  | 5983 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Fixed-Income Securities | 32409 | 45261 |  | 77670 |
| Alternative Investments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Managed funds(a) |  |  | 6569 | 6569 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Alternative Investments |  |  | 6569 | 6569 |
| Other: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents(b) | 4138 |  |  | 4138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Other | 4138 |  |  | 4138 |
| Total assets | $109544 | $45261 | $6569 | $161374 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Includes approximately 98.5% in alternative investments (real assets, commodities and resources, absolute return funds) and 1.5% in cash and cash equivalents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Includes investments in temporary funds.

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Asset categories based on the nature and risks of the U.S. pension benefit plans' assets as of December 31, 2021 are summarized below.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Quoted Prices in<br>Active Markets for<br>Identical Inputs<br>(Level 1)** | **Significant Other<br>Observable Inputs<br>(Level 2)** | **Significant<br>Unobservable<br>Inputs<br>(Level 3)** | **Total** |
| Equity Securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumer discretionary | $6442 | $— | $— | $6442 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumer staples | 3050 |  |  | 3050 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Energy | 1167 |  |  | 1167 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial | 4617 |  |  | 4617 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Healthcare | 10526 |  |  | 10526 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Industrials | 8089 |  |  | 8089 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Information technology | 11819 |  |  | 11819 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Materials | 938 |  |  | 938 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mutual funds and ETFs | 58440 |  |  | 58440 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real estate | 824 |  |  | 824 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Telecommunications | 2388 |  |  | 2388 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Utilities | 146 |  |  | 146 |
| &nbsp;&nbsp;&nbsp;International |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumer discretionary | 426 |  |  | 426 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial | 751 |  |  | 751 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Healthcare | 880 |  |  | 880 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Industrials | 1410 |  |  | 1410 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Information technology | 2065 |  |  | 2065 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Materials | 1330 |  |  | 1330 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Equity Securities | 115308 |  |  | 115308 |
| Fixed-Income Securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate bonds |  | 41991 |  | 41991 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Treasury bonds | 28694 |  |  | 28694 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Agency bonds |  | 257 |  | 257 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mutual funds and ETFs | 7334 |  |  | 7334 |
| &nbsp;&nbsp;&nbsp;International |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate bonds |  | 3711 |  | 3711 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Fixed-Income Securities | 36028 | 45959 |  | 81987 |
| Alternative Investments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Managed funds(a) |  |  | 8167 | 8167 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Alternative Investments |  |  | 8167 | 8167 |
| Other: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents(b) | 9349 |  |  | 9349 |
| &nbsp;&nbsp;&nbsp;Other(c) | 76 |  | 50 | 126 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Other | 9425 |  | 50 | 9475 |
| Total assets | $160761 | $45959 | $8217 | $214937 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Includes approximately 89.6% in alternative investments (real assets, commodities and resources, absolute return funds) and 10.4% in cash and cash equivalents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Includes investments in temporary funds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Includes accrued receivables and pending broker settlements.

------

Asset categories based on the nature and risks of the foreign pension benefit plan's assets as of December 31, 2022 are summarized below.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Quoted Prices in<br>Active Markets for<br>Identical Inputs<br>(Level 1)** | **Significant Other<br>Observable<br>Inputs<br>(Level 2)** | **Significant<br>Unobservable<br>Inputs<br>(Level 3)** | **Total** |
| Fixed-Income Securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Commingled funds (U.K.) | $— | $24144 | $— | $24144 |
| &nbsp;&nbsp;&nbsp;Commingled funds (International) |  | 13355 | 831 | 14186 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Fixed-Income Securities |  | 37499 | 831 | 38330 |
| Alternative Investments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Absolute Return Funds |  |  |  |  |
| Cash and cash equivalents | 647 | 2702 |  | 3349 |
| Total assets | $647 | $40201 | $831 | $41679 |

---

Asset categories based on the nature and risks of the foreign pension benefit plan's assets as of December 31, 2021 are summarized below.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Quoted Prices in<br>Active Markets for<br>Identical Inputs<br>(Level 1)** | **Significant Other<br>Observable<br>Inputs<br>(Level 2)** | **Significant<br>Unobservable<br>Inputs<br>(Level 3)** | **Total** |
| Equity Securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Commingled funds (U.K.) | $— | $— | $1079 | $1079 |
| &nbsp;&nbsp;&nbsp;Commingled funds (International) |  | 1663 | 8205 | 9868 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Equity Securities |  | 1663 | 9284 | 10947 |
| Fixed-Income Securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Commingled funds (U.K.) | $— | 16320 |  | 16320 |
| &nbsp;&nbsp;&nbsp;Commingled funds (International) |  | 15281 | 10197 | 25478 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Fixed-Income Securities |  | 31601 | 10197 | 41798 |
| Multi-Asset Commingled Funds (International) |  | 9077 |  | 9077 |
| Alternative Investments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Absolute Return Funds |  |  | 1347 | 1347 |
| Cash and cash equivalents |  | 8445 |  | 8445 |
| Total assets | $— | $50786 | $20828 | $71614 |

---

The following table sets forth a summary of changes in the fair value of the Level 3 plan assets for the U.S. and foreign pension benefit plans for the years ended December 31, 2022 and 2021.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **U.S. Pension Benefits** | **U.S. Pension Benefits** | **Foreign Pension Benefits** | **Foreign Pension Benefits** |
|  | **2022** | 2021 | **2022** | 2021 |
| Fair value as of January 1 | $8167 | $7557 | $20828 | $23765 |
| Transfers from other plan assets | **—** | **—** | **—** | 10214 |
| Transfers to other plan assets | **(**1677**)** | (1600) | **(**16557**)** | (16957) |
| Realized gains | 526 | 273 | 1763 | 5989 |
| Change in net unrealized (losses) gains | **(**447**)** | 1937 | **(**3109**)** | (2085) |
| Other, primarily impact from changes in foreign currency<br> exchange rates | **—** | **—** | **(**2094**)** | (98) |
| Fair value as of December 31 | $6569 | $8167 | $831 | $20828 |

---

------

**Net Periodic Pension and Other Postretirement Benefit Costs** 

The actual return on the fair value of the plan assets is included in determining the funded status of the plans. In determining net periodic pension benefit costs, the expected long-term rate of return on the market-related value of the plan assets is used. Differences between the actual return on the fair value of the plan assets and the expected long-term rate of return on the market-related value of the plan assets are classified as part of unrecognized actuarial gains or losses and are recorded as a component of accumulated other comprehensive loss on the consolidated balance sheet. When these gains or losses exceed 10% of the greater of the projected benefit obligation or the market-related value of plan assets, they are amortized to net periodic pension and other postretirement benefit costs over the average remaining service period or life expectancy of the employees expected to receive benefits under the plans. When the gains or losses are less than 10% of the greater of the projected benefit obligation or the market-related value of plan assets, they are included in net periodic pension and other postretirement benefit costs indirectly as a result of lower/higher interest costs arising from a decrease/increase in the projected benefit obligation.

Net periodic pension and other postretirement benefit costs include the following components for each of the years.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **U.S. Pension<br>Benefits** | **U.S. Pension<br>Benefits** | **Foreign Pension<br>Benefits** | **Foreign Pension<br>Benefits** | **Other Postretirement<br>Benefits** | **Other Postretirement<br>Benefits** |
|  | **2022** | 2021 | **2022** | 2021 | **2022** | 2021 |
| Service cost | $51 | $243 | $286 | $375 | $234 | $245 |
| Interest cost | 6185 | 5349 | 1079 | 829 | 220 | 182 |
| Expected return on plan assets | **(**13207**)** | (12995) | **(**1945**)** | (1935) |  |  |
| Amortization of: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Prior service cost (credit) | 8 | 23 | **(**275**)** | (306) | **(**1035**)** | (1030) |
| &nbsp;&nbsp;&nbsp;Actuarial loss (gain) | 2231 | 2632 | 322 | 635 | **(**135**)** | (78) |
| Total net periodic pension and other postretirement benefit costs | $**(**4732**)** | $(4748) | $**(**533**)** | $(402) | $**(**716**)** | $(681) |

---

**Assumptions** 

Assumptions are reviewed on an annual basis. The expected long-term rate of return on plan assets is an estimate of average rates of earnings expected to be earned on funds invested, or to be invested, to provide for the benefits included in the projected benefit obligation. Since these benefits will be paid over many years, the expected long-term rate of return is reflective of current investment returns and investment returns over a longer period. Consideration is also given to target and actual asset allocations, inflation and real risk-free return. A percentage point decrease in the expected long-term rate of return would increase annual pension expense by approximately $2,600. Conversely, a percentage point increase in the expected long-term rate of return would decrease annual pension expense by approximately $2,600. The discount rates used in determining future pension obligations and other postretirement benefits for each of the plans are based on rates of return on high-quality fixed-income investments currently available, and expected to be available, during the period to maturity of the pension and other postretirement benefits. High-quality fixed-income investments are defined as those investments which have received one of the two highest ratings given by a recognized rating agency with maturities of 10+ years. With the increase in interest rates during 2022 and the resulting impact on bond yields, the discount rate rose significantly at December 31, 2022 when compared to December 31, 2021. Assumptions about wage increases are not relevant since substantially all the benefits available under the defined benefit pension plans are either frozen or based on a multiplier, versus wages.

The discount rates used to determine the benefit obligations as of December 31, 2022 and 2021 are summarized below.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **U.S. Pension<br>Benefits** | **U.S. Pension<br>Benefits** | **Foreign Pension<br>Benefits** | **Foreign Pension<br>Benefits** | **Other Postretirement<br>Benefits** | **Other Postretirement<br>Benefits** |
|  | **2022** | 2021 | **2022** | 2021 | **2022** | 2021 |
| Discount rate | 5.48**-**5.49%** | 2.79-2.91% | 4.85**%** | 1.95% | 5.49**%** | 2.91% |

---

In addition, the assumed health care cost trend rate at December 31, 2022 for other postretirement benefits, is 6.50% for 2023 gradually decreasing to 4.75% in 2028. In selecting rates for current and long-term health care assumptions, the Corporation considers known health care cost increases, the design of the benefit programs, the demographics of its active and retiree populations, and expectations of inflation rates in the future.

The following assumptions were used to determine net periodic pension and other postretirement benefit costs for the years ended December 31, 2022 and 2021.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **U.S. Pension<br>Benefits** | **U.S. Pension<br>Benefits** | **Foreign Pension<br>Benefits** | **Foreign Pension<br>Benefits** | **Other Postretirement<br>Benefits** | **Other Postretirement<br>Benefits** |
|  | **2022** | 2021 | **2022** | 2021 | **2022** | 2021 |
| Discount rate | 2.79**-**2.91%** | 2.50-2.63% | 1.95**%** | 1.45% | 2.91**%** | 2.61% |
| Expected long-term rate of return | 6.94**%** | 6.50-7.00% | 3.00**%** | 2.90% | **n/a** | n/a |

---

------

**NOTE 12 – COMMITMENTS AND CONTINGENT LIABILITIES:** 

Outstanding standby and commercial letters of credit as of December 31, 2022 approximated $18,970, of which approximately half serves as collateral for the IRB debt. In addition, outstanding surety bonds guaranteeing certain obligations of the two unfunded foreign defined benefit pension plans approximated $3,300 (SEK 33,900) as of December 31, 2022.

The Corporation has undertaken a significant capital program to upgrade existing equipment at certain of its FCEP locations which is anticipated to cost approximately $27,000 and be substantially completed by December 31, 2023. At December 31, 2022, commitments for future capital expenditures, including those associated with the FCEP capital program, approximated $16,400.

Approximately 34% of the Corporation's employees are covered by collective bargaining agreements or agreements with works councils that have expiration dates ranging from September 2023 to May 2026. Collective bargaining agreements and agreements with works councils expiring in 2023 (representing approximately 59% of the covered employees) will be negotiated with the intent to secure mutually beneficial, long-term arrangements.

See [<u>Note 15</u>](#note_15) regarding derivative instruments, [<u>Note 20</u>](#note_20) regarding litigation and [<u>Note 22</u>](#note_22) for environmental matters.

**NOTE 13 – EQUITY RIGHTS OFFERING:** 

In September 2020, the Corporation completed an equity rights offering, issuing 5,507,889 shares of its common stock and 12,339,256 Series A warrants to existing shareholders. The shares of common stock and warrants are classified as equity instruments in the consolidated statements of shareholders' equity. Additional proceeds may be received from the future exercise of the Series A warrants. Each Series A warrant provides the holder with the right to purchase 0.4464 shares of common stock at an exercise price of $2.5668, or $5.75 per whole share of common stock, and expires on August 1, 2025. In 2021, the Corporation received proceeds of $3,308 from shareholders who exercised 1,289,009 Series A warrants, equating to the issuance of 575,405 common shares.

In May 2022, the Corporation filed a Tender Offer and Prospectus Supplement (the "Offer") with the SEC pursuant to which the exercise price of each tendered Series A warrant was temporarily reduced. During the Offer period, the holders of Series A warrants were given the opportunity to exercise their Series A warrants at a temporarily reduced cash exercise price of $1.7856 per Series A warrant (or $4.00 per whole share of common stock). The Offer expired on July 15, 2022. The Corporation raised $193 in gross proceeds resulting from the tender and exercise of 108,378 Series A warrants. Series A warrants not exercised during the Offer period reverted to their original terms including the right to purchase 0.4464 shares of common stock at an exercise price of $2.5668, or $5.75 per whole share of common stock. Stock issuance costs approximated $193 and were recorded against the proceeds in additional paid-in capital.

The following summarizes outstanding warrants as of December 31, 2022 and 2021 and activity for the years then ended.

---

| | |
|:---|:---|
|  | Number of Warrants |
| Outstanding as of January 1, 2021 | 12339256 |
| Issued |  |
| Converted to common stock | (1289009) |
| Outstanding as of December 31, 2021 | 11050247 |
| Issued |  |
| Converted to common stock | **(**108378**)** |
| Outstanding as of December 31, 2022 | 10941869 |

---

------

**NOTE 14 – ACCUMULATED OTHER COMPREHENSIVE LOSS:** 

Net changes and ending balances for the various components of other comprehensive income (loss) and for accumulated other comprehensive loss as of and for the years ended December 31, 2022 and 2021 are summarized below.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Foreign<br>Currency<br>Translation<br>Adjustments** | **Unrecognized<br>Components<br>of Employee<br>Benefit Plans** | **Derivatives** | **Total Accumulated<br>Other<br>Comprehensive<br>Loss** | **Noncontrolling Interest** | **Accumulated<br>Other<br>Comprehensive<br>Loss Attributable to Ampco-Pittsburgh** |
| January 1, 2021 | $(11371) | $(57652) | $589 | $(68434) | $261 | $(68695) |
| Net change | (2951) | 17089 | (312) | 13826 | 237 | 13589 |
| December 31, 2021 | (14322) | (40563) | 277 | (54608) | 498 | (55106) |
| Net change | (11848) | 7940 | (125) | (4033) | (727) | (3306) |
| December 31, 2022 | $**(**26170**)** | $**(**32623**)** | $152 | $**(**58641**)** | $**(**229**)** | $**(**58412**)** |

---

The following summarizes the line items affected on the consolidated statements of operations for components reclassified from accumulated other comprehensive loss for the years ended December 31, 2022 and 2021. Amounts in parentheses represent credits to net income (loss).

---

| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Amortization of unrecognized employee benefit costs: |  |  |
| &nbsp;&nbsp;&nbsp;Other – net | $1116 | $1876 |
| &nbsp;&nbsp;&nbsp;Income tax (provision) | **(**1**)** | (50) |
| &nbsp;&nbsp;&nbsp;Net of income tax | $1115 | $1826 |
| Settlement of cash flow hedges: |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization (foreign currency purchase contracts) | $**(**27**)** | $(27) |
| &nbsp;&nbsp;&nbsp;Costs of products sold (excluding depreciation and amortization) <br> (futures contracts – copper and aluminum) | 426 | (1092) |
| &nbsp;&nbsp;&nbsp;Total before income tax | 399 | (1119) |
| &nbsp;&nbsp;&nbsp;Income tax (provision) benefit | **(**12**)** | 33 |
| &nbsp;&nbsp;&nbsp;Net of income tax | $387 | $(1086) |

---

The income tax effect associated with the various components of other comprehensive income (loss) for the years ended December 31, 2022 and 2021 is summarized below. Amounts in parentheses represent credits to net income (loss) when reclassified to earnings. Certain amounts have no tax effect due to the Corporation having a valuation allowance recorded against the deferred income tax assets for the jurisdiction where the income or expense is recognized. Foreign currency translation adjustments exclude the effect of income taxes since earnings of non-U.S. subsidiaries are deemed to be re-invested for an indefinite period of time.

---

| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Income tax effect associated with changes in: |  |  |
| &nbsp;&nbsp;&nbsp;Unrecognized employee benefit costs | $1554 | $(1049) |
| &nbsp;&nbsp;&nbsp;Fair value of cash flow hedges | 16 | (38) |
| Income tax effect associated with reclassification adjustments: |  |  |
| &nbsp;&nbsp;&nbsp;Amortization of unrecognized employee benefit costs | **(**1**)** | (50) |
| &nbsp;&nbsp;&nbsp;Settlement of cash flow hedges | **(**12**)** | 33 |

---

------

**NOTE 15 – DERIVATIVE INSTRUMENTS:** 

Certain divisions of the ALP segment are subject to risk from increases in the price of commodities (copper and aluminum) used in the production of inventory. To minimize this risk, futures contracts are entered into which are designated as cash flow hedges. At December 31, 2022, approximately 43% or $2,216 of anticipated copper purchases over the next eight months and 57% or $751 of anticipated aluminum purchases over the next seven months are hedged. At December 31, 2021, approximately 67% or $3,434 of anticipated copper purchases over the next eight months and 56% or $684 of anticipated aluminum purchases over the next six months were hedged.

At December 31, 2022, the Corporation has purchase commitments covering approximately 25% or $760 of anticipated natural gas usage through December 31, 2023, for one of its subsidiaries and approximately 25% or $1,547 of anticipated electricity usage through December 31, 2025, for one of its subsidiaries. Purchases of natural gas and electricity under previously existing commitments approximated $3,077 for 2022. No purchase commitments for anticipated natural gas usage were outstanding during 2021; however, at December 31, 2021, the Corporation had purchase commitments covering approximately 29% or $1,753 of anticipated natural gas usage through December 31, 2023, for one of its subsidiaries and approximately 34% or $2,125 of anticipated electricity usage through December 31, 2024, for two of its subsidiaries. The commitments qualify as normal purchases and, accordingly, are not reflected on the consolidated balance sheet.

The Corporation previously entered into foreign currency purchase contracts to manage the volatility associated with euro-denominated progress payments to be made for certain machinery and equipment. Upon occurrence of an anticipated purchase and placement of the underlying fixed assets in service, the foreign currency purchase contract is settled and the change in fair value deferred in accumulated other comprehensive loss is reclassified to earnings (depreciation and amortization expense) over the life of the underlying asset. As of December 31, 2010, all contracts had been settled, the underlying fixed assets were placed in service and the change in fair value of the foreign currency purchase contract deferred in accumulated other comprehensive loss is being amortized to earnings over the life of the underlying assets.

No portion of the existing cash flow hedges is considered to be ineffective, including any ineffectiveness arising from the unlikelihood of an anticipated transaction to occur. Additionally, no amounts have been excluded from assessing the effectiveness of a hedge. The Corporation does not enter into derivative transactions for speculative purposes and, therefore, holds no derivative instruments for trading purposes.

The change in the fair value of the cash flow contracts is recorded as a component of accumulated other comprehensive loss. Amounts recognized as and reclassified from accumulated other comprehensive loss are recorded as a component of other comprehensive income (loss) and are summarized below. Amounts are after-tax, where applicable. Certain amounts recognized as or reclassified from comprehensive income (loss) for 2022 and 2021 have no tax effect due to the Corporation recording a valuation allowance against the deferred income tax assets in the related jurisdictions.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **For the Year Ended December 31, 2022** | **Beginning of<br>the Year** | **Recognized** | **Reclassified** | **End of<br>the Year** |
| Foreign currency purchase contracts | $135 | $— | $27 | $108 |
| Future contracts – copper and aluminum | 142 | (512) | (414) | 44 |
| Change in fair value | $277 | $**(**512**)** | $**(**387**)** | $152 |
| For the Year Ended December 31, 2021 |  |  |  |  |
| Foreign currency purchase contracts | $162 | $— | $27 | $135 |
| Future contracts – copper and aluminum | 427 | 774 | 1059 | 142 |
| Change in fair value | $589 | $774 | $1086 | $277 |

---

The change in fair value reclassified or expected to be reclassified from accumulated other comprehensive loss to earnings is summarized below. All amounts are pre-tax.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Location of Gain (Loss) in** | **Estimated to be<br>Reclassified in<br>the Next** | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **Consolidated Statements of Operations** | **12 Months** | **2022** | 2021 |
| Foreign currency purchase contracts | Depreciation and amortization | $27 | $27 | $27 |
| Futures contracts – copper and<br> aluminum | Costs of products sold (excluding depreciation and amortization) | 44 | **(**414**)** | 1059 |

---

Losses on foreign exchange transactions included in other income (expense) approximated $2,293 and $(1,134) for 2022 and 2021, respectively.

------

**NOTE 16 – FAIR VALUE:** 

The following summarizes financial assets and liabilities reported at fair value on a recurring basis in the consolidated balance sheets at December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **2022** | **Quoted Prices<br>in Active<br>Markets for<br>Identical Inputs<br>(Level 1)** | **Significant<br>Other<br>Observable<br>Inputs<br>(Level 2)** | **Significant<br>Unobservable<br>Inputs<br>(Level 3)** | **Total** |
| Investments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Other noncurrent assets | $3353 | $— | $— | $3353 |
| 2021 |  |  |  |  |
| Investments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Other noncurrent assets | $4860 | $— | $— | $4860 |

---

The investments held as other noncurrent assets represent assets held in the "Rabbi" trust for the purpose of providing benefits under the non-qualified defined benefit pension plan. The fair value of the investments is based on quoted prices of the investments in active markets. The fair value of foreign currency exchange contracts is determined based on the fair value of similar contracts with similar terms and remaining maturities. The fair value of futures contracts is based on market quotations. The fair values of the variable-rate IRB debt and borrowings under the revolving credit facility and other debt facilities approximate their carrying values. Additionally, the fair values of trade receivables and trade payables approximate their carrying values.

**NOTE 17 – REVENUE:**

Net sales by geographic area and product line for the years ended December 31, 2022 and 2021 are outlined below. Net sales are attributed to the geographic areas based on the location of the customer. Sales to individual foreign countries were less than 10% of consolidated net sales for each of the years.

---

| | | |
|:---|:---|:---|
|  | **Net Sales by Geographic Area** | **Net Sales by Geographic Area** |
|  | **2022** | 2021 |
| United States | $204952 | $178090 |
| Foreign | 185237 | 166830 |
| Consolidated total | $390189 | $344920 |

---

---

| | | |
|:---|:---|:---|
|  | **Net Sales by Product Line** | **Net Sales by Product Line** |
|  | **2022** | 2021 |
| Forged and cast mill rolls | $256559 | $234926 |
| Forged engineered products | 42925 | 25278 |
| Heat exchange coils | 31395 | 24372 |
| Air handling systems | 29436 | 26477 |
| Centrifugal pumps | 29874 | 33867 |
| Consolidated total | $390189 | $344920 |

---

------

**NOTE 18 – STOCK-BASED COMPENSATION:** 

The Ampco-Pittsburgh Corporation 2016 Omnibus Incentive Plan, as amended (the "Incentive Plan"), authorizes the issuance of up to 2,700,000 shares of the Corporation's common stock for awards under the Incentive Plan. Awards under the Incentive Plan may include incentive stock options and non-qualified stock options, stock appreciation rights, restricted shares and restricted stock units, performance awards, other stock-based awards, or short-term cash incentive awards. If any award is canceled, terminates, expires, or lapses for any reason prior to the issuance of the shares, or if the shares are issued under the Incentive Plan and thereafter are forfeited to the Corporation, the shares subject to such awards and the forfeited shares will not count against the aggregate number of shares available under the Incentive Plan. Shares tendered or withheld to pay the option exercise price or tax withholding will continue to count against the aggregate number of shares of common stock available for grant under the Incentive Plan. Any shares repurchased by the Corporation with cash proceeds from the exercise of options will not be added back to the pool of shares available for grant under the Incentive Plan.

The Incentive Plan may be administered by the Board of Directors or the Compensation Committee of the Board of Directors. The Compensation Committee has the authority to determine, within the limits of the express provisions of the Incentive Plan, the individuals to whom the awards will be granted and the nature, amount and terms of such awards.

The Incentive Plan also provides for equity-based awards during any one year to non-employee members of the Board of Directors, based on the grant date fair value, not to exceed $200. The limit does not apply to shares received by a non-employee director at his or her election in lieu of all or a portion of the director's retainer for board service.

The Compensation Committee has granted stock options, time-vesting restricted stock units (RSUs) and performance-vesting restricted stock units (PSUs) to select individuals. Each stock option represents the right to purchase one share of common stock of the Corporation at a designated price, subject to the terms and conditions of the stock option award agreement. All stock options are fully vested. Each RSU represents the right to receive one share of common stock of the Corporation at a future date after the RSU has become earned and vested, subject to the terms and conditions of the RSU award agreement. The RSUs typically vest over a three-year period. The PSUs can be earned depending upon the achievement of a performance or market condition and a time-vesting condition as follows: (i) achievement of a targeted return on invested capital over a three-year performance period; (ii) achievement of a three-year cumulative relative total shareholder return as ranked against other companies included in the Corporation's peer group; and (iii) remaining continuously employed with the Corporation through the end of the third year following the date of grant. Earlier vesting of the stock units is permitted under certain conditions, such as upon a change of control of the Corporation, or as approved by the Board of Directors. In 2021, in connection with the early retirement of two executive officers, the Board of Directors approved modifying certain terms of their outstanding awards including accelerating the vesting requirements. The modifications increased stock-based compensation expense for 2021 by approximately $369.

The grant date fair value for the RSUs equals the closing price of the Corporation's common stock on the NYSE on the date of grant. The grant date fair value for PSUs subject to a market condition is determined using a Monte Carlo simulation model and the grant date fair value for PSUs that vest subject to a performance condition is equal to the closing price of the Corporation's stock on the NYSE on the date of grant. The determination of the fair value of these awards takes into consideration the likelihood of achievement of the market or performance condition and, in certain circumstances, is adjusted for subsequent changes in the estimated or actual outcome of the condition. Unrecognized compensation expense associated with the RSUs and PSUs equaled $2,688 at December 31, 2022, and is expected to be recognized over a weighted-average period of approximately 2 years.

Outstanding RSUs and PSUs, which would represent non-vested awards, as of December 31, 2022 and 2021, and activity for the years then ended, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number of<br>RSUs** | **Weighted-<br>Average<br>Fair<br>Value** | **Number of<br>PSUs** | **Weighted-<br>Average<br>Fair<br>Value** |
| Outstanding at January 1, 2021 | 278658 | $3.68 | 348196 | $4.45 |
| Granted | 207381 | 5.74 | 215150 | 6.78 |
| Converted to common stock | (169757) | 4.39 | (133745) | 5.98 |
| Forfeited | (15435) | 4.80 | (96994) | 4.30 |
| Outstanding at December 31, 2021 | 300847 | 4.64 | 332607 | 5.39 |
| **Granted** | 200485 | 5.50 | 179389 | 6.80 |
| **Converted to common stock** | **(**142968**)** | 4.20 | **(**52801**)** | 4.05 |
| **Forfeited** | **(**15182**)** | 5.24 | **(**62658**)** | 3.08 |
| **Outstanding at December 31, 2022** | 343182 | $5.29 | 396537 | $6.57 |

---

------

Outstanding stock options, all of which are fully vested, as of December 31, 2022 and 2021, and activity for the years then ended, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number of<br>Shares Under<br>Options** | **Weighted-<br>Average<br>Exercise<br>Price** | **Remaining<br>Contractual<br>Life In<br>Years** | **Intrinsic<br>Value** |
| Outstanding at January 1, 2021 | 269250 | $19.85 | 2.0 | $— |
| Granted |  | N/A |  |  |
| Exercised |  | N/A |  |  |
| Forfeited | (5000) | 20.00 |  |  |
| Expired | (58750) | 25.18 |  |  |
| Outstanding at December 31, 2021 | 205500 | 18.32 | 1.4 |  |
| **Granted** |  | N/A |  |  |
| **Exercised** |  | N/A |  |  |
| **Forfeited** |  | N/A |  |  |
| **Expired** | **(**131500**)** | 18.16 |  |  |
| **Outstanding at December 31, 2022** | 74000 | $18.60 | 0.8 | $**—** |
| **Exercisable at December 31, 2022** | 74000 | $18.60 | 0.8 | $**—** |
| **Vested or expected to vest at December 31, 2022** | 74000 | $18.60 | 0.8 | $**—** |

---

Stock-based compensation expense for all awards, including expense associated with the modified awards and equity-based awards granted to non-employee members of the Board of Directors, approximated $1,665 and $2,438 for 2022 and 2021, respectively. The income tax benefit recognized in the consolidated statements of operations was not significant due to the Corporation having a valuation allowance recorded against its deferred income tax assets for the jurisdiction where the expense was recognized (see [<u>Note 21</u>](#note_21)).

**NOTE 19 – RESEARCH AND DEVELOPMENT COSTS:** 

Expenditures relating to the development of new products, identification of products or process alternatives and modifications and improvements to existing products and processes are expensed as incurred. These expenses approximated $1,024 for 2022 and $1,229 for 2021.

------

**NOTE 20 – LITIGATION:** 

The Corporation and its subsidiaries are involved in various claims and lawsuits incidental to their businesses and are also subject to asbestos litigation as described below.

**Asbestos Litigation** 

Claims have been asserted alleging personal injury from exposure to asbestos-containing components historically used in some products manufactured by predecessors of Air & Liquid (the "Asbestos Liability"). Air & Liquid and, in some cases, the Corporation, are defendants (among a number of defendants, often in excess of 50) in cases filed in various state and federal courts.

**Asbestos Claims** 

The following table reflects approximate information about the claims for the Asbestos Liability against Air & Liquid and the Corporation for the years ended December 31, 2022 and 2021. The majority of the settlement and defense costs were reported and paid by insurer carriers. Because claims are often filed and can be settled or dismissed in large groups, the amount and timing of settlements, as well as the number of open claims, can fluctuate significantly from period to period.

---

| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Total claims pending at the beginning of the period | 6097 | 5891 |
| New claims served | 1200 | 1233 |
| Claims dismissed | **(**634**)** | (605) |
| Claims settled | **(**404**)** | (422) |
| Total claims pending at the end of the period(1) | 6259 | 6097 |
| Administrative closures(2) | **(**3109**)** | (2941) |
| Total active claims pending at the end of the period(2) | 3150 | 3156 |
| Gross settlement and defense costs paid (in 000's) | $19834 | $23215 |
| Average gross settlement and defense costs per claim resolved (in 000's) (3) | $19.11 | $22.60 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Included as "open claims" are approximately 655 and 661 claims in 2022 and 2021, respectively, classified in various jurisdictions as "inactive" or transferred to a state or federal judicial panel on multi-district litigation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)Administrative closures include (i) those claims that were filed six or more years ago; (ii) claims that were previously classified in various jurisdictions as "inactive;" and (iii) claims that were transferred to a state or federal judicial panel on multi-district litigation. Collectively, these claims are unlikely to result in any liability to the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)Claims resolved do not include claims that were administratively closed.

**Asbestos Insurance** 

The Corporation and Air & Liquid are parties to a series of settlement agreements ("Settlement Agreements") with insurer carriers that have coverage obligations for the Asbestos Liability (the "Settling Insurers"). Under the Settlement Agreements, the Settling Insurers accept financial responsibility, subject to the terms and conditions of the respective agreements, including overall coverage limits, for pending and future claims for the Asbestos Liability. The Settlement Agreements encompass the majority of insurance policies that provide coverage for claims for the Asbestos Liability.

The Settlement Agreements include acknowledgments that Howden North America, Inc. ("Howden") is entitled to coverage under policies covering the Asbestos Liability for claims arising out of the historical products manufactured or distributed by Buffalo Forge, a former subsidiary of the Corporation (the "Products"), which was acquired by Howden. The Settlement Agreements do not provide for any prioritization on access to the applicable policies or any sub-limits of liability as to Howden or the Corporation and Air & Liquid and, accordingly, Howden may access the coverage afforded by the Settling Insurers for any covered claim arising out of the Products. In general, access by Howden to the coverage afforded by the Settling Insurers for the Products will erode coverage under the Settlement Agreements available to the Corporation and Air & Liquid for the Asbestos Liability.

**Asbestos Valuations** 

At December 31, 2006, with the assistance of a nationally recognized expert in the valuation of asbestos liabilities, the Corporation recorded its initial reserve for the Asbestos Liability. Since then, the Corporation and the expert have reviewed the Asbestos Liability and the underlying assumptions on a regular basis to determine whether any adjustment to the Asbestos Liability or the underlying assumptions were necessary. When warranted, the Asbestos Liability was adjusted to consider the current trends and new information that became available and, if reasonably estimable, to extend the valuation of asbestos liabilities further into the future. In 2018, the valuation was extended to include claims projected to be asserted through the estimated final date by which the Corporation expects to have settled all asbestos-related claims.

------

In conjunction with the regular updates of the estimated Asbestos Liability, the Corporation also develops an estimate of defense costs expected to be incurred with settling the Asbestos Liability and probable insurance recoveries for the Asbestos Liability and defense costs. In developing the estimate of probable defense costs, the Corporation considers several factors including, but not limited to, current and historical defense-to-indemnity cost ratios and expected defense-to-indemnity costs ratios. In developing the estimate of probable insurance recoveries, the Corporation considers the expert's projection of settlement costs for the Asbestos Liability and management's projection of associated defense costs. In addition, the Corporation consults with its outside legal counsel on insurance matters and a nationally recognized insurance consulting firm that it retains to assist with certain policy allocation matters. The Corporation also considers a number of other factors including the Settlement Agreements in effect, policy exclusions, policy limits, policy provisions regarding coverage for defense costs, attachment points, gaps in the coverage, policy exhaustion, the nature of the underlying claims for the Asbestos Liability, estimated erosion of insurance limits on account of claims against Howden arising out of the Products, prior impairment of policies, insolvencies among certain of the insurance carriers, and creditworthiness of the remaining insurer carriers based on publicly available information. Based on these factors, the Corporation estimates the probable insurance recoveries for the Asbestos Liability and defense costs for the corresponding time frame of the Asbestos Liability.

In 2021, primarily as a result of identified changes in claim data and availability of new information, the Corporation engaged Gnarus Advisors LLC ("Gnarus") to update the estimated Asbestos Liability. The methodology used by Gnarus in its updated projection was substantially the same methodology employed previously, which has been accepted by numerous courts, and included the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•interpretation of a widely accepted forecast of the population likely to have been exposed to asbestos;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•epidemiological studies estimating the number of people likely to develop asbestos-related diseases;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•analysis of the number of people likely to file an asbestos-related injury claim against the subsidiaries and the Corporation based on such epidemiological data and relevant claims history from January 1, 2018 to July 31, 2021;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•an analysis of pending cases, by type of injury claimed and jurisdiction where the claim is filed; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•an analysis of claims resolution history from January 1, 2018 to July 31, 2021, to determine the average settlement value of claims, by type of injury claimed and jurisdiction of filing.

Based on this analysis, the Corporation recorded an increase to its estimated Asbestos Liability of $23,333 for claims pending or projected to be asserted through the estimated final date by which the Corporation expects to have settled all asbestos-related claims. The increase is primarily attributable to recent claim experience, including a higher expected proportion of mesothelioma claims which typically have a higher settlement value, offset by a lower defense-to-indemnity cost ratio (reduced to 70% from 80% based on experience and future expectations) and elimination of an inflationary factor based on historical experience over the past 10+ years which provided no evidence that inflationary pressures influenced settlement averages. In addition, the Corporation increased its estimated insurance receivable by $16,672 for the estimated insurance recoveries attributable to the claims for which the Asbestos Liability reserve has been established and the portion of defense costs covered by the Settlement Agreements. The difference between the increase to the Asbestos Liability and the increase to the insurance receivable of $6,661 is recorded as a charge for asbestos-related costs in the consolidated statement of operations for 2021.

In 2022, the Corporation revised its defense-to-indemnity cost ratio (reduced from 70% to 65%) based on continuing favorable experience and future expectations, which reduced the Asbestos Liability by $6,905 and insurance receivable by $4,679 with the difference recorded as a credit for asbestos-related costs in the consolidated statement of operations of $2,226 for 2022.

The following table summarizes activity relating to asbestos-related liabilities for the years ended December 31, 2022 and 2021.

---

| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Asbestos liability, beginning of the year | $180314 | $180196 |
| Settlement and defense costs paid | **(**19834**)** | (23215) |
| Change in estimated liability | **(**6905**)** | 23333 |
| Asbestos liability, end of the year | $153575 | $180314 |

---

The following table summarizes activity relating to insurance recoveries for the years ended December 31, 2022 and 2021.

---

| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Insurance receivable – asbestos, beginning of the year | $121297 | $117937 |
| Settlement and defense costs paid by insurance carriers | **(**10708**)** | (13312) |
| Change in estimated coverage | **(**4679**)** | 16672 |
| Insurance receivable – asbestos, end of the year | $105910 | $121297 |

---

------

The balance of the insurance receivable does not assume any recovery from insolvent carriers. A substantial majority of the insurance recoveries deemed probable is from insurance companies rated A – (excellent) or better by A.M. Best Corporation. There can be no assurance, however, that there will not be insolvencies among the relevant insurance carriers, or that the assumed percentage recoveries for certain carriers will prove correct.

The amounts recorded for the Asbestos Liability and insurance receivable rely on assumptions that are based on currently known facts and strategy. The Corporation's actual expenses or insurance recoveries could be significantly higher or lower than those recorded if assumptions used in the Corporation's or the experts' calculations vary significantly from actual results. Key variables in these assumptions are identified above and also include the number and nature of new claims to be filed each year, the average cost of disposing of each new claim, average annual defense costs, compliance by relevant parties with the terms of the Settlement Agreements, and the solvency risk with respect to the relevant insurance carriers. Other factors that may affect the Asbestos Liability and ability to recover under the Corporation's insurance policies include uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, reforms that may be made by state and federal courts, and the passage of state or federal tort reform legislation.

The Corporation intends to continue to evaluate the Asbestos Liability and related insurance receivable, as well as the underlying assumptions, on a regular basis to determine whether any adjustments to the estimates are required. Due to the uncertainties surrounding asbestos litigation and insurance, these regular reviews may result in the Corporation adjusting its current reserve; however, the Corporation is currently unable to estimate such future adjustments. Adjustments, if any, to the Corporation's estimate of the Asbestos Liability and/or insurance receivable could be material to the operating results for the periods in which the adjustments to the liability or receivable are recorded and to the Corporation's consolidated financial position and liquidity.

**NOTE 21 – INCOME TAXES:** 

Income (loss) from operations before income taxes for the years ended December 31, 2022 and 2021 is summarized below. Income (loss) from operations before income taxes for certain foreign entities is classified differently for book reporting and income tax reporting purposes.

---

| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Domestic | $1438 | $(9223) |
| Foreign | 4118 | 8228 |
| Income (loss) from operations before income taxes | $5556 | $(995) |

---

The income tax provision for the years ended December 31, 2022 and 2021 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Current: |  |  |
| &nbsp;&nbsp;&nbsp;Federal | $**—** | $— |
| &nbsp;&nbsp;&nbsp;State | 219 | (16) |
| &nbsp;&nbsp;&nbsp;Foreign | 889 | 1017 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current income tax provision | 1108 | 1001 |
| Deferred: |  |  |
| &nbsp;&nbsp;&nbsp;Federal | **(**3**)** | (1122) |
| &nbsp;&nbsp;&nbsp;State | 2177 | (937) |
| &nbsp;&nbsp;&nbsp;Foreign | 52 | 1138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Decrease) increase in valuation allowance | **(**1758**)** | 2225 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax provision | 468 | 1304 |
| Total income tax provision | $1576 | $2305 |

---

------

The difference between statutory U.S. federal income tax and the Corporation's effective income tax for the years ended December 31, 2022 and 2021 was as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Computed at statutory rate | $1167 | $(209) |
| State income taxes | **(**924**)** | (949) |
| Rate change | 2857 | 482 |
| Tax differential on non-U.S. earnings | **—** | (49) |
| GILTI inclusion | **—** | 305 |
| Stock-based compensation | 183 | 152 |
| Meals and entertainment | 28 | 10 |
| Adjustments to net operating losses | 296 | 275 |
| (Decrease) increase in valuation allowance | **(**1758**)** | 2225 |
| Other – net | **(**273**)** | 63 |
| Total income tax provision | $1576 | $2305 |

---

Deferred income tax assets and liabilities as of December 31, 2022 and 2021 are summarized in the following table. Unremitted earnings of the Corporation's non-U.S. subsidiaries and affiliates are deemed to be permanently re-invested and, accordingly, no deferred income tax liability has been recorded. If the Corporation were to remit any foreign earnings to the U.S., the estimated tax impact would be insignificant.

---

| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
| Assets: |  |  |
| &nbsp;&nbsp;&nbsp;Employment – related liabilities | $4931 | $7378 |
| &nbsp;&nbsp;&nbsp;Pension liability – domestic | 5873 | 7984 |
| &nbsp;&nbsp;&nbsp;Capital loss carryforwards | 182 | 204 |
| &nbsp;&nbsp;&nbsp;Asbestos-related liability | 12005 | 14685 |
| &nbsp;&nbsp;&nbsp;Net operating loss – domestic | 12224 | 13156 |
| &nbsp;&nbsp;&nbsp;Net operating loss – state | 3172 | 5415 |
| &nbsp;&nbsp;&nbsp;Net operating loss – foreign | 8504 | 9666 |
| &nbsp;&nbsp;&nbsp;Impairment charge associated with investment in MG | 956 | 961 |
| &nbsp;&nbsp;&nbsp;Operating lease right-of-use assets | 855 | 980 |
| &nbsp;&nbsp;&nbsp;Interest expense limitation | 814 | 2517 |
| &nbsp;&nbsp;&nbsp;Sale-leaseback | 9784 |  |
| &nbsp;&nbsp;&nbsp;Other | 643 | 797 |
| Gross deferred income tax assets | 59943 | 63743 |
| Valuation allowance | **(**31981**)** | (37889) |
|  | 27962 | 25854 |
| Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation | **(**24085**)** | (22015) |
| &nbsp;&nbsp;&nbsp;Inventory related | **(**1576**)** | (1511) |
| &nbsp;&nbsp;&nbsp;Pension asset – foreign | **(**808**)** | (1482) |
| &nbsp;&nbsp;&nbsp;Intangible assets – finite life | **(**241**)** | (565) |
| &nbsp;&nbsp;&nbsp;Intangible assets – indefinite life | **(**453**)** | (510) |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | **(**855**)** | (980) |
| &nbsp;&nbsp;&nbsp;Other | **(**321**)** | (664) |
| Gross deferred income tax liabilities | **(**28339**)** | (27727) |
| Net deferred income tax liabilities | $**(**377**)** | $(1873) |

---

------

At December 31, 2022, the Corporation has U.S. federal net operating loss carryforwards of $58,211, of which $54,870 can be carried forward indefinitely but will be limited to 80% of taxable income in any given year. The balance of $3,341 will begin to expire in 2035 and can be used without taxable income limitation. Additionally, at December 31, 2022, the Corporation had state net operating loss carryforwards of $77,747, which begin to expire in 2023, and foreign net operating loss carryforwards of $39,592 and capital loss carryforwards of $730, which do not expire.

Unrecognized tax benefits and changes in unrecognized tax benefits for the years ended December 31, 2022 and 2021 are insignificant. If the unrecognized tax benefits were recognized, the effect on the Corporation's effective income tax rate would also be insignificant. The amount of penalties and interest recognized in the consolidated balance sheets as of December 31, 2022 and 2021 and in the consolidated statements of operations for 2022 and 2021 is insignificant.

In 2022, new legislation was enacted which will decrease the Pennsylvania state income tax rate from 9.99% to 4.99% in 2031. In 2021, new legislation was enacted which will increase the U.K. corporate income tax rate from 19% to 25% in 2023.

On August 16, 2022, the Inflation Reduction Act ("IRA") was enacted in the United States. Among other provisions, the IRA included a new 15% Corporate Alternative Minimum Tax ("CAMT") for corporations with financial income in excess of $1 billion and a 1% excise tax on corporate share repurchases. The CAMT is effective for tax years beginning on or after January 1, 2023. The excise tax on corporate share repurchases is not expected to impact the Corporation as the Corporation's revolving credit facility prohibits the Corporation from repurchasing its shares.

The Corporation is subject to taxation in the United States, various states and foreign jurisdictions, and remains subject to examination by tax authorities for 2013, due to the carryback of net operating losses enabled by the Coronavirus Aid, Relief, and Economic Security Act signed into law in 2020, and for tax years 2019 – 2022.

**NOTE 22 – ENVIRONMENTAL MATTERS:** 

The Corporation is currently performing certain remedial actions in connection with the sale of real estate previously owned and periodically incurs costs to maintain compliance with environmental laws and regulations. Environmental exposures are difficult to assess and estimate for numerous reasons, including lack of reliable data, the multiplicity of possible solutions, the years of remedial and monitoring activity required, and identification of new sites. The undiscounted potential liability for remedial actions and environmental compliance measures approximated $100 as of December 31, 2022 and 2021.

**NOTE 23 – RELATED PARTIES:** 

In 2022, ATR periodically had loans outstanding with its minority shareholder. Amounts borrowed and repaid approximated $5,776 (RMB 38,471) in 2022. In addition, ATR repaid an existing loan in 2021 of approximately $1,056 (RMB 6,901). No loans are outstanding as of December 31, 2022 or 2021.

Interest on the borrowings equaled the three-to-five-year loan interest rate set by the People's Bank of China in effect at the time of the borrowing, which approximated 4.785% and 5% for 2022 and 2021, respectively. Interest paid in 2022, including interest accumulated on previous loans, approximated $1,766 (RMB 11,063). Interest paid in 2021 approximated $479 (RMB 3,046). Accrued interest as of December 31, 2021 approximated $1,713 (RMB 10,901), and was recorded in other current liabilities on the consolidated balance sheet. No interest was outstanding as of December 31, 2022.

Purchases from ATR's minority shareholder and its affiliates, which were in the ordinary course of business, approximated $6,666 (RMB 44,856) and $11,368 (RMB 73,299) in 2022 and 2021, respectively. At December 31, 2022 and 2021, the amount payable to ATR's minority shareholder and its affiliates for purchases approximated $412 (RMB 2,841) and $1,125 (RMB 7,157), respectively. Additionally, customer deposits from ATR's minority shareholder and its affiliates approximated $368 (RMB 2,542) and $616 (RMB 3,921) at December 31, 2022 and 2021, respectively. Sales to ATR's minority shareholder and its affiliates, which were in the ordinary course of business, approximated $9,934 (RMB 66,849) and $9,842 (RMB 63,460) for 2022 and 2021, respectively. At December 31, 2022, the amount due from ATR's minority shareholder or its affiliates approximated $1,066 (RMB 7,352). No amounts were due from ATR's minority shareholder or its affiliates as of December 31, 2021.

------

**NOTE 24 – BUSINESS SEGMENTS:** 

The Corporation organizes its business into two operating segments – Forged and Cast Engineered Products and Air and Liquid Processing. Summarized financial information concerning the Corporation's reportable segments is shown in the following tables. Corporate assets included under Identifiable Assets represent primarily cash and cash equivalents and other items not allocated to reportable segments. Long-lived assets exclude deferred income tax assets. Corporate costs are comprised of operating costs of the corporate office and other costs not allocated to the segments. The accounting policies are the same as those described in [<u>Note 1</u>](#note_1), Summary of Significant Accounting Policies.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Net Sales(1)** | **Net Sales(1)** | **Income (Loss) Before Income Taxes** | **Income (Loss) Before Income Taxes** |
|  | **2022** | 2021 | **2022** | 2021 - as adjusted |
| Forged and Cast Engineered Products | $299484 | $260204 | $444 | $5073 |
| Air and Liquid Processing(2) | 90705 | 84716 | 13686 | 2601 |
| Total Reportable Segments | 390189 | 344920 | 14130 | 7674 |
| Corporate costs, including other income (expense) | **—** |  | **(**8574**)** | (8669) |
| Consolidated total | $390189 | $344920 | $5556 | $(995) |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Capital Expenditures** | **Capital Expenditures** | **Depreciation and<br>Amortization Expense** | **Depreciation and<br>Amortization Expense** | **Identifiable Assets(3)** | **Identifiable Assets(3)** |
|  | **2022** | 2021 | **2022** | 2021 | **2022** | 2021 |
| Forged and Cast Engineered Products | $15312 | $14929 | $16730 | $17051 | $327277 | $331598 |
| Air and Liquid Processing | 1376 | 307 | 667 | 749 | 168583 | 162010 |
| Corporate | **—** |  | 11 | 77 | 6914 | 12352 |
| Consolidated total | $16688 | $15236 | $17408 | $17877 | $502774 | $505960 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Long-lived Assets(4)** | **Long-lived Assets(4)** | **Income (Loss) Before Income Taxes** | **Income (Loss) Before Income Taxes** |
| **Geographic Areas:** | **2022** | 2021 | **2022** | 2021 - as adjusted |
| United States (5) | $202860 | $218712 | $1424 | $(9314) |
| Foreign | 66365 | 76447 | 4132 | 8319 |
| Consolidated total | $269225 | $295159 | $5556 | $(995) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)For the FCEP segment, one customer accounted for 10% of its net sales in 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)Income before income taxes for the ALP segment includes a credit of $(2,226) in 2022 representing the reduction in the estimated defense-to-indemnity cost ratio from 70% to 65% and a charge of $6,661 in 2021 representing the estimated increase in the costs of asbestos-related litigation through the estimated final date by which the Corporation expects to have settled all asbestos-related claims, net of estimated insurance recoveries.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)Identifiable assets for the FCEP segment include investments in joint ventures of $2,175 at December 31, 2022 and 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)Foreign long-lived assets primarily represent assets of the foreign operations. Long-lived assets of the U.S. include noncurrent asbestos-related insurance receivables of $90,910 and $105,297 at December 31, 2022 and 2021, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5)Income (loss) before income taxes for the United States includes Corporate costs, a credit of $(2,226) in 2022 representing the reduction in the estimated defense-to-indemnity cost ratio from 70% to 65%, and a charge of $6,661 in 2021 representing the estimated increase in the costs of asbestos-related litigation through the estimated final date by which the Corporation expects to have settled all asbestos-related claims, net of estimated insurance recoveries.

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**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

Shareholders and Board of Directors

Ampco-Pittsburgh Corporation

Carnegie, Pennsylvania

**Opinion on the Consolidated Financial Statements** 

We have audited the accompanying consolidated balance sheets of Ampco-Pittsburgh Corporation (the Corporation) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Corporation at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years then ended**,** in conformity with accounting principles generally accepted in the United States of America.

**Change in Accounting Method Related to Inventory**

As discussed in Notes 1 and 2 to the consolidated financial statements, the Corporation has elected to change its method of accounting for inventory cost in the United States from the last-in, first-out (LIFO) to the first-in, first-out (FIFO) method in 2022. The accounting change has been retrospectively applied to all periods presented in the financial statements.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on the Corporation's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Corporation is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Corporation's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matter**

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

**Asbestos Liabilities and Related Insurance Receivables**

As described in Notes 1 and 20 to the Corporation's consolidated financial statements, the Corporation has accrued asbestos liabilities of $153.6 million ($23.0 million current and $130.6 million long term) and recorded asbestos-related insurance receivables of $105.9 million ($15.0 million current and $90.9 million noncurrent) as of December 31, 2022. These liabilities and insurance receivables relate to claims that have been asserted alleging personal injury from exposure to asbestos-containing components historically used in certain products manufactured by predecessors of the Corporation's Air & Liquid Systems Corporation. The Corporation utilizes third-party experts to assist in developing (i) an estimate of the asbestos liability for the probable pending and future claims over the period that the Corporation believes it can reasonably estimate such claims and (ii) an estimate of the insurance receivable for the insurance proceeds expected to be received under existing policies associated with the asbestos liabilities.

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We identified the valuation of asbestos liabilities and insurance receivables as a critical audit matter. The principal considerations for our determination are: (i) the subjectivity of estimating projected claims including the period for which the Corporation can reasonably estimate the asbestos liabilities, (ii) the estimation process for projected settlement values of reported and unreported claims including the number of claims expected to be filed and adjudicated, the disease type, and the settlement and defense costs to estimate the asbestos liabilities, and (iii) the complexity of determining the associated insurance receivables including the estimated settlement costs for the asbestos liabilities and the associated defense costs, the continued financial solvency of the insurance carriers, and legal interpretation of rights for recovery under the insurance policies and the related settlement agreements. Auditing these elements involved especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge needed.

The primary procedures we performed to address this critical audit matter included:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Assessing the qualifications, experience, and objectivity of the Corporation's third-party experts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Testing the underlying historical data that served as a basis for the valuation of the asbestos liabilities for completeness and accuracy through the examination of relevant source documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Testing the insurance policies for existence and coverage amounts including independent confirmation of a selection of policies and the related settlement agreements directly with insurance carriers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Evaluating the ongoing financial solvency of a selection of insurance carriers utilizing publicly available financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Utilizing personnel with specialized knowledge and skill in actuarial science to assist in: (i) evaluating the valuation methodology utilized by the Corporation to estimate the asbestos liabilities, (ii) testing the computation of the asbestos liability estimate performed by the Corporation's third-party experts, (iii) evaluating the period utilized by the Corporation to project probable pending and future claims for reasonableness, and (iv) evaluating the reasonableness of assumptions utilized to develop the estimates of future indemnification costs for the asbestos liabilities.

/s/ BDO USA, LLP

We have served as the Corporation's auditor since 2020.

Pittsburgh, Pennsylvania

March 21, 2023

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**ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE** 

The Corporation did not experience any changes in, or disagreements with its accountants on, accounting and financial disclosure during the period covered.

**ITEM 9A. CONTROLS AND PROCEDURES** 

**Disclosure Controls and Procedures.** An evaluation of the effectiveness of the Corporation's disclosure controls and procedures as of the end of the period covered by this report was carried out under the supervision, and with the participation, of management, including the principal executive officer and principal financial officer. Disclosure controls and procedures are defined under Securities and Exchange Commission ("SEC") rules as controls and other procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, the Corporation's management, including the principal executive officer and principal financial officer, has concluded that, as of December 31, 2022, the Corporation's disclosure controls and procedures were not effective due to material weaknesses (as defined in SEC Rule 12b-2) in its internal control over financial reporting.

**Management's Annual Report on Internal Control Over Financial Reporting.** The Corporation's management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a – 15(f) under the Securities Exchange Act). Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Effective internal control over financial reporting can only provide reasonable assurance that the objectives of the control process are met. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Further, the design of internal control over financial reporting includes the consideration of the benefits of each control relative to the cost of the control.

Management assessed the effectiveness of internal control over financial reporting as of December 31, 2022. In making this assessment, management used the criteria set forth in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on those criteria and management's assessment, management, including the principal executive officer and principal financial officer, concluded that the Corporation's internal control over financial reporting was not effective as of December 31, 2022, because of material weaknesses as described below. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

Based upon the aforementioned assessment, management determined that, as of December 31, 2022, there were material weaknesses related to (i) the accounting for the claims asserted alleging personal injury from exposure to asbestos-containing components historically used in some products manufactured by predecessors of Air & Liquid Systems Corporation ("Asbestos Liability") and (ii) management review control activities related to the tax accounting for a non-routine transaction.

<u>Asbestos Liability</u>: The material weakness related to the Asbestos Liability is a result of the aggregation of the following control deficiencies: insufficient design and business process controls surrounding a new asbestos claims management database, insufficient testing of data migration from the previous asbestos claims management database to the new asbestos claims management database, and inadequate information technology ("IT") general controls which ensure the integrity of the data and processes that the new asbestos claims management system supports. To provide reasonable assurance regarding the reliability of the consolidated financial statements of the Corporation as of and for the year ended December 31, 2022, the Corporation engaged its internal auditors, Schneider Downs & Co., Inc. (an audit, tax and advisory firm), to assist management in:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Reviewing the asbestos claim management process and identifying financial reporting risks associated with the Asbestos Liability and related insurance receivable balances;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Formalizing relevant key controls which are intended to mitigate the identified financial reporting risks related to the financial reporting of the Corporation's Asbestos Liability and related insurance receivable balances;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Testing key attributes and documents to validate the design and operating effectiveness of each identified key control;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Performing an independent assessment over the new third-party asbestos claims management database;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Performing data migration testing from the previous asbestos claims management database to the new third-party asbestos claims management database;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Performing testing of the new third-party asbestos claims management database through a random and targeted sample of asbestos claims and agreeing asbestos claim data attributes having a direct impact on the value of the Asbestos Liability and related insurance receivable balances to supporting evidence provided by local counsels; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Confirming certain asbestos claim data from the new third-party asbestos claims management database with local counsels and resolving significant differences, if any.

Accordingly, management believes the consolidated financial statements included in this report fairly present, in all material respects, the Corporation's financial condition, results of operations, changes in shareholders' equity, and cash flows for the periods presented.

Management's Remediation Plans and Progress

The Corporation has dedicated a full-time employee to manage the accounting for asbestos claims and costs associated with the Asbestos Liability, with oversight provided by the Corporation's Chief Financial Officer ("CFO"). The asbestos claims and costs associated with the Asbestos Liability will continue to be managed using the new third-party asbestos claims management database. The third-party service provider has committed to provide an appropriate Service Organization Control ("SOC") report, which will give assurance over the functioning of the third-party system and the sufficiency of its internal controls. The SOC report will be obtained and reviewed by the CFO ensuring the SOC report is appropriate, no material deficiencies exist to cause the inability to rely on the third-party system, and any additional management controls are designed and assessed for operating effectiveness. The Corporation has established limits of authority for its employees utilizing the new third-party asbestos claims management database, which provides an appropriate segregation of duties. Annually, user access to, and user rights within, the new third-party asbestos claims management database will be independently reviewed and approved.

<u>Non-routine Transaction</u>: The material weakness related to management review control activities was attributable to the tax accounting for a non-routine transaction. Specifically, management determined that its management review control activities did not operate at a sufficient level of precision to detect errors related to the tax accounting for the non-routine transaction. This material weakness resulted in classification adjustments between the components of deferred income tax assets and liabilities in [<u>Note 21</u>](#note_21), Income Taxes, to the Corporation's Consolidated Financial Statements; however, no significant adjustments were required to the Corporation's consolidated balance sheets, statements of operations, comprehensive income, shareholders' equity or cash flows. Since the necessary adjustments were made to [<u>Note 21</u>](#note_21), Income Taxes, management believes the consolidated financial statements included in this report fairly present, in all material respects, the Corporation's financial condition, results of operations, changes in shareholders' equity, and cash flows for the periods presented.

Management's Remediation Plans and Progress

The Corporation will enhance its management review control activities when assessing the propriety of the accounting for the income tax consequences of a non-routine transaction. Specifically, the Corporation will continue to engage external consultants, under the Corporation's supervision, to provide support and assist the Corporation in its evaluation of such transactions. In addition, the Corporation will enhance its management review controls over income taxes on an interim basis to include specific activities at a more precise level to assess the impacts of non-routine transactions, including the identification of relevant contractual terms and conditions related to such transactions.

Despite management's remediation plans and progress related to the Asbestos Liability and the non-routine transaction, the material weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

**Changes in Internal Control Over Financial Reporting.** Except as discussed above, there were no other changes in the Corporation's internal control over financial reporting during the quarter ended December 31, 2022, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

**ITEM 9B. OTHER INFORMATION** 

None

**ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS**

Not applicable.

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**– PART III –** 

**ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE** 

The information about the Corporation's directors required by Item 401 of Regulation S-K and not otherwise set forth below is contained under the caption "Proposal 1: Election of Directors" in the Corporation's definitive Proxy Statement for the 2023 Annual Meeting of Shareholders (the "Proxy Statement") which the Corporation anticipates filing with the Securities and Exchange Commission, pursuant to Regulation 14A, not later than 120 days after the end of the Corporation's fiscal year, and is incorporated by reference. The information required by Item 401 of Regulation S-K regarding executive officers is set forth in Part I, Item 1 of this report under "Executive Officers."

The information required by Item 405 of Regulation S-K is contained under the caption "Security Ownership of Certain Beneficial Owners and Management - Delinquent Section 16(a) Reports" of the Proxy Statement and is incorporated by reference.

The Corporation and its subsidiaries have adopted a Code of Business Conduct and Ethics that applies to all of their officers, directors and employees, as well as an additional Code of Ethics that applies to the Corporation's Chief Executive Officer and Chief Financial Officer, which are available on the Corporation's website at www.ampcopittsburgh.com.

The information required by Items 407(c)(3), (d)(4) and (d)(5) of Regulation S-K is contained under the captions "Corporate Governance – Director Nominating Procedures" and "Board Committees: Director Compensation – Audit Committee" of the Proxy Statement and is incorporated by reference.

**ITEM 11. EXECUTIVE COMPENSATION** 

The information required for Item 11 is contained under the captions "Director Compensation," "Compensation Discussion and Analysis ("CDA")," "Summary Compensation Table," "Outstanding Equity Awards at Fiscal Year-End," "Retirement Benefits," "Potential Payments upon Termination, Resignation or Change in Control," and "Report of The Compensation Committee" of the Proxy Statement and is incorporated by reference.

**ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS** 

The information required by Item 201(d) of Regulation S-K is contained under the caption "Equity Compensation Plan Information" of the Proxy Statement and is incorporated by reference.

The information required by Item 403 of Regulation S-K is contained under the caption "Security Ownership of Certain Beneficial Owners and Management" of the Proxy Statement and is incorporated by reference.

**ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE** 

The information required by Item 404 of Regulation S-K is contained under the caption "Certain Relationships and Related Transactions" in the Proxy Statement and is incorporated by reference.

The information required by Item 407(a) of Regulation S-K is contained under the caption "Corporate Governance – Board Independence" of the Proxy Statement and is incorporated by reference.

**ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES** 

The information required for Item 14 is contained under the caption "Report of the Audit Committee" of the Proxy Statement and is incorporated herein.

------

**– PART IV –** 

**ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES** 

**THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:** 

**1.** **Financial Statements** 

– Consolidated Balance Sheets

– Consolidated Statements of Operations

– Consolidated Statements of Comprehensive Income

– Consolidated Statements of Shareholders' Equity

– Consolidated Statements of Cash Flows

– Notes to Consolidated Financial Statements

– Report of Independent Registered Public Accounting Firm (BDO USA, LLP; Pittsburgh, Pennsylvania, United States; PCAOB ID #243)

**2.** **Financial Statement Schedules** 

The financial statement schedules are not applicable to the Corporation since the Corporation meets the definition of a Smaller Reporting Company, as defined by the Securities and Exchange Commission per Rule 12b-2 of the Exchange Act.

**3.** **Exhibits** 

**Exhibit No.** 

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| | | |
|:---|:---|:---|
|  | 2.1 | [<u>Purchase Agreement, dated November 1, 2016, by and among Ampco UES Sub, Inc., ASW Steel Inc., CK Pearl Fund, Ltd., CK Pearl Fund LP, and White Oak Strategic Master Fund, L.P., incorporated by reference to Current Report on Form 8-K filed on November 4, 2016.</u>](https://www.sec.gov/Archives/edgar/data/6176/000119312516760255/d253707dex21.htm) |
|  | 2.2 | [<u>Purchase Agreement, dated September 30, 2019, by and among Ampco UES Sub, Inc., ASW Steel Inc., Valbruna Canada Ltd. and Ampco-Pittsburgh Corporation, incorporated by reference to Current Report on Form 8-K filed on October 3, 2019.</u>](https://www.sec.gov/Archives/edgar/data/0000006176/000119312519261666/d814580dex21.htm) |
|  | 3.1 | [<u>Restated Articles of Incorporation, effective as of August 11, 2017, incorporated by reference to Quarterly Report on Form 10-Q filed on November 9, 2017.</u>](https://www.sec.gov/Archives/edgar/data/6176/000119312517338325/d435120dex101.htm) |
|  | 3.2 | [<u>Amendment of Amended and Restated Articles of Incorporation, effective as of May 9, 2019, incorporated by reference to Quarterly Report on Form 10-Q filed on May 10, 2019.</u>](https://www.sec.gov/Archives/edgar/data/0000006176/000156459019018430/ap-ex31_74.htm) |
| † | 3.3 | [<u>Amended and Restated By-laws, effective as of December 14, 2022.</u>](ap-ex3_3.htm) |
|  | 4.1 | [<u>Form of Common Stock Certificate, incorporated by reference to Registration Statement on Form S-3 filed on January 19, 2018.</u>](https://www.sec.gov/Archives/edgar/data/0000006176/000119312518014782/d689438dex44.htm) |
|  | 4.2 | [<u>Form of Series A Warrant Certificate, incorporated by reference to Amendment No. 1 to Registration Statement on Form S-1 filed on July 21, 2020.</u>](https://www.sec.gov/Archives/edgar/data/0000006176/000114036120016463/nt10013019x2_ex4-4.htm) |
|  | 4.3 | [<u>Warrant Agreement between Ampco-Pittsburgh Corporation and Broadridge Corporate Issuer Solutions, Inc. with respect to Series A Warrants, incorporated by reference to Quarterly Report on Form 10-Q filed on November 16, 2020.</u>](https://www.sec.gov/Archives/edgar/data/0000006176/000156459020054147/ap-ex42_29.htm) |
| † | 4.4 | [<u>Description of Securities.</u>](ap-ex4_4.htm) |
| \* | 10.1 | [<u>Ampco-Pittsburgh Corporation 2016 Omnibus Incentive Plan, as amended and restated, incorporated by reference to the Registration Statement on Form S-8 filed on May 13, 2021.</u>](https://www.sec.gov/Archives/edgar/data/6176/000119312521160565/d41915dex991.htm) |
| \* | 10.2 | [<u>Change in Control Agreement by and between Ampco-Pittsburgh Corporation and Michael G. McAuley, dated April 25, 2016, incorporated by reference to Current Report on Form 8-K filed on April 25, 2016.</u>](https://www.sec.gov/Archives/edgar/data/6176/000119312516554344/d129545dex101.htm) |
|  | 10.3 | [<u>First Amended and Restated Security Agreement, dated June 29, 2021, by and among Air & Liquid Systems Corporation, Union Electric Steel Corporation, Alloys Unlimited and Processing, LLC, Akers National Roll Company, Union Electric Steel UK Limited, Åkers AB and Åkers Sweden AB, certain lenders, the guarantors</u>](https://www.sec.gov/Archives/edgar/data/6176/000119312521206328/d198690dex101.htm) |

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| | | |
|:---|:---|:---|
|  |  | [<u>party thereto, including the Corporation, PNC Bank, National Association, as agent for the lenders, and the other lenders party thereto, incorporated by reference to Current Report on Form 8-K filed on July 1, 2021.</u>](https://www.sec.gov/Archives/edgar/data/6176/000119312521206328/d198690dex101.htm) |
|  | 10.4 | [<u>Amendment No. 1 to First Amended and Restated Revolving Credit and Security Agreement, dated December 17, 2021, by and among Air & Liquid Systems Corporation, Union Electric Steel Corporation, Alloys Unlimited and Processing, LLC, Akers National Roll Company, Union Electric Steel UK Limited, Åkers AB and Åkers Sweden AB, certain lenders, the guarantors party thereto, including the Corporation, PNC Bank, National Association, as agent for the lenders, and the other lenders party thereto, incorporated by reference to Annual Report on Form 10-K filed on March 16, 2022.</u>](https://www.sec.gov/Archives/edgar/data/6176/000156459022010687/ap-ex109_267.htm) |
| \* | 10.5 | [<u>Form of Notice of Grant of Restricted Stock Unit Award (Time-Vesting), incorporated by reference to Annual Report on Form 10-K filed on March 16, 2017.</u>](https://www.sec.gov/Archives/edgar/data/6176/000119312517085559/d300651dex1020.htm) |
| \* | 10.6 | [<u>Form of Notice of Grant of Restricted Stock Unit Award (Performance-Vesting), incorporated by reference to Annual Report on Form 10-K filed on March 16, 2017.</u>](https://www.sec.gov/Archives/edgar/data/6176/000119312517085559/d300651dex1021.htm) |
| \* | 10.7 | [<u>Change in Control Agreement by and between Ampco-Pittsburgh Corporation and J. Brett McBrayer, dated July 1, 2018, incorporated by reference to Amendment No. 1 to Quarterly Report on Form 10-Q/A filed on August 17, 2018.</u>](https://www.sec.gov/Archives/edgar/data/6176/000156459018021968/ap-ex101_11.htm) |
| \* | 10.8 | [<u>Offer Letter by and between Ampco-Pittsburgh Corporation and J. Brett McBrayer, dated June 16, 2018, incorporated by reference to Amendment No. 1 to Quarterly Report on Form 10-Q/A filed on August 17, 2018.</u>](https://www.sec.gov/Archives/edgar/data/6176/000119312518205689/d478722dex101.htm) |
| \* | 10.9 | [<u>Amendment No. 1 to Offer Letter, dated August 10, 2021, by and between Ampco-Pittsburgh Corporation and J. Brett McBrayer, incorporated by reference to Current Report on Form 8-K filed on August 13, 2021.</u>](https://www.sec.gov/Archives/edgar/data/6176/000119312521246099/d171726dex103.htm) |
| \* | 10.10 | [<u>Ampco-Pittsburgh Corporation Executive Severance Plan, effective as of June 21, 2018, incorporated by reference to Current Report on Form 8-K filed on June 27, 2018.</u>](https://www.sec.gov/Archives/edgar/data/6176/000119312518205689/d478722dex102.htm) |
|  | 10.11 | [<u>Master Lease Agreement by and between Union Electric Steel Corporation and Store Capital Acquisitions, LLC, dated September 28, 2018, incorporated by reference to Quarterly Report on Form 10-Q filed on November 9, 2018.</u>](https://www.sec.gov/Archives/edgar/data/6176/000156459018028874/ap-ex101_47.htm) |
|  | 10.12 | [<u>Unconditional Guaranty of Payment and Performance by and between Ampco-Pittsburgh Corporation and Store Capital Acquisitions, LLC, dated September 28, 2018, incorporated by reference to Quarterly Report on Form 10-Q filed on November 9, 2018.</u>](https://www.sec.gov/Archives/edgar/data/6176/000156459018028874/ap-ex102_49.htm) |
|  | 10.13 | [<u>Amended and Restated Unconditional Guaranty of Payment and Performance between Ampco-Pittsburgh Corporation and Store Capital Acquisitions, LLC, dated August 30, 2022, incorporated by reference to Current Report on Form 8-K filed on September 2, 2022.</u>](https://www.sec.gov/Archives/edgar/data/6176/000119312522237918/d402397dex102.htm) |
|  | 10.14 | [<u>Master Loan and Security Agreement between Union Electric Steel Corporation and Clarus Capital Funding I, LLC, dated September 29, 2022, incorporated by reference to Current Report on Form 8-K filed on October 4, 2022.</u>](https://www.sec.gov/Archives/edgar/data/6176/000119312522257599/d250749dex101.htm) |
|  | 10.15 | [<u>Guaranty made by Ampco-Pittsburgh Corporation to Clarus Capital Funding I, LLC, and dated September 29, 2022, incorporated by reference to Current Report on Form 8-K filed on October 4, 2022.</u>](https://www.sec.gov/Archives/edgar/data/6176/000119312522257599/d250749dex102.htm) |
| \* | 10.16 | [<u>Change in Control Agreement by and among Ampco-Pittsburgh Corporation, Union Electric Steel Corporation and Samuel C. Lyon, dated March 6, 2019, incorporated by reference to Annual Report on Form 10-K filed on March 18, 2019.</u>](https://www.sec.gov/Archives/edgar/data/6176/000156459019008247/ap-ex1030_319.htm) |
| \* | 10.17 | [<u>Amendment to Change in Control Agreement by and between Ampco-Pittsburgh Corporation and J. Brett McBrayer, dated December 20, 2019, incorporated by reference to Annual Report on Form 10-K filed on March 16, 2020.</u>](https://www.sec.gov/Archives/edgar/data/0000006176/000156459020011218/ap-ex1027_64.htm) |
| \* | 10.18 | [<u>Change in Control Agreement by and among Ampco-Pittsburgh Corporation, Air & Liquid Systems Corporation and David Anderson, dated January 1, 2022, incorporated by reference to Annual Report on Form 10-K filed on March 16, 2022.</u>](https://www.sec.gov/Archives/edgar/data/6176/000156459022010687/ap-ex1026_269.htm) |
|  | 10.19 | [<u>Amended and Restated Master Lease Agreement between Union Electric Steel Corporation and Store Capital Acquisitions, LLC, dated August 30, 2022, incorporated by reference to Current Report on Form 8-K filed on September 2, 2022.</u>](https://www.sec.gov/Archives/edgar/data/6176/000119312522237918/d402397dex101.htm) |
| † | 18 | [<u>Preferability Letter from BDO USA, LLP</u>](ap-ex18.htm) |

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| | | |
|:---|:---|:---|
| † | 21 | [<u>Significant Subsidiaries</u>](ap-ex21.htm) |
| † | 23.1 | [<u>Consent of BDO USA, LLP</u>](ap-ex23_1.htm) |
| † | 23.2 | [<u>Consent of GNARUS Advisors LLC</u>](ap-ex23_2.htm) |
| † | 31.1 | [<u>Certification of Principal Executive Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.</u>](ap-ex31_1.htm) |
| † | 31.2 | [<u>Certification of Principal Financial Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.</u>](ap-ex31_2.htm) |
| †† | 32.1 | [<u>Certification of Principal Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.</u>](ap-ex32_1.htm) |
| †† | 32.2 | [<u>Certification of Principal Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.</u>](ap-ex32_2.htm) |
| \*\* | 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
| \*\* | 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| \*\* | 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| \*\* | 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| \*\* | 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| \*\* | 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| \*\* | 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document)<br>|

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† Filed herewith

†† Furnished herewith

\* Management contracts, compensatory plans or arrangements required to be filed as an exhibit hereto pursuant to Item 601 of Regulation S-K.

\*\* Attached as Exhibit 101 to this report are the following documents formatted in Inline XBRL (Extensible Business Reporting Language) as of and for the year ended December 31, 2022: (i) the Consolidated Statement of Operations, (ii) the Consolidated Balance Sheet, (iii) the Consolidated Statement of Shareholders' Equity, (iv) the Consolidated Statement of Comprehensive Income, (v) the Consolidated Statement of Cash Flows, and (vi) Notes to Consolidated Financial Statements.

**ITEM 16. FORM 10-K SUMMARY** 

Not applicable.

------

**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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| | | | |
|:---|:---|:---|:---|
| March 21, 2023 | AMPCO-PITTSBURGH CORPORATION | AMPCO-PITTSBURGH CORPORATION | AMPCO-PITTSBURGH CORPORATION |
|  | By:  | /s/ J. Brett McBrayer | /s/ J. Brett McBrayer |
|  |  | Name:  | **J. Brett McBrayer** |
|  |  | Title:  | Chief Executive Officer |

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Each person whose individual signature follows hereby authorizes and appoints J. Brett McBrayer and Michael G. McAuley, and each of them, with full power of substitution and re-substitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated, and to file any and all amendments to this annual report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his or her substitute or substitutes may lawfully do or cause to be done by virtue thereof.

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in their capacities and on the dates indicated.

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| | | |
|:---|:---|:---|
| **SIGNATURE** | &nbsp;&nbsp;**TITLE** | &nbsp;&nbsp;**DATE** |
| /s/ J. Brett McBrayer | &nbsp;&nbsp;Director and Chief Executive Officer (Principal Executive Officer) | &nbsp;&nbsp;&nbsp;&nbsp;March 21, 2023 |
| J. Brett McBrayer | &nbsp;&nbsp;Director and Chief Executive Officer (Principal Executive Officer) | &nbsp;&nbsp;&nbsp;&nbsp;March 21, 2023 |
| <br>/s/ Michael G. McAuley | &nbsp;&nbsp;Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) | &nbsp;&nbsp;March 21, 2023 |
| Michael G. McAuley | &nbsp;&nbsp;Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) |  |
| /s/ James J. Abel | &nbsp;&nbsp;&nbsp;Director | &nbsp;&nbsp;&nbsp;&nbsp;March 21, 2023 |
| James J. Abel |  |  |
| /s/ Frederick D. DiSanto | &nbsp;&nbsp;Director | &nbsp;&nbsp;March 21, 2023 |
| Frederick D. DiSanto  |  |  |
| /s/ Robert A. DeMichiei | &nbsp;&nbsp;Director | &nbsp;&nbsp;March 21, 2023 |
| Robert A. DeMichiei  |  |  |
| /s/ Elizabeth A. Fessenden  | &nbsp;&nbsp;Director | &nbsp;&nbsp;March 21, 2023 |
| Elizabeth A. Fessenden  |  |  |
| /s/ Michael I. German  | &nbsp;&nbsp;Director | &nbsp;&nbsp;March 21, 2023 |
| Michael I. German  |  |  |
| /s/ William K. Lieberman  | &nbsp;&nbsp;Director | &nbsp;&nbsp;March 21, 2023 |
| William K. Lieberman  |  |  |
| /s/ Darrell L. McNair | &nbsp;&nbsp;Director | &nbsp;&nbsp;March 21, 2023 |
| Darrell L. McNair |  |  |
| /s/ Laurence E. Paul | &nbsp;&nbsp;Director | &nbsp;&nbsp;March 21, 2023 |
| Laurence E. Paul |  |  |
| /s/ Stephen E. Paul | &nbsp;&nbsp;Director | &nbsp;&nbsp;March 21, 2023 |
| Stephen E. Paul |  |  |
| /s/ Carl H. Pforzheimer, III | &nbsp;&nbsp;Director | &nbsp;&nbsp;March 21, 2023 |
| Carl H. Pforzheimer, III |  |  |

---

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## Ex-3

**EXHIBIT 3.3**

**AMPCO-PITTSBURGH CORPORATION** 

**INCORPORATED UNDER THE LAWS OF PENNSYLVANIA** 

**BY-LAWS** 

**AS AMENDED AND RESTATED ON DECEMBER 14, 2022**

DOCPROPERTY "DocID" \\* MERGEFORMAT LEGAL\60374986\7

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**Table of Contents** 

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| | | |
|:---|:---|:---|
| **Article I SHAREHOLDERS** | **Article I SHAREHOLDERS** | **1** |
| &nbsp;&nbsp;&nbsp;Section 1. | Annual Meeting. | 1 |
| &nbsp;&nbsp;&nbsp;Section 2. | Business to be Conducted at Annual Meeting. | 1 |
| &nbsp;&nbsp;&nbsp;Section 3. | Special Meetings. | 4 |
| &nbsp;&nbsp;&nbsp;Section 4. | Place of Meetings. | 4 |
| &nbsp;&nbsp;&nbsp;Section 5. | Notice of Meetings; Waiver. | 4 |
| &nbsp;&nbsp;&nbsp;Section 6. | Record Dates. | 5 |
| &nbsp;&nbsp;&nbsp;Section 7. | Quorum. | 5 |
| &nbsp;&nbsp;&nbsp;Section 8. | Voting. | 5 |
| &nbsp;&nbsp;&nbsp;Section 9. | Voting by Ballot. | 6 |
| &nbsp;&nbsp;&nbsp;Section 10. | Adjournments. | 6 |
| &nbsp;&nbsp;&nbsp;Section 11. | Proxies. | 6 |
| &nbsp;&nbsp;&nbsp;Section 12. | Organization; Procedure. | 7 |
| &nbsp;&nbsp;&nbsp;Section 13. | Inspectors of Election. | 7 |
| &nbsp;&nbsp;&nbsp;Section 14. | Voting Lists. | 7 |
| &nbsp;&nbsp;&nbsp;Section 15. | Participation in Meetings by Electronic Means. | 7 |
| &nbsp;&nbsp;&nbsp;Section 16. | No Consent of Shareholders in Lieu of Meeting. | 8 |
| **Article II BOARD OF DIRECTORS** | **Article II BOARD OF DIRECTORS** | **8** |
| &nbsp;&nbsp;&nbsp;Section 1. | General Powers. | 8 |
| &nbsp;&nbsp;&nbsp;Section 2. | Number and Terms of Office. | 8 |
| &nbsp;&nbsp;&nbsp;Section 3. | Vacancies. | 8 |
| &nbsp;&nbsp;&nbsp;Section 4. | Resignations. | 8 |
| &nbsp;&nbsp;&nbsp;Section 5. | Removal of Directors. | 8 |
| &nbsp;&nbsp;&nbsp;Section 6. | Annual Meeting. | 9 |
| &nbsp;&nbsp;&nbsp;Section 7. | Regular Meetings. | 9 |
| &nbsp;&nbsp;&nbsp;Section 8. | Special Meetings. | 9 |
| &nbsp;&nbsp;&nbsp;Section 9. | Quorum and Voting. | 9 |
| &nbsp;&nbsp;&nbsp;Section 10. | Adjournment. | 10 |
| &nbsp;&nbsp;&nbsp;Section 11. | Chairman of the Board of Directors. | 10 |
| &nbsp;&nbsp;&nbsp;Section 12. | Compensation. | 10 |
| &nbsp;&nbsp;&nbsp;Section 13. | Committees. | 10 |
| &nbsp;&nbsp;&nbsp;Section 14. | Remote Participation in Meetings. | 11 |
| &nbsp;&nbsp;&nbsp;Section 15. | Action Without a Meeting. | 11 |
| &nbsp;&nbsp;&nbsp;Section 16. | Section 16 Regulations; Manner of Acting. | 11 |
| &nbsp;&nbsp;&nbsp;Section 17. | Nomination of Directors. | 11 |
| &nbsp;&nbsp;&nbsp;Section 18. | Limit on Liability. | 16 |
| &nbsp;&nbsp;&nbsp;Section 19. | Director Emeritus. | 17 |
| &nbsp;&nbsp;&nbsp;Section 20. | Advisory Committees | 17 |
| **Article III OFFICERS** | **Article III OFFICERS** | **17** |
| &nbsp;&nbsp;&nbsp;Section 1. | Officers. | 17 |
| &nbsp;&nbsp;&nbsp;Section 2. | Term. | 17 |
| &nbsp;&nbsp;&nbsp;Section 3. | Compensation. | 18 |

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i

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;Section 4. | Duties. | 18 |
| &nbsp;&nbsp;&nbsp;Section 5. | Removal. | 18 |
| &nbsp;&nbsp;&nbsp;Section 6. | Prescription of Agency Authority. | 18 |
| &nbsp;&nbsp;&nbsp;Section 7. | Chief Executive Officer. | 18 |
| &nbsp;&nbsp;&nbsp;Section 8. | President. | 18 |
| &nbsp;&nbsp;&nbsp;Section 9. | Vice Presidents. | 19 |
| &nbsp;&nbsp;&nbsp;Section 10. | Treasurer. | 19 |
| &nbsp;&nbsp;&nbsp;Section 11. | Secretary. | 19 |
| &nbsp;&nbsp;&nbsp;Section 12. | Additional Officers. | 20 |
| **Article IV CAPITAL STOCK** | **Article IV CAPITAL STOCK** | **20** |
| &nbsp;&nbsp;&nbsp;Section 1. | Certificates of Stock. | 21 |
| &nbsp;&nbsp;&nbsp;Section 2. | Lost, Stolen or Destroyed Certificates. | 21 |
| &nbsp;&nbsp;&nbsp;Section 3. | Transfer of Stock. | 21 |
| &nbsp;&nbsp;&nbsp;Section 4. | Registered Shareholders. | 21 |
| &nbsp;&nbsp;&nbsp;Section 5. | Transfer Agent and Registrar. | 22 |
| **Article V INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS** | **Article V INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS** | **22** |
| &nbsp;&nbsp;&nbsp;Section 1. | Mandatory Indemnification of Directors and Officers. | 22 |
| &nbsp;&nbsp;&nbsp;Section 2. | Mandatory Advancement of Expenses to Directors and Officers. | 23 |
| &nbsp;&nbsp;&nbsp;Section 3. | Permissive Indemnification and Advancement of Expenses. | 23 |
| &nbsp;&nbsp;&nbsp;Section 4. | Enforcement. | 24 |
| &nbsp;&nbsp;&nbsp;Section 5. | General. | 24 |
| &nbsp;&nbsp;&nbsp;Section 6. | Definition of Corporation. | 24 |
| &nbsp;&nbsp;&nbsp;Section 7. | Definition of Authorized Representative. | 24 |
| &nbsp;&nbsp;&nbsp;Section 8. | Savings Clause. | 24 |
| &nbsp;&nbsp;&nbsp;Section 9. | Insurance. | 25 |
| &nbsp;&nbsp;&nbsp;Section 10. | Funding to Meet Indemnification Obligations. | 25 |
| **Article VI GENERAL PROVISIONS** | **Article VI GENERAL PROVISIONS** | **25** |
| &nbsp;&nbsp;&nbsp;Section 1. | Fiscal Year. | 25 |
| &nbsp;&nbsp;&nbsp;Section 2. | Seal. | 25 |
| &nbsp;&nbsp;&nbsp;Section 3. | Execution of Instruments. | 26 |
| &nbsp;&nbsp;&nbsp;Section 4. | Deposits. | 26 |
| &nbsp;&nbsp;&nbsp;Section 5. | Voting as Shareholder. | 26 |
| &nbsp;&nbsp;&nbsp;Section 6. | Definition of Electronic Transmission. | 26 |
| &nbsp;&nbsp;&nbsp;Section 7. | Definition of Public Announcement. | 26 |
| **Article VII AMENDMENT OF BY-LAWS** | **Article VII AMENDMENT OF BY-LAWS** | **26** |
| **Article VIII EMERGENCY BY-LAWS** | **Article VIII EMERGENCY BY-LAWS** | **27** |
| &nbsp;&nbsp;&nbsp;Section 1. | When Operative. | 27 |
| &nbsp;&nbsp;&nbsp;Section 2. | Meetings. | 27 |
| &nbsp;&nbsp;&nbsp;Section 3. | Lines of Succession. | 27 |
| &nbsp;&nbsp;&nbsp;Section 4. | Offices. | 28 |
| &nbsp;&nbsp;&nbsp;Section 5. | Liability. | 28 |
| &nbsp;&nbsp;&nbsp;Section 6. | Repeal or Change. | 28 |

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ii

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| | | |
|:---|:---|:---|
| **Article IX NON-APPLICABILITY OF STATUTE** | **Article IX NON-APPLICABILITY OF STATUTE** | **28** |
| **Article X CONSTRUCTION** | **Article X CONSTRUCTION** | **28** |
| **Article XI FORUM SELECTION** | **Article XI FORUM SELECTION** | **29** |
| &nbsp;&nbsp;&nbsp;Section 1. | Exclusive Forum. | 29 |
| &nbsp;&nbsp;&nbsp;Section 2. | Submission to Jurisdiction. | 29 |

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iii

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**Ampco-Pittsburgh Corporation (the "<u>Corporation</u>")** 

**Incorporated Under the Laws of Pennsylvania** 

**BY-LAWS** 

**As amended and restated on December 14, 2022** 

**Article I<br>SHAREHOLDERS**

Section 1. <u>Annual Meeting.</u> 

An annual meeting of shareholders for the election of Directors of the Corporation (each a "<u>Director</u>") and the transaction of such other business as may properly come before the meeting shall be held on such date and at such time as the Board of Directors of the Corporation (the "<u>Board of Directors</u>") may designate, with such time date and time being set forth in the notice of the annual meeting provided pursuant to Section 5 of this Article I. If the date fixed for an annual meeting, or for the reconvening of an adjourned annual meeting, is a legal holiday, the meeting shall be held at the same hour on the next succeeding full business day which is not a legal holiday.

Section 2. <u>Business to be Conducted at Annual Meeting.</u> 

At an annual meeting of shareholders, only such business (other than nominations of Directors, which must be made in compliance with, and shall be exclusively governed by, Section 17 of Article II) shall be conducted as shall have been brought before the meeting (i) pursuant to the Corporation's notice of the meeting, (ii) by or at the direction of the Board of Directors, (iii) by the chairman of the meeting, or (iv) by any shareholder of the Corporation who is a shareholder of record both at the time of giving of the notice provided for in this Section 2 and at the time of the annual meeting, who shall be entitled to vote at such meeting and who shall have complied with the notice procedures set forth in this Section 2. Clause (iv) in the immediately preceding sentence shall be the exclusive means for a shareholder to submit such business (other than matters properly brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the "<u>Exchange Act</u>"), and included in the Corporation's notice of meeting) before an annual meeting of shareholders.

For any such business to be properly brought before an annual meeting by a shareholder pursuant to this Section 2, notice in writing must be delivered or mailed by certified mail to the Secretary of the Corporation (the "<u>Secretary</u>") and received at the principal offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is to be more than 30 days before or more than 60 days after such anniversary date, notice by the shareholder must be received not earlier than the 120th day prior to the date of such annual meeting and not later than the 90th day prior to the date of such annual meeting or, if the first public announcement of the date of such advanced or delayed annual meeting is less than 100 days prior to the date of such annual meeting, the tenth day following the day on which public announcement of the date of the annual meeting is first made. In no event shall any adjournment or postponement of an annual meeting or announcement thereof commence a new time period (or extend any time period) for the giving of a shareholder's notice as described above.

Such shareholder notice shall set forth, as to each matter the shareholder proposes to bring before the annual meeting, each of the following:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a brief description of the business to be brought before the annual meeting and the reasons for conducting such business at such meeting, and the text of the proposal or business (including the text of any resolutions proposed for consideration and, in the event that such business includes a proposal to amend these By-Laws, the text of the proposed amendment);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) as to both the shareholder giving the notice and any Shareholder Associated Person on whose behalf the proposal is made:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the name and address, as they appear on the Corporation's books, of such shareholder and of each Shareholder Associated Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the class or series and number of the Corporation's securities which are owned, directly or indirectly, beneficially and of record by such shareholder and by each Shareholder Associated Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism related to any security of the Corporation or with a value derived in whole or in part from the value of any security of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying security of the Corporation or otherwise (a "<u>Derivative Instrument</u>") directly or indirectly owned beneficially by such shareholder or Shareholder Associated Person and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of any security of the Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) any hedging or other transaction or series of transactions entered into by or on behalf of, or any other agreement, arrangement, or understanding (including any borrowing or lending of shares) the effect or intent of which is to mitigate loss or manage risk or to increase or decrease the voting power of, such shareholder or Shareholder Associated Person with respect to any share of the Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) any proxy, contract, arrangement, understanding, or relationship pursuant to which such shareholder or Shareholder Associated Person has a right to vote any shares of any class or series of the Corporation's capital stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) any short interest of such shareholder or Shareholder Associated Person in any security of the Corporation (for purposes of this Section 2, a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) any rights to dividends on any securities of the Corporation owned beneficially by such shareholder or Shareholder Associated Person that are separated or separable from the underlying securities of the Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) any proportionate interest in shares of any class or series of the Corporation's capital stock or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such shareholder or Shareholder Associated Person is a general partner or, directly or indirectly, beneficially owns an interest in a general partner;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) any performance-related fees (other than an asset-based fee) to which such shareholder or Shareholder Associated Person is entitled based on any increase or decrease in the

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value of securities of the Corporation or Derivative Instruments as of the date of such notice, including any such interests held by members of the immediate family of such shareholder or Shareholder Associated Person sharing the same household (which information shall be supplemented by such shareholder and Shareholder Associated Person not later than ten (10) days after the record date for the meeting to disclose such ownership as of the record date);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) any other information relating to such shareholder or Shareholder Associated Person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of Directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) any material interest of the shareholder or Shareholder Associated Person on whose behalf the proposal is made in such business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) a description of all agreements, arrangements and understandings between such shareholder or such Shareholder Associated Person and any other person or persons (including their names) in connection with the proposal of such business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) a representation that the shareholder is a holder of record of capital stock of the Corporation, is entitled to vote at such meeting and intends to appear, in person or by proxy, at the annual meeting to propose such business; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14) a representation as to whether the shareholder or such Shareholder Associated Person is or intends to be part of a group that intends (A) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation's outstanding capital stock required to approve or adopt the proposal and/or (B) otherwise to solicit proxies from shareholders in support of such proposal.

For purposes of these By-Laws, a "<u>Shareholder Associated Person</u>" of any shareholder includes (x) any person or entity controlling, directly or indirectly, or acting in concert with, the shareholder; (y) any beneficial owner of shares of the Corporation owned of record or beneficially by the shareholder; or (z) any person or entity controlling, controlled by, or under common control with any person or entity described in subsections (x) or (y).

The shareholder and any Shareholder Associated Person shall update and supplement the notice required by this Section 2 by giving notice that the information provided or required to be provided in such notice shall be true and correct (1) as of the record date for the meeting and (2) as of the date that is ten (10) business days prior to the meeting or any adjournment or recess thereof. Such updates and supplements shall be delivered or mailed by certified mail to the Secretary and received at the principal executive offices of the Corporation not later than five (5) business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or recess thereof) not later than five (5) business days prior to the date for the meeting or, if practicable, any adjournment or recess thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or recessed).

The Chairman of the Board of Directors (the "<u>Chairman</u>") may, if the facts warrant, determine that any proposed business was not properly brought before the annual meeting in accordance with the provisions of this Section 2; and if the Chairman should so determine, the Chairman shall so declare to the annual meeting, and any such business shall not be transacted. A shareholder seeking to bring

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business before an annual meeting in accordance with the provisions of this Section 2 shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2; provided, however, that any references in these By-Laws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the applicable requirements pursuant to this Section 2. Nothing in this Section 2 shall be deemed to affect any rights of shareholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act. The provisions of this Section 2 shall also govern what constitutes timely notice for purposes of Rule 14a-4(c) of the Exchange Act.

Section 3. <u>Special Meetings.</u> 

A special meeting of shareholders shall be held on such date and at such time as shall be set forth in the notice of such special meeting provided pursuant to Section 5 of this Article I. Special meetings of shareholders, other than those required by applicable law, may be called only by the Chairman or a majority of the Directors then in office. The only business to be transacted at a special meeting of shareholders shall be the business stated in the notice of such meeting. Upon the written or electronically transmitted request of the person or persons, as the case may be, who have duly called a special meeting, it shall be the duty of the Secretary to fix the date and time of the meeting, to be held not more than 60 days after the receipt of the request.

Section 4. <u>Place of Meetings.</u> 

Each annual or special meeting of shareholders shall be held at such place, either within or without the Commonwealth of Pennsylvania, as the Board of Directors may designate, with such place being set forth in the notice of such meeting provided pursuant to Section 5 of this Article I; provided, however, if a meeting is held by means of the Internet or other electronic communications technology in a fashion pursuant to which shareholders have the opportunity to read or hear the proceedings substantially concurrently with their occurrence, vote on matters submitted to the shareholders and pose questions to the directors, the meeting need not be held at a particular geographic location.

Section 5. <u>Notice of Meetings; Waiver.</u> 

The Secretary shall mail or electronically transmit, or cause to be mailed or electronically transmitted, notice stating the place (or if held by means of the Internet or other electronic communications technology, the means of remote communications by which shareholders and proxyholders may be deemed to be present in person and vote at such meeting), date and time of each meeting of shareholders and, in the case of a special meeting, the general nature of the business to be transacted in accordance with any requirements set forth in the Pennsylvania Business Corporation Law (the "<u>PBCL</u>"). If such notice is mailed, it shall be deemed to have been given to a shareholder when deposited in the United States mail, postage prepaid, directed to the shareholder at the address of such shareholder as it appears on the record of shareholders of the Corporation or supplied by such shareholder to the Corporation for the purpose of notice. Notice given by electronic transmission shall be deemed given (i) if by facsimile, when directed to a number at which the shareholder has consented to receive such notice; (ii) if by electronic mail, when directed to an electronic mail address at which the shareholder consented to receive such notice; (iii) if by posting on an electronic network together with separate notice to the shareholder of such specific posting, upon the later of (A) such posting and (B) giving of such separate notice; and (iv) if by any other form of electronic transmission, when directed to the shareholder.

No notice of any meeting of shareholders need be given to any shareholder who properly waives notice, whether before or after the meeting and whether in writing or by electronic transmission or otherwise. Neither the business to be transacted at, nor the purpose of, any meeting need be specified in a

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waiver of notice. The attendance, in person or by proxy, of any shareholder at any meeting of shareholders shall constitute a proper waiver of notice of such meeting, except if the shareholder attends a meeting solely for the express purpose of objecting, prior to or at the commencement of such meeting, to the transaction of any business on the ground that the meeting is not lawfully called or convened.

Section 6. <u>Record Dates.</u> 

The Board of Directors may fix a date and time in accordance with the PBCL as a record date for the determination of the shareholders entitled to notice of or to vote at any meeting of shareholders, to receive payment of any dividend or distribution, to receive any allotment of rights or with respect to any change, conversion or exchange of shares. Only such shareholders as shall be shareholders of record at the close of business on the record date so fixed shall be entitled to notice of or to vote at such meeting, to receive payment of such dividend or distribution, to receive such allotment of rights or to exercise rights in respect to any change, conversion or exchange of shares, as the case may be, notwithstanding any transfer of any shares on the books of the Corporation after the record date fixed as aforesaid.

Section 7. <u>Quorum.</u> 

Except as otherwise provided or permitted by applicable law or the Articles of Incorporation of the Corporation (as amended, the "<u>Articles of Incorporation</u>"), the presence, in person or by proxy, of shareholders entitled to cast at least a majority of the votes which all shareholders are entitled to cast on a particular matter to be acted upon shall constitute a quorum for the purpose of acting upon such matter at a meeting of shareholders. If a quorum is not present, in person or by proxy, at a meeting of shareholders, those present may adjourn from time to time to reconvene at such date, time and place as they may determine. The shareholders present at any duly organized meeting of shareholders may continue to transact business until adjournment, notwithstanding the withdrawal of sufficient shareholders to otherwise render the remaining shareholders less than a quorum.

Section 8. <u>Voting.</u> 

Except as otherwise required by applicable law or the Articles of Incorporation, shareholders shall be entitled to one vote for each share of capital stock owned by them as reflected on the books of the Corporation and entitled to vote at the particular meeting of shareholders at which the shareholder is present, in person or by proxy. Except as otherwise required by applicable law, the Articles of Incorporation or these By-Laws, the affirmative vote of a majority of the votes cast by all shareholders entitled to vote on a particular matter (and, if any shareholders are entitled to vote thereon as a class, upon receiving the affirmative vote of a majority of the votes cast by the shareholders entitled to vote as a class) at a meeting of shareholders at which a quorum is present shall be the act of the shareholders with respect to such matter. At each meeting of shareholders at which Directors are to be elected, provided a quorum is present thereat, the Directors shall be elected by a plurality of the votes validly cast in such election. Shareholders shall be entitled to cumulative voting rights in the election of Directors to the extent permitted by the PBCL. The Chairman shall fix and announce at each meeting of shareholders the date and time of the opening and closing of the polls for each matter upon which the shareholders will act at such meeting.

Section 9. <u>Voting by Ballot.</u> 

No vote of the shareholders need be taken by written ballot or conducted by Inspectors of Election, unless otherwise required by applicable law. Any vote of the shareholders which need not be taken by ballot may be conducted in any manner approved by the Chairman. If authorized by the Board of Directors, a ballot may be submitted by electronic transmission, provided that any such electronic

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transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the shareholder or proxyholder.

Section 10. <u>Adjournments.</u> 

At any meeting of shareholders, only the Chairman or the holders of a majority of the voting power of the shares of capital stock entitled to vote thereat, present, in person or by proxy, shall have the power to adjourn such meeting to another date, time or place or by means of the Internet or other electronic communication technology, without notice other than announcement at the meeting of the date, time and place, if any, at which such meeting will be reconvened and the means of electronic communication technology, if any, by which shareholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting; provided, however, any notice required by applicable law shall be given. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted on the original date of the meeting.

Section 11. <u>Proxies.</u> 

Any shareholder entitled to vote at any meeting of shareholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such shareholder by proxy. A shareholder may authorize a valid proxy in any manner permitted by applicable law, including by executing a written instrument executed by such shareholder, or by causing such shareholder's signature to be affixed to such writing by any reasonable means, including by facsimile signature or by transmitting or authorizing an electronic transmission to the person designated as the holder of the proxy, a proxy solicitation firm or a like authorized agent. No such proxy shall be voted or acted upon after the expiration of three years from the date of such proxy, unless such proxy provides for a longer period. Every proxy shall be revocable at the pleasure of the shareholder executing it, unless such proxy is coupled with an interest sufficient in law to support an irrevocable power and except in any other case in which applicable law provides that such a proxy shall be irrevocable. A shareholder may revoke any proxy which is not irrevocable by giving notice of such revocation in writing or by electronic transmission to the Secretary or the designated agent of the Secretary. Proxies authorized by electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the shareholder. Any copy, facsimile telecommunication or other reliable reproduction of a writing or electronic transmission created pursuant to this Section 11 may be substituted or used in lieu of the original writing or electronic transmission, as the case may be, for any and all purposes for which the original writing or electronic transmission, as the case may be, could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or electronic transmission, as the case may be. Every proxy shall be filed with or transmitted to the Secretary or the Corporation's designated agent.

Any shareholder directly or indirectly soliciting proxies from other shareholders must use a proxy card color other than white, which shall be reserved for exclusive use by the Corporation.

Section 12. <u>Organization; Procedure.</u> 

At every meeting of shareholders, the Chairman shall preside over the meeting, or, in the case of a vacancy in office or absence of the Chairman, one of the following persons present, in the order stated, shall preside: any presiding officer designated by the Board of Directors pursuant to Section 12 of Article III of these By-Laws, the Chief Executive Officer, the President, the vice presidents in their order of earliest election to that office, or a person chosen by vote of the shareholders present. The Secretary, or, in the event of his absence or disability, an Assistant Secretary, or if there no Assistant Secretary is present thereat then an appointee of the presiding officer at the meeting, shall act as secretary of the meeting. The

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order of business and all other matters of procedure at every meeting of shareholders shall be determined by such presiding officer.

Section 13. <u>Inspectors of Election.</u> 

Before each meeting of shareholders, the Chairman or any officer of the Corporation designated by resolution of the Board of Directors shall appoint one or more Inspectors of Election (each an "<u>Inspector</u>") for the meeting. If any of the Inspectors shall fail to attend or refuse or be unable to serve, a substitute shall be appointed by the Chairman. An Inspector may be an employee of the Corporation and shall have such duties as are provided by applicable law. Upon request by the Chairman, an Inspector shall take and sign an oath faithfully to execute the duties of an Inspector of Election with strict impartiality and according to the best of such person's ability.

Section 14. <u>Voting Lists.</u> 

The officer who has charge of the stock ledger of the Corporation shall prepare a complete list of the shareholders entitled to vote at a meeting of shareholders. The list shall be arranged in alphabetical order, showing the address of each shareholder and the number of shares registered in the name of each shareholder; provided, however, that, subject to applicable law, the Corporation shall not be required to include electronic mail addresses or other electronic contact information for shareholders on such list. The list shall be produced and kept open at the time and place of the meeting of shareholders and shall be subject to the inspection of any shareholder during such meeting for the purposes thereof. The Board of Directors also may elect to make the list available at such other times and by such other means as permitted by applicable law. If the Board of Directors determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to shareholders of the Corporation. If a meeting of shareholders is to be held solely by means of remote communication, then the list also shall be open to the examination of any shareholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting of shareholders. The list shall presumptively determine the identity of the shareholders entitled to vote at the meeting and the number of shares that each such shareholder may vote at the meeting.

Section 15. <u>Participation in Meetings by Electronic Means.</u> 

The Chairman may permit, on such conditions as may be determined by him, one or more shareholders or proxyholders to participate in a meeting of shareholders, count for the purposes of determining a quorum thereat and exercise all rights and privileges to which such person or persons might be entitled were such person or persons, as the case may be, personally in attendance at such meeting (including the right to vote or to consent to or dissent from any action) by means of conference telephone or other electronic means, including the Internet. Unless the Board of Directors so permits by resolution or the Chairman so permits, no person may participate in a meeting of shareholders by means of a conference telephone or other electronic means, including the Internet.

Section 16. <u>No Consent of Shareholders in Lieu of Meeting.</u> 

No action, including the authorization of any business or the expression of consent or dissent to any corporate action, may be taken by the shareholders of the Corporation without a meeting, whether by written consent or otherwise, except by the unanimous consent of all holders of capital stock of the Corporation entitled to vote upon such action.

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**Article II<br>BOARD OF DIRECTORS** 

Section 1. <u>General Powers.</u> 

Except as otherwise provided by applicable law, the Articles of Incorporation or these By-Laws, the Board of Directors shall manage or direct the management of the property, affairs and business of the Corporation, and the Board of Directors may exercise all the powers of the Corporation. In addition to the powers and authorities expressly conferred upon it by these By-Laws, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by applicable law, the Articles of Incorporation or these By-Laws directed or required to be exercised or done solely by the shareholders of the Corporation.

Section 2. <u>Number and Terms of Office.</u> 

The number of members of the Board of Directors shall be fixed in the manner specified in the Articles of Incorporation. Directors shall serve for such terms as are specified in the Articles of Incorporation. A Director shall hold office until the expiration of the term for which he was elected and until his successor shall be elected and qualified, subject, however, to prior death, resignation, retirement, disqualification or removal from office.

Section 3. <u>Vacancies.</u> 

Except as set forth in Section 5 of this Article II, vacancies in the Board of Directors, including vacancies resulting from an increase in the number of members of the Board of Directors, shall be filled in the manner specified in the Articles of Incorporation.

Section 4. <u>Resignations.</u> 

Any Director may resign at any time by delivering a notice of resignation in writing or by electronic transmission to the Chairman, the Chief Executive Officer or the Secretary. Unless otherwise specified therein, such a resignation shall take effect upon delivery.

Section 5. <u>Removal of Directors.</u> 

Any Director may be removed at any time by shareholder vote as specified in the Articles of Incorporation. Any vacancy in the Board of Directors caused by any such removal may be filled at such meeting by the shareholders entitled to vote for the election of the Director so removed. If such shareholders do not fill such a vacancy at such meeting, the vacancy may be filled in the manner provided in Section 3 of this Article II. The repeal of any provision of the Articles of Incorporation or these By-Laws prohibiting, or the addition of any provision to the Articles of Incorporation or these By-Laws permitting, the removal by the shareholders of the Board of Directors, a class of the Board of Directors or any one or more Directors without assigning any cause shall not apply to any incumbent Director during the balance of the term for which he was elected.

Section 6. <u>Annual Meeting.</u> 

An annual meeting of the Board of Directors shall be held each year as soon as practicable after the annual meeting of shareholders, at the place where such meeting of shareholders was held or on such other date and at such other time and place, either within or without the Commonwealth of Pennsylvania,

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as the Board of Directors may designate, for the purposes of organization, election of officers and the transaction of such other business as shall come before the meeting.

Section 7. <u>Regular Meetings.</u> 

The Board of Directors from time to time may, by resolution, provide for the holding of regular meetings. Regular meetings of the Board of Directors may be held on such dates and at such times and places, either within or without the Commonwealth of Pennsylvania, as the Board of Directors may designate. Notice of regular meetings need not be given; provided, however, that if the Board of Directors shall fix or change the time or place of any regular meeting, notice of such action shall be given by regular mail, electronic mail or other means of electronic transmission, telephone or personal delivery to each Director who shall not have been present at the meeting at which such action was taken. Any Director who submits a waiver of notice in writing or by electronic transmission to the Secretary before or after such meeting or attends the first regular meeting after such action is taken without protesting, prior to or at the commencement of such meeting, the lack of notice to him of the prior regular meeting, shall be deemed to have waived notice of such action to the fullest extent permitted by applicable law. Neither the business to be transacted at, nor the purpose of, any meeting need be specified in a waiver of notice.

Section 8. <u>Special Meetings.</u> 

Special meetings of the Board of Directors may be called only by the Chairman, the Chief Executive Officer or a majority of the Directors in office, to be held on such date, at such time as will permit the giving of notice as provided in this Section 8, and at such place, either within or without the Commonwealth of Pennsylvania, as may be designated by the person or persons, as the case may be, calling the meeting, as the case may be. Any business may be acted upon at any special meeting of the Directors. The Secretary shall give, or cause to be given, notice by first-class or express mail, personal delivery, courier service, or electronic transmission, stating the place (or if held by means of the Internet or other electronic communications technology, the means of remote communications by which Directors may be deemed to be present in person at and participate in such meeting), date and time of each special meeting of the Board of Directors. Notice under this Section 8 given by electronic transmission shall be given at least 24 hours before the meeting; notice under this Section 8 given by personal delivery, courier service, or express mail shall be given at least 48 hours before the meeting; notice given under this Section 8 by first-class mail shall be given at least five (5) days before the meeting. Notice of any special meeting need not be given to any Director who attends such meeting or the first regular meeting thereafter without protesting the lack of notice to him, prior to or at the commencement of such meeting, or to any Director who submits a waiver of notice, whether before or after such meeting.

Section 9. <u>Quorum and Voting.</u> 

The presence of a majority of Directors then in office shall constitute a quorum for the purpose of acting upon proper matters at a meeting of the Board of Directors. If a quorum is not present at a meeting of the Board of Directors, those Directors present may adjourn from time to time to reconvene at such time and place as they may determine. The Directors present at any duly organized meeting of the Board of Directors may continue to transact business until adjournment, notwithstanding the withdrawal of sufficient Directors to otherwise render the remaining Directors less than a quorum. Except as otherwise required by applicable law or the Articles of Incorporation, the vote of a majority of the Directors present at any meeting of the Board of Directors at which a quorum is present shall be the act of the Board of Directors.

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Section 10. <u>Adjournment.</u> 

At any meeting of the Board of Directors, the Chairman or a majority of the Directors shall have the power to adjourn such meeting to another date, time or place or by means of the Internet or other electronic communication technology, without notice other than announcement at the meeting of the date, time and place, if any, at which such meeting will be reconvened and the means of electronic communication technology, if any, by which Directors may be deemed to be present and vote at such adjourned meeting.

Section 11. <u>Chairman of the Board of Directors.</u> 

The Board of Directors may elect from among the members of the Board of Directors a Chairman. The Chairman shall preside at all meetings of the Board of Directors and otherwise shall perform such other duties as may from time to time be assigned to him by the Board of Directors. The Chairman may also be the Chief Executive Officer of the Corporation (the "<u>Chief Executive Officer</u>") or be employed by the Corporation in any other capacity. In the event of the absence or disability of the Chairman, any duties assigned to the Chairman by the Board of Directors may be performed by a presiding officer chosen by a majority of the Board of Directors, and such a presiding officer may be granted the authority to take any action required or permitted to be taken by the Chairman by applicable law, the Articles of Incorporation or these By-Laws as if such presiding officer were the Chairman. All references in these By-Laws to the "Chairman" shall include such a presiding officer in the event of the absence or disability of the Chairman.

Section 12. <u>Compensation.</u> 

Directors shall receive such compensation for their services as shall be determined by resolution of the Board of Directors. Directors shall also be reimbursed for their expenses for attending Board of Directors and committee meetings as determined from time to time by resolution of the Board of Directors.

Section 13. <u>Committees.</u> 

The Board of Directors may, by resolution adopted by a majority of the Directors then in office, appoint such other committees as it may deem advisable, and each such committee shall have such authority and perform such duties as the Board of Directors may delegate to such committee; provided, however, that no committee appointed by the Board of Directors shall have any power or authority as to (i) the submission to shareholders of any action requiring approval of shareholders under the PBCL, (ii) the creation or filling of vacancies in the Board of Directors, (iii) the adoption, amendment or repeal of these By-Laws, (iv) the amendment or repeal of any resolution of the Board of Directors that by its terms is amendable or repealable only by the Board of Directors or (v) action on matters committed by resolution of the Board of Directors exclusively to another committee of the Board of Directors or to the Board of Directors as a whole. At each meeting of the Board of Directors, all action taken by each committee since the preceding meeting of the Board of Directors shall be reported to it. Notwithstanding anything contained in this Section 13, no committee shall have any power or authority prohibited from being vested in such a committee by applicable law, the Articles of Incorporation or these By-Laws.

The term "Board of Directors" or "Board" when used in any provision of these By-Laws related to the organization or procedures of or the manner of taking action by the Board of Directors, shall be construed to include and refer to any executive or other committee of the Board of Directors. Subject to any charter adopted by the Board with respect to a committee of the Board of Directors, any provision of these By-Laws related or referring to action to be taken by the Board of Directors or the procedures

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required therefor shall be satisfied by the taking of corresponding action by a committee of the Board of Directors to the extent authority to take the action has been delegated to the committee pursuant to this Section 13.

Section 14. <u>Remote Participation in Meetings.</u> 

One or more Directors may participate in a meeting of the Board of Directors or any committee thereof by means of a conference telephone or other remote communications equipment, including electronic communications equipment, by means of which all persons participating in the meeting can hear each other. If a meeting is held by means of the Internet or other electronic communications technology in a fashion pursuant to which Directors have the opportunity to read or hear the proceedings substantially concurrently with their occurrence, vote on matters submitted to the Directors and converse with and pose questions to any one or more of the other Directors, the meeting need not be held at a particular geographic location.

Section 15. <u>Action Without a Meeting.</u> 

Any action which is required or permitted to be taken at a meeting of the Board of Directors or any committee of the Board of Directors may be taken without a meeting, if, before, on, or after the effective date of the action, a consent or consents in writing or by electronic transmission, setting forth the action so taken, are signed by all of the Directors or the members of the particular committee, as the case may be, in office on the date the first consent is signed. The consent or consents must be filed with the minutes of proceedings of the Board of Directors.

Section 16. <u>Regulations; Manner of Acting.</u> 

To the extent not inconsistent with applicable law, the Articles of Incorporation and these By-Laws, the Board of Directors may adopt such rules and regulations for conduct of meetings of the Board of Directors and for the management of the property, affairs and business of the Corporation as the Board of Directors may deem appropriate. The Directors shall act only as a collective Board, and the individual Directors shall have no power as such.

Section 17. <u>Nomination of Directors.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Only persons who are nominated in accordance with the procedures set forth in these By-Laws shall be eligible for election as Directors. For purposes of this Section 17, a "nominee" shall include any person being considered to fill a vacancy on the Board of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Nominations of persons who satisfy the eligibility requirements of subsection (d) of this Section 17 for the election of Directors may be made by the Board of Directors, by a committee appointed by the Board of Directors with authority from the Board to do so, or by any shareholder who complies with subsection (c) of this Section 17.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Nominations of persons who satisfy the eligibility requirements of subsection (d) of this Section 17 for the election of Directors may be made by any person that (i) is a shareholder of record both at the time of giving of the notice provided for in this Section 17 and at the time of the annual meeting, (ii) is entitled to vote for the election of Directors at the annual meeting and (iii) complies with the notice procedures set forth in this Section 17. Nomination for the election of Directors pursuant to this subsection (c) of this Section 17 is the exclusive means for a shareholder to make nominations before a meeting of shareholders. For nominations to be properly brought before a meeting of shareholders pursuant to subsection (c) of this Section 17, such nomination (other than a nomination to fill a vacancy

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resulting from removal from office by a vote of the shareholders under Section D of Article Sixth of the Articles of Incorporation) may be made by a shareholder only if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Advance written notice of a proposed nomination by a shareholder setting forth the information required under subsection (e) of this Section 17 is delivered or mailed by certified mail to the Secretary and received at the principal executive offices of the Corporation no later than (i) with respect to an election to be held at an annual meeting, 90 days prior to the anniversary of the previous year's annual meeting of shareholders, or (ii) with respect to an election to be held at a special meeting of shareholders or at an annual meeting that is held more than 30 days before or more than 60 days after the anniversary of the previous year's annual meeting, not earlier than the 120<sup>th</sup> day prior to the date of such meeting and not later than (a) the 90<sup>th</sup> day prior to the date of such meeting or, (b) if the first public announcement of the date of such meeting is made less than 90 days prior to the date of such meeting, the tenth day following the date on which notice of such meeting is first given to the shareholders by public announcement. In no event shall any adjournment or postponement of a meeting or the announcement thereof commence a new time period (or extend any time period) for the giving of a shareholder's notice as described above;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Any update or supplement to the notice delivered pursuant to Section 17(c)(1) above is delivered pursuant to the requirements of subsections (f) and (g) of this Section 17;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) The nominating shareholder has complied in all respects with the requirements of Section 14 of the Exchange Act, including without limitation, the requirements of Rule 14a-19 (as such rule and regulations may be amended from time to time by the Securities and Exchange Commission (the "Commission"), including any Commission staff interpretation relating thereto); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) The Board of Directors or an executive officer designated thereby has determined that the shareholder has reasonably satisfied the requirements of this Section 17.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) To be eligible to be a nominee for election as a Director pursuant to this Section 17, the prospective nominee (whether nominated by or at the direction of the Board of Directors or by a shareholder), or someone acting on such prospective nominee's behalf, must deliver (with respect to any nomination by a shareholder pursuant to this Section 17, in accordance with any applicable time periods prescribed for delivery of notice under this Section 17) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request). Upon request, the prospective nominee must also provide a written representation and agreement, in the form provided by the Secretary upon written request, that such prospective nominee:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) is not and will not become a party to (A) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such prospective nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a "<u>Voting Commitment</u>") that has not been disclosed to the Corporation or (B) any Voting Commitment that could limit or interfere with such prospective nominee's ability to comply, if elected as a director of the Corporation, with such prospective nominee's fiduciary duties under applicable laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or

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indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) would be in compliance if elected as a director of the Corporation, and will comply with all applicable corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Each notice delivered pursuant to subsection (c)(1) of this Section 17 shall set forth:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) as to each person whom the shareholder proposes to nominate for election or reelection as a Director:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) all information relating to such person that would be required to be disclosed in solicitations of proxies for election of Directors, or is otherwise required, in each case pursuant to and in accordance with Regulation 14A under the Exchange Act (including such person's written consent to (1) being named as a nominee in any proxy materials relating to the Corporation's next annual meeting or special meeting, as applicable, and (2) to serving as a Director if elected); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such shareholder and beneficial owner on whose behalf the nomination is being made, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and such nominees' respective affiliates and associates, or others acting in concert therewith, on the other hand, including all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the shareholder making the nomination and any beneficial owner on whose behalf the nomination is made, or any affiliate or associate thereof or person acting in concert therewith, were the "registrant" for purposes of such rule and the nominee were a director or executive officer of such registrant;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) as to the shareholder giving the notice and any Shareholder Associated Person on whose behalf the nomination is made:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the name and address, as they appear on the Corporation's books, of such shareholder, and of each Shareholder Associated Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the class or series and number of shares of the Corporation's securities which are owned, directly or indirectly, beneficially and of record, by such shareholder and by each Shareholder Associated Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) any Derivative Instrument directly or indirectly owned beneficially by such shareholder or Shareholder Associated Person and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of any security of the Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) any hedging or other transaction or series of transactions entered into by or on behalf of, or any other agreement, arrangement, or understanding (including any borrowing or lending of shares) the effect or intent of which is to mitigate loss or

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manage risk or to increase or decrease the voting power of, such shareholder or Shareholder Associated Person with respect to any share of the Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) any proxy, contract, arrangement, understanding, or relationship pursuant to which such shareholder or Shareholder Associated Person has a right to vote any shares of any class or series of the Corporation's capital stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) any short interest of such shareholder or Shareholder Associated Person in any security of the Corporation (for purposes of this Section 17, a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) any rights to dividends on any securities of the Corporation owned beneficially by such shareholder or Shareholder Associated Person that are separated or separable from the underlying securities of the Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) any proportionate interest in shares of any class or series of the Corporation's capital stock or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such shareholder or Shareholder Associated Person is a general partner or, directly or indirectly, beneficially owns an interest in a general partner;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) any performance-related fees (other than an asset-based fee) to which such shareholder or beneficial owner is entitled based on any increase or decrease in the value of securities of the Corporation or Derivative Instruments, if any, as of the date of such notice, including any such interests held by members of the immediate family of such shareholder or Shareholder Associated Person sharing the same household (which information shall be supplemented by such shareholder and Shareholder Associated Person not later than ten (10) days after the record date for the meeting to disclose such ownership as of the record date);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) any significant equity interests or any Derivative Instruments or short interests in any principal competitor of the Corporation held by such shareholder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) any direct or indirect interest of such shareholder or any Shareholder Associated Person in any contract with the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) all information that would be required to be set forth in a Schedule 13D filed pursuant to Rule 13d-1(a) or an amendment pursuant to Rule 13d-2(a) if such a statement were required to be filed under the Exchange Act and the rules and regulations promulgated thereunder by such shareholder or beneficial owner, if any;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) in the case of a notice of nomination delivered pursuant to this Section 17, a representation that such nominating shareholder or beneficial owner, if any, intends to solicit the holders of shares representing at least 67% of the shares of capital stock of the Corporation entitled to vote generally for the election of Directors in support of

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director nominees other than the Corporation's nominees in accordance with Rule 14a-19; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) any other information relating to such shareholder or Shareholder Associated Person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) a representation that the shareholder is a holder of record of capital stock of the Corporation is entitled to vote at such meeting and intends to appear in person or by proxy at the annual meeting to propose such nomination; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) a representation as to whether the shareholder or any such Shareholder Associated Person is or intends to be part of a group that intends to solicit proxies from shareholders in support of such nomination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The shareholder and any Shareholder Associated Person shall update and supplement the notice required by this Section 17 by giving notice that the information provided or required to be provided in such notice shall be true and correct (1) as of the record date for the meeting and (2) as of the date that is ten (10) business days prior to the meeting or any adjournment, postponement or recess thereof. Such updates and supplements shall be delivered or mailed by certified mail to the Secretary and received at the principal executive offices of the Corporation not later than five (5) business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment, postponement or recess thereof) not later than five (5) business days prior to the date for the meeting or, if practicable, any adjournment, postponement or recess thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned, postponed or recessed). No such supplement or update may include any new nominees who were not named in the original notice of nomination or to be deemed to cure any defects or limit the remedies (including without limitation under these By-Laws) available to the Corporation relating to any defect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) In addition, the shareholder making such nomination shall promptly provide any other information reasonably requested by the Corporation, including information to determine (1) the eligibility of such proposed nominee to serve as an independent Director of the Corporation or that could be material to a reasonable shareholder's understanding of the independence, or lack thereof, of such nominee; (2) whether the proposed nominee has any direct or indirect relationship with the Corporation other than those relationships that have been deemed categorically immaterial pursuant to the Corporation's corporate governance guidelines or its related party transaction policy; (3) whether the proposed nominee would, by serving on the Board of Directors, violate or cause the Corporation to be in violation of these By-Laws, the Articles of Incorporation, the rules and listing standards of the principal U.S. exchange upon which the common stock of the Corporation is listed or any applicable law, rule or regulation, and (4) whether the proposed nominee is or has been subject to any event specified in Item 401(f) of Regulation S-K (or successor rule) of the Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) A shareholder who has delivered a notice of nomination pursuant to this Section 17 shall promptly certify to the Corporation in writing that it has complied with the requirements of Rule 14a-19 promulgated under the Exchange Act and deliver no later than five business days prior to the annual meeting or special meeting, as applicable, reasonable evidence that it has complied with such requirements.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Notwithstanding anything to the contrary in these By-Laws, unless otherwise required by law, if any shareholder (i) provides notice pursuant to Rule 14a-19 promulgated under the Exchange Act and (ii) subsequently (A) notifies the Corporation that such shareholder no longer intends to solicit proxies in support of director nominees other than the Corporation's director nominees in accordance with Rule 14a-19, (B) fails to comply with the requirements of Rule 14a-19 or (C) fails to provide reasonable evidence sufficient to satisfy the Corporation that such requirements have been met, such shareholder's nomination(s) shall be deemed null and void and the Corporation shall disregard any proxies or votes solicited for any nominee proposed by such shareholder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) The Chairman may, if the facts warrant, determine that any proposed nomination was not properly brought before the annual meeting in accordance with the provisions of this Section 17; and if the Chairman shall so determine, the Chairman shall so declare to the annual meeting, and any such nomination not properly brought before the annual meeting shall not be considered. A shareholder proposing a nomination for Director shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 17; provided, however, that any references in these By-Laws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the applicable requirements pursuant to this Section 17.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Subject to Rules 14a-8 and 14a-19 promulgated under the Exchange Act, nothing in these By-Laws shall be construed to permit any shareholder, or give any shareholder the right to include or have disseminated or described in any proxy materials relating to the Corporation's next annual meeting or special meeting, as applicable, any nomination of a director or directors or any other business proposal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) Subject to applicable law, subsections (h), (i) and (k) of this Section 17 shall apply to annual meetings of shareholders occurring after the annual meeting of shareholders for 2023.

Section 18. <u>Limit on Liability.</u> 

A Director shall not be personally liable for monetary damages for any action taken, or any failure to take any action in his capacity as such; provided, however, that this provision shall not eliminate or limit the liability of a director to the extent that such elimination or limitation of liability is expressly prohibited by the PBCL as in effect at the time of the alleged action or failure to take action by such Director.

Any repeal or modification of this Section 18 shall not adversely affect any right or protection existing at the time of such repeal or modification to which any Director or former Director may be entitled under this Section 18. The rights conferred by this Section 18 shall continue as to any person who has ceased to be a Director and shall inure to the benefit of the heirs of any Director or former Director and the executors and administrators of the estate of any Director or former Director.

Section 19. <u>Director Emeritus.</u> 

The Board of Directors may, at its discretion, designate by resolution any former Director as a Director Emeritus. The designation, number and term of each Director Emeritus shall be within the sole discretion of the Board of Directors, and the Board of Directors may remove, with or without cause, a Director Emeritus at any time. A Director Emeritus, shall provide consulting or advisory services to the Board of Directors as requested from time to time by the Board of Directors and may be invited to attend meetings of the Board of Directors at the request of the Chairman but shall not vote, serve on any committee of the Board of Directors, be counted in determining a quorum or have any of the duties or obligations imposed on a Director or officer of the Corporation under the PBCL, the Articles of

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Incorporation or these By-Laws or, except as provided in the last sentence of this Section 19, otherwise be considered to be a Director or officer of the Corporation. Each Director Emeritus shall be compensated for his services and reimbursed expenses incurred as determined by the Board of Directors by resolution from time to time. A Director Emeritus shall be entitled to benefits and protections in accordance with Section 18 of this Article II and Article V of these By-Laws as if such person were deemed to be a Director or former Director of the Corporation, as the case may be.

Section 20. <u>Advisory Committees</u>

The Board of Directors may, at its discretion, designate by resolution one or more Advisory Committees consisting of one or more Directors Emeritus, to provide consulting or advisory services to the Board of Directors as requested from time to time by the Board of Directors. Directors Emeritus serving on an Advisory Committee shall be considered for all purposes to be governed by the terms of Section 19 of this Article II.

**Article III<br>OFFICERS** 

Section 1. <u>Officers.</u> 

The Board of Directors at any time may elect a Chief Executive Officer, a President, one or more Vice Presidents, a Treasurer, a Secretary and such other officers as may be elected in accordance with Section 12 of this Article III. Any two or more offices may be held by the same person. No officer need be a Director of the Corporation. The officers shall be elected at the annual meeting of the Board of Directors pursuant to Section 6 of Article II.

Section 2. <u>Term.</u> 

Unless otherwise designated by the Board of Directors, each officer shall hold office until the expiration of the term for which he was elected and until his successor shall be elected and qualified, subject, however, to prior death, resignation, retirement, disqualification or removal from office.

Section 3. <u>Compensation.</u> 

The salaries and other compensation of all officers of the Corporation specifically identified in Section 1 of this Article III shall be fixed as determined by the Board of Directors or a committee of the Board of Directors to which the Board of Directors has delegated authority to do so; provided, however, that the salaries and other compensation of any additional officers appointed pursuant to Section 12 of this Article III also may be fixed by the Chief Executive Officer or the President of the Corporation (the "<u>President</u>").

Section 4. <u>Duties.</u> 

All officers of the Corporation shall have such authority and perform such duties as are provided in these By-Laws or as otherwise may be determined by the Board of Directors or the Chairman. However, each officer shall exercise such powers and perform such duties as may be required by applicable law.

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Section 5. <u>Removal.</u> 

Any officer may be removed, with or without cause, at any time by the Board of Directors. Any additional officers appointed pursuant to Section 12 of this Article III also may be removed, with or without cause, by the Chief Executive Officer or the President. Any officer may resign at any time by delivering a notice of resignation in writing signed by such officer or by electronic submission to the Board of Directors, the Chief Executive Officer or the President. Any officer specifically identified in Section 1 of this Article III shall also provide a copy of such a written notice of resignation to the Board of Directors in any event. Unless otherwise specified therein, any resignation by an officer shall take effect upon delivery. Any vacancy occurring in any office specified identified in Section 1 of this Article III due to the death, resignation or removal of such officer or otherwise shall be filled by the Board of Directors, and any vacancy due to the death, resignation or removal of an officer appointed pursuant to Section 12 of this Article III, or otherwise, shall be filled at the discretion of the Chief Executive Officer or President, if at all.

Section 6. <u>Prescription of Agency Authority.</u> 

Notwithstanding any other provisions of these By-Laws, the Board of Directors shall have the power from time to time by resolution to prescribe by what officers or agents of the Corporation particular documents or instruments may or shall be signed, countersigned, endorsed or executed.

Section 7. <u>Chief Executive Officer.</u> 

The Chief Executive Officer shall have general control and supervision of the policies and operations of the Corporation subject, however, to the review and superseding action of the Board of Directors. The Chief Executive Officer shall perform all duties and have all powers as provided by applicable law, the Articles of Incorporation an these By-Laws and, subject to applicable law and the Articles of Incorporation, shall perform all such other duties and have all such other powers as the Board of Directors may from time to time prescribe and may delegate any such powers or duties to other officers of the Corporation in his discretion.

Section 8. <u>President.</u> 

The President shall perform all duties and have all powers as may be assigned or delegated to him from time to time by the Board of Directors or the Chief Executive Officer, subject to applicable law and the Articles of Incorporation, and subject to the review and superseding action of the Board of Directors or the Chief Executive Officer. In the event of the absence or disability of the Chief Executive Officer, all duties of the Chief Executive Officer shall be performed and all powers of the Chief Executive Officer may be exercised by the President to the extent designated by the Chief Executive Officer, or, failing such a designation by the Chief Executive Officer, all such duties shall be performed and all such powers may be exercised by the President, subject in any case to review and superseding action by the Board of Directors.

Section 9. <u>Vice Presidents.</u> 

Each Vice President of the Corporation (each a "<u>Vice President</u>") shall perform all duties and have all powers as may be assigned or delegated to him from time to time by the Board of Directors, the Chief Executive Officer or the President, subject to applicable law and the Articles of Incorporation, and subject to the review and superseding action of the Board of Directors, the Chief Executive Officer or the President. In the event of the absence or disability of the Chief Executive Officer and/or the President, all duties of the Chief Executive Officer and/or President, as the case may be, shall be performed, and all

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powers of the Chief Executive Officer and/or President, as the case may be, may be exercised by such Vice President to the extent designated by the Chief Executive Officer or the President, as the case may be, or, failing such a designation, all such duties shall be performed and all such powers may be exercised by each Vice President in the order of their earliest election to that office, subject in any case to review and superseding action by the Board of Directors, the Chief Executive Officer or the President.

Section 10. <u>Treasurer.</u> 

The Treasurer of the Corporation (the "<u>Treasurer</u>") shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) have charge and supervision over and be responsible for the moneys, securities, receipts and disbursements of the Corporation, and keep or cause to be kept full and accurate records of all receipts of the Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) cause the moneys and other valuable effects of the Corporation to be deposited in the name and to the credit of the Corporation in such banks or trust companies or with such bankers or other depositaries as shall be selected as provided in Section 4 of Article VI;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) cause the moneys of the Corporation to be disbursed by checks or drafts (signed as provided in Section 3 of Article VI) upon the authorized depositaries of the Corporation and cause to be taken and preserved proper vouchers for all moneys disbursed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) sign (unless an Assistant Treasurer or the Secretary or an Assistant Secretary shall have signed) certificates representing stock of the Corporation, the issuance of which shall have been authorized by the Board of Directors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) perform, in general, all duties incident to the office of treasurer and such other duties as may be specified in these By-Laws or as may be assigned to the Treasurer from time to time by the Board of Directors, the Chief Executive Officer or the President.

Section 11. <u>Secretary.</u> 

The Secretary shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) keep or cause to be kept a record of all the proceedings of the meetings of the shareholders and of the Board of Directors in books provided for that purpose;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) cause all notices to be duly given in accordance with the provisions of these By-Laws and as required by law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) whenever any Committee shall be appointed pursuant to a resolution of the Board of Directors, furnish a copy of such resolution to the members of such Committee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) be the custodian of the records and of the seal of the Corporation and cause such seal (or a facsimile thereof) to be affixed to all certificates representing shares of the Corporation prior to the issuance thereof and to all instruments the execution of which on behalf of the Corporation under its seal shall have been duly authorized in accordance with these By-Laws, and when so affixed the Secretary may attest the same;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) properly maintain and file all books, reports, statements, certificates and all other documents and records required by applicable law, the Articles of Incorporation or these By-Laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) have charge of the stock books and ledgers of the Corporation and cause the stock and transfer books to be kept in such manner as to show at any time the number of shares of stock of the Corporation of each class issued and outstanding, the names and the addresses of the holders of record of such shares, the number of shares held by each holder and the date as of which each became such holder of record;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) sign (unless the Treasurer or an Assistant Treasurer or Assistant Secretary of the Corporation shall have signed) certificates representing shares of the Corporation the issuance of which shall have been authorized by the Board of Directors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) perform, in general, all duties incident to the office of secretary and such other duties as may be specified in these By-Laws or as may be assigned to the Secretary from time to time by the Board of Directors, the Chief Executive Officer or the President.

Section 12. <u>Additional Officers.</u> 

The Board of Directors, the Chief Executive Officer or the President may appoint such other officers and agents as it or he, as the case may be, may deem appropriate (including Assistant Secretaries and Assistant Treasurers), and such other officers and agents shall hold their offices for such terms and shall exercise such powers and perform such duties as may be determined from time to time by the Board of Directors, the Chief Executive Officer or the President, as the case may be. The Board of Directors from time to time may delegate to any officer or agent the power to appoint subordinate officers or agents and to prescribe their respective rights, terms of office, authorities and duties. Any such officer or agent may remove any such subordinate officer or agent appointed by him, with or without cause. Any Assistant Treasurer or Assistant Secretary of the Corporation and any other assistant to any officer shall perform such duties as are, from time to time, delegated to him by the officer to whom he is an assistant, the Board of Directors, the Chief Executive Officer or the President. At the request of the Board of Directors, the Chairman, the Chief Executive Officer or the President, any officer of the Corporation may temporarily perform the duties of Assistant Secretary or Assistant Treasurer, and when so acting shall be deemed on a temporary basis to be an Assistant Secretary or Assistant Treasurer, as the case may be, and shall have the powers of and be subject to the restrictions imposed upon that officer.

**Article IV<br>CAPITAL STOCK** 

Section 1. <u>Certificates of Stock.</u> 

The shares of the capital stock of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the stock of the Corporation shall be uncertificated shares evidenced by registration in book-entry accounts. Any such resolution shall not apply to shares represented by a certificate until each certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock in the Corporation represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the corporation, by the Chief Executive Officer, the President or a Vice President, and by the Treasurer or any Assistant Treasurer, or the Secretary or any Assistant Secretary, representing the number of shares

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registered in certificate form. Such certificate shall be in such form as the Board of Directors may determine, to the extent consistent with applicable law, the Articles of Incorporation and these By-Laws.

All signatures on such certificate may be a facsimile, engraved or printed, to the extent permitted by applicable law. In case any officer, transfer agent or registrar who has signed, or whose facsimile signature has been placed upon, a certificate shall have ceased to hold such office, or to be such transfer agent or registrar, as the case may be, before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

Section 2. <u>Lost, Stolen or Destroyed Certificates.</u> 

The Board of Directors may direct that a new certificate be issued or an appropriate book-entry be recorded in place of any certificate previously issued by the Corporation alleged to have been lost, stolen or destroyed, upon delivery to the Board of Directors of an affidavit of the owner or owners of such certificate, setting forth such allegation. The Board of Directors may require the owner of such lost, stolen or destroyed certificate, or his legal representative, to post with the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate or the recording of any such appropriate book-entry.

Section 3. <u>Transfer of Stock.</u> 

Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares, duly endorsed or accompanied by appropriate evidence of succession, assignment or authority to transfer, the Corporation shall issue a new certificate to the person or persons, as the case may be, entitled thereto or record the succession, assignment or transfer by appropriate book-entry procedures, cancel the old certificate and record the transaction upon its books. Within a reasonable time after the transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to applicable laws. Subject to the provisions of applicable law, the Articles of Incorporation and these By-Laws, the Board of Directors may prescribe such additional rules and regulations as it may deem appropriate relating to the issue, transfer and registration of shares of the Corporation.

Section 4. <u>Registered Shareholders.</u> 

Prior to due surrender of shares, whether or not certificated, for registration of transfer, the Corporation may treat the registered owner thereof as the person exclusively entitled to receive dividends and other distributions, to vote, to receive notice and otherwise to exercise all the rights and powers of the owner of the shares represented by such certificate, and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in such shares on the part of any other person, whether or not the Corporation shall have notice of such claim or interests. Whenever any transfer of shares shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer if, when the certificates are presented to the Corporation for transfer or uncertificated shares are requested to be transferred, both the transferor and transferee request the Corporation to do so.

Section 5. <u>Transfer Agent and Registrar.</u> 

The Board of Directors may appoint one or more transfer agents and/or one or more registrars with respect to any class or series of the Corporation's capital stock, and may require all certificates representing shares of such class or series to bear the signature of any such transfer agents or registrars.

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**Article V<br>INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS** 

Section 1. <u>Mandatory Indemnification of Directors and Officers.</u> 

The Corporation shall promptly indemnify, to the fullest extent now or hereafter permitted by applicable law, the Articles of Incorporation and this Section 1, each Director or officer (including each former Director or officer) of the Corporation (hereafter, an "<u>indemnitee</u>") who was or is made a party to or a witness in, or is threatened to be made a party to or a witness in, any threatened, pending or completed action, suit, investigation, or proceeding, whether civil, criminal, administrative or investigative and whether external or internal to the Corporation (hereafter, a "<u>proceeding</u>"), by reason of the fact that the indemnitee is or was an authorized representative, against all expenses (including attorneys' fees, disbursements and other charges), judgments, losses, fines (including excise taxes and penalties) and amounts paid in settlement (collectively, "<u>Losses</u>") actually and reasonably incurred or suffered by the indemnitee in connection with such proceeding. Indemnification pursuant to this Section 1 shall include cases in which indemnification is permitted pursuant to the provisions of Chapter 17, Subchapter D, of the PBCL. Indemnification pursuant to this Section 1 shall be made in every case described in Section 1 hereof except:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) in connection with a proceeding (or any claim, issue or matter therein or any part thereof) initiated by the indemnitee, except (1) if the Board of Directors of the Corporation has approved the initiation or bringing of such claim or (2) any compulsory counterclaim, compulsory cross-claim, or required joinder made by indemnitee in a proceeding not initiated by indemnitee; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) with respect to any act that is established, by a final, unappealable adjudication adverse to the indemnitee, as having been material to the cause of action so adjudicated and as having constituted either willful misconduct or recklessness; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) for liability imposed in a proceeding by or for the benefit of the Corporation to recover any profit pursuant to the provisions of Section 16(b) of the Exchange Act and any rules and regulations thereunder or similar provisions of any applicable state law; provided, however, that the exclusion in this clause (c) shall not apply to expenses (including attorney's fees, disbursements and other charges) incurred by indemnitee in such a proceeding.

Notwithstanding the foregoing provisions of this Section 1, to the extent that an indemnitee is successful on the merits or otherwise in defense of any proceeding or any part thereof or in defense of any claim, issue or matter therein, including but not limited to obtaining a dismissal without prejudice or a settlement without admission of liability, the indemnitee shall be promptly indemnified by the Corporation against all Losses actually and reasonably incurred or suffered by the indemnitee in connection therewith.

The right of indemnification pursuant to this Section 1 is conferred in order to attract and retain the services of highly qualified Directors and officers and to encourage them to make corporate decisions without fear of strike suits and legal harassment. Indemnification pursuant to this Section 1 is therefore declared to be consistent with the fiduciary duty of the Corporation's Board of Directors. Except as specifically provided in this Section 1, such indemnification shall be made by the Corporation without any requirement that any determination be made or any action be taken by the Board of Directors, shareholders or legal counsel of the Corporation. A failure of the Board of Directors, shareholders, or legal counsel to make a determination or take action favorable to the claim of an indemnitee for indemnification pursuant to this Section 1, or the making of a determination or taking of action adverse to

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such a claim, shall not preclude indemnification under this Article V or create any presumption that the indemnitee is not entitled to such indemnification.

Section 2. <u>Mandatory Advancement of Expenses to Directors and Officers.</u> 

To the fullest extent now or hereafter permitted by applicable law, the Articles of Incorporation and these By-Laws, the Corporation shall promptly pay all expenses (including attorneys' fees, disbursements and other charges) actually incurred by an indemnitee in defending or appearing in any proceeding described in Section 1 of this Article V in advance of the final disposition of such proceeding upon receipt of (A) an undertaking by or on behalf of the indemnitee to repay all amounts advanced if it is ultimately specifically determined by a final, unappealable adjudication that the indemnitee is not entitled to be indemnified by the Corporation and (B) an irrevocable assignment to the Corporation of all payments to which the indemnitee may be or become entitled, under any policy of insurance or otherwise, in reimbursement of any such expenses paid by the Corporation pursuant to this Section 2. Notwithstanding the foregoing, no advance payment shall be made by the Corporation pursuant to this Section 2 if the Board of Directors reasonably and promptly determines by a majority vote of the Directors then in office who are not parties to the proceeding that, based upon the facts known to the Board of Directors at the time the determination is made, the matter is of the kind described in Section 1(a) of this Article V.

Section 3. <u>Permissive Indemnification and Advancement of Expenses.</u> 

The Corporation may, as determined by the Board of Directors from time to time:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) indemnify, to the fullest extent permitted by Section 1 of this Article V, any other person who was or is made a party to or required to appear in, or is threatened to be made a party to or required to appear in, or was or is otherwise involved in, any threatened, pending or completed proceeding by reason of the fact that such person is or was an authorized representative of the Corporation, both as to action in such person's official capacity and as to action in another capacity while holding such office or position, against all Losses actually and reasonably incurred or suffered by such person in connection with such action or proceeding, with the same effect as though such person were an "indemnitee" as defined in Section 1 of this Article V; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) pay expenses incurred by any such other person by reason of his participation in any such proceeding in advance of the final disposition of such proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation and to repay all amounts advanced for which he is reimbursed under any policy of insurance or otherwise, with the same effect as though such person were an "indemnitee" as defined in Section 1 of this Article V.

Section 4. <u>Enforcement.</u> 

If the Corporation refuses or fails to make any payment to an indemnitee required by this Article V, the indemnitee shall be promptly indemnified by the Corporation against expenses (including attorneys' fees, disbursements and other charges) actually incurred by the indemnitee in connection with the successful establishment of such indemnitee's right to indemnification or advancement of expenses, in whole or in part, in an action in a court of competent jurisdiction.

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Section 5. <u>General.</u> 

Each Director or officer of the Corporation shall be deemed to act in such capacity in reliance upon such rights of indemnification and advancement of expenses as are provided in this Article V. The rights of indemnification and advancement of expenses provided by this Article V shall not be deemed exclusive of any other rights to which any person seeking indemnification or advancement of expenses may be entitled under any bylaws, agreement, vote of shareholders or disinterested Directors, statute or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office or position, and shall continue as to a person who has ceased to be an authorized representative of the Corporation and shall inure to the benefit of the heirs and personal representatives of such person. Indemnification and advancement of expenses under this Article V shall be provided whether or not the indemnified liability arises or arose from any threatened, pending or completed action by or in the right of the Corporation. Any repeal or modification of this Article V shall not adversely affect any right or protection existing at the time of such repeal or modification to which any person may be entitled under this Article V.

Section 6. <u>Definition of Corporation.</u> 

For the purposes of this Article V, references to the "<u>Corporation</u>" shall include all constituent corporations absorbed in a consolidation, merger or division, as well as the surviving or new corporations surviving or resulting therefrom, so that (i) any person who is or was an authorized representative of a constituent, surviving or new corporation shall stand in the same position under the provisions of this Article V with respect to the surviving or new corporation as such person would if such person had served the surviving or new corporation in the same capacity and (ii) any person who is or was an authorized representative of the Corporation shall stand in the same position under the provisions of this Article V with respect to the surviving or new corporation as such person would with respect to the Corporation if its separate existence had continued.

Section 7. <u>Definition of Authorized Representative.</u> 

For the purposes of this Article V, the term "<u>authorized representative</u>" shall mean, and the indemnification provisions of this Article V shall be deemed to apply to, a Director, officer, employee or agent of the Corporation or of any subsidiary (including any former subsidiary) of the Corporation, or a trustee, custodian, administrator, committeeman or fiduciary of any employee benefit plan (including former employee benefit plan) established and maintained by the Corporation or by any direct or indirect subsidiary (including any former subsidiary) of the Corporation, or a person serving another corporation, partnership, joint venture, trust or other enterprise in any of the foregoing capacities at the request of the Corporation.

Section 8. <u>Savings Clause.</u> 

If a court of competent jurisdiction determines that any provision of this Article V requires the Corporation to take an action that would violate applicable law, such provision shall be limited or modified in its application to such action to the minimum extent necessary to avoid such violation of law, and, as so limited or modified, such provision and the balance of this Article V shall be enforceable in accordance with their terms to the fullest extent permitted by applicable law, including but not limited to the PBCL. Without limiting the generality of the foregoing, if some or all of the indemnification provided for in this Article V is unavailable for any reason in respect of any liability or portion thereof, the Corporation shall contribute to the liabilities to which the indemnitee may be subject in such proportion as is appropriate to reflect the intent of this Article V, in proportion to the relative benefits received by the Corporation (including any subsidiary or former subsidiary of the Corporation) and all other officers,

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directors, and employees of the Corporation (or of any subsidiary or former subsidiary of the Corporation or other relevant enterprise described in Section 7 of this Article V) who are or would be jointly liable with the indemnitee, on the one hand, and by the indemnitee, on the other hand, and, to the extent required to conform to law, as further adjusted by reference to the relative fault of the Corporation (including any subsidiary or former subsidiary of the Corporation) and all other officers, directors, and employees of the Corporation (or of any subsidiary or former subsidiary of the Corporation or other relevant enterprise described in Section 7 of this Article V), on the one hand, and of the indemnitee, on the other hand.

Section 9. <u>Insurance.</u> 

The Corporation may purchase and maintain insurance on behalf of any person who is or was a Director or officer of the Corporation, or is or was an authorized representative of the Corporation, against any liability asserted against or incurred by such person in any such capacity, or arising out of the status of such person as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article V.

Section 10. <u>Funding to Meet Indemnification Obligations.</u> 

The Board of Directors, without approval of the shareholders of the Corporation, shall have the power to borrow money on behalf of the Corporation, including the power to pledge the assets of the Corporation, from time to time to discharge the Corporation's obligations with respect to indemnification, the advancement and reimbursement of expenses and the purchase and maintenance of insurance referred to in this Article V. The Corporation may, in lieu of or in addition to the purchase and maintenance of insurance referred to in Section 9 of this Article V, establish and maintain a fund of any nature or otherwise secure or insure in any manner its indemnification obligations, whether arising under or pursuant to this Article V or otherwise.

**Article VI<br>GENERAL PROVISIONS** 

Section 1. <u>Fiscal Year.</u> 

The fiscal year of the Corporation shall be the calendar year unless otherwise designated by the Board of Directors.

Section 2. <u>Seal.</u> 

The seal of the Corporation shall be circular in form and shall contain the name of the Corporation and its state of incorporation around the border, or the seal may be in such other form as the Board of Directors shall determine from time to time by resolution.

Section 3. <u>Execution of Instruments.</u> 

Each of the Chief Executive Officer, the President, any Vice President, the Secretary and the Treasurer may enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. Each of the Board of Directors, the Chief Executive Officer and the President may authorize any other officer or agent to enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. Any such authorization may be general or limited to specific contracts or instruments. All checks, drafts, or demands for money and notes of the Corporation shall be

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executed by such officer or agent of the Corporation, and in such manner, as the Board of Directors, the Chief Executive Officer or the President from time to time may determine.

Section 4. <u>Deposits.</u> 

Any funds of the Corporation may be deposited from time to time in such banks, trust companies or other depositaries as may be determined by the Board of Directors, the Chief Executive Officer, the President, the Treasurer or such other officer or agent as may be authorized by the Board of Directors, the Chief Executive Officer, the President or the Treasurer to make such determination.

Section 5. <u>Voting as Shareholder.</u> 

Unless otherwise determined by resolution of the Board of Directors, each of the Chief Executive Officer, the President and any Vice President shall have full power and authority on behalf of the Corporation to attend any meeting of shareholders, unitholders, members, partners or other equity owners of any corporation, limited liability company, partnership or other legal entity in which the Corporation may hold stock or other ownership interests, and to act, vote (or execute proxies to vote) and exercise in person or by proxy all other rights, powers and privileges incident to the ownership of such stock or other ownership interest. Such officers acting on behalf of the Corporation shall have full power and authority to execute any instrument expressing consent to or dissent from any action of any such corporation, limited liability company, partnership or other legal entity without a meeting. The Board of Directors by resolution from time to time may confer such power and authority upon any other person.

Section 6. <u>Definition of Electronic Transmission.</u> 

For purposes of these By-Laws, "<u>electronic transmission</u>" means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

Section 7. <u>Definition of Public Announcement.</u> 

For purposes of these By-Laws, "<u>public announcement</u>" shall mean disclosure in a press release reported by the Dow Jones News Service, PR Newswire, Associated Press or a comparable news service, or in a document publicly filed or furnished by the Corporation with the Commission pursuant to Section 13, 14 or 15(b) of the Exchange Act, and the meaning of the term "<u>group</u>" shall be within the meaning ascribed to such term under Section 13 of the Exchange Act.

**Article VII<br>AMENDMENT OF BY-LAWS** 

These By-Laws may be altered or amended as provided in the Articles of Incorporation.

**Article VIII<br>EMERGENCY BY-LAWS** 

Section 1. <u>When Operative.</u> 

The emergency By-Laws provided by the following sections shall be operative during any emergency resulting from warlike damage or an attack on the United States or any nuclear or atomic disaster, notwithstanding any different provision in the preceding Articles of the By-Laws, the Articles of

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Incorporation or the PBCL. To the extent not inconsistent with the emergency By-Laws, the By-Laws provided in the preceding Articles shall remain in effect during such emergency and upon the termination of such emergency the emergency By-Laws shall cease to be operative unless and until another such emergency shall occur.

Section 2. <u>Meetings.</u> 

During any emergency contemplated by Section 1 of this Article VIII:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Any meeting of the Board of Directors may be called by any Director. Whenever any officer of the Corporation who is not a Director has reason to believe that no Director is available to participate in a meeting, such officer may call a meeting to be held under the provisions of this Section 2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notice of each meeting called under the provisions of this Section 2 shall be given by the person calling the meeting or at his request by any officer of the Corporation. The notice shall specify the time and the place of the meeting, which shall be the head office of the Corporation, if feasible, and otherwise any other place, within or without the Commonwealth of Pennsylvania, specified in the notice. Notice need be given only to such of the Directors as it may be feasible to reach at the time and may be given by such means as may be feasible at the time, including publication or radio. If given by mail, messenger; telephone, electronic transmission, or telegram, the notice shall be addressed to the Director at his residence, personal or business electronic mail address, business address, or such other place as the person giving the notice shall deem suitable.

In the case of meetings called by an officer who is not a Director, notice shall also be given similarly, to the extent feasible, to the persons named on the list referred to in part (iii) of this Section 2. Notice shall be given at least two (2) days before the meeting if feasible in the judgment of the person giving the notice, and otherwise the meeting may be held on any shorter notice he shall deem suitable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) At any meeting called under the provisions of this Section 2, the Director or Directors present shall constitute a quorum for the transaction of business. If no Director attends a meeting called by an officer who is not a Director and if there are present at least three (3) of the persons named on a numbered list of personnel approved by the Board of Directors before the emergency, those present (but not more than the nine (9) appearing highest in priority on such list) shall be deemed Directors for such meeting and shall constitute a quorum for the transaction of business.

Section 3. <u>Lines of Succession.</u> 

The Board of Directors, during as well as before any emergency contemplated by Section 1 of this Article VIII, may provide, and from time to time modify, lines of succession in the event that during such an emergency any or all officers or agents of the Corporation shall for any reason be rendered incapable of discharging their duties.

Section 4. <u>Offices.</u> 

The Board of Directors, during as well as before any emergency contemplated by Section 1 of this Article VIII, may, effective upon the occurrence of such emergency, change the head office or designate several alternative head offices or regional offices, or authorize the officers so to do.

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Section 5. <u>Liability.</u> 

No officer, Director or employee acting in accordance with these emergency By-Laws shall be liable to the Corporation or any shareholder thereof, except for willful misconduct.

Section 6. <u>Repeal or Change.</u> 

The emergency By-Laws shall be subject to repeal or change by action of the Board of Directors or by action of the shareholders, except that no such repeal or change shall modify the provisions of Section 5 of this Article VIII with regard to, action or inaction prior to the time of such repeal or change.

**Article IX<br>NON-APPLICABILITY OF STATUTE** 

Subchapter E of Chapter 25 of the PBCL (formerly known as Section 910 of the PBCL of 1933, as amended) shall not be applicable to the Corporation. (This By-Law provision was adopted by action of the Board of Directors on February 28, 1984 and may not be rescinded except by an amendment to the Articles of Incorporation.)

Subchapters G and H of Chapter 25 of the PBCL shall not be applicable to the Corporation. (This By-Law provision was adopted by action of the Board of Directors on July 20, 1990.)

**Article X<br>CONSTRUCTION** 

In the event of any conflict between the provisions of these By-Laws as in effect from time to time and the provisions of applicable law or the Articles of Incorporation as in effect from time to time, the provisions of applicable law or the Articles of Incorporation, as the case may be, shall be controlling. Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the PBCL shall govern the construction of these By-Laws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, the term "<u>person</u>" includes a natural person, a corporation or any other entity of any type, and the masculine gender includes the feminine gender. All restrictions, limitations, requirements and other provisions of these By-Laws shall be construed, insofar as possible, as supplemental and additional to all provisions of law applicable to the subject matter thereof and shall be fully complied with in addition to the said provisions of law unless such compliance shall be illegal. Any Article, section, subsection, subdivision, sentence, clause or phrase of these By-Laws which upon being construed in the manner provided in this Article X shall be contrary to or inconsistent with any applicable law shall not apply so long as said provisions of law shall remain in effect, but such result shall not affect the validity or applicability of any other portions of these By-Laws, it being hereby declared that these By-Laws would have been adopted and each article, section, subsection, subdivision, sentence, clause or phrase thereof, irrespective of the fact that any one or more articles, sections, subsections, subdivisions, sentences, clauses or phrases is or are illegal. All references in these By-Laws to any statute, law, regulation or rule also shall include any successor statute, law, regulation or rule, as the case may be. All references to Articles and Sections refer to Articles and Sections of these By-Laws. The headings and subheadings in these By-Laws are for convenience only; they do not form a part of these By-Laws and shall not affect the interpretation of these By-Laws. Whenever the words "including," "include" or "includes" are used in these By-Laws, they should be interpreted in a non-exclusive manner as though the words "without limitation" immediately followed the same.

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**Article XI<br>FORUM SELECTION**

Section 1. <u>Exclusive Forum.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Unless the Corporation consents in writing to the selection of an alternative forum, the state court of the Commonwealth of Pennsylvania in and for Allegheny County, the Court of Common Pleas, shall be the sole and exclusive forum, to the fullest extent permitted by law, for (a) any derivative action or proceeding brought on behalf of the Corporation; (b) any action asserting a claim of a breach of fiduciary duty owed to the Corporation or to the Corporation's shareholders by any director, officer, or other employee of the Corporation; (c) any action asserting a claim against the Corporation, or against any director, officer, or other employee of the Corporation, arising pursuant to any provision of the Pennsylvania Associations Code, 15 Pa. C. S., the Articles of Incorporation, or these By-Laws, in each case, as amended; (d) any action seeking to interpret, apply, enforce, or determine the validity of the Articles of Incorporation or these By-Laws; or (e) any action asserting a claim against the Corporation, or any director, officer, or other employee of the Corporation, governed by the internal affairs doctrine. If a court of competent jurisdiction finally determines that a shareholder has breached the provisions of this Section 1, then the Corporation shall be entitled to recover its reasonable legal fees and costs in addition to any and all other rights and remedies that may exist at law or in equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. Any person or entity purchasing or otherwise acquiring any interest in any securities of the Corporation shall be deemed to have notice of and consented to this Section 1(b) of this Article XI.

Section 2. <u>Submission to Jurisdiction.</u> 

Without limiting the effect of 15 Pa. C. S. § 1505, any person or entity purchasing or otherwise acquiring any interest in shares of the Corporation shall be deemed, to the fullest extent permitted by law, to be a "shareholder" for purposes of Section 1 of this Article XI and to have notice of and consented to the provisions of this Article XI. Any shareholder who initiates an action or proceeding of the type described in parts (a) through (e) of Section 1(a) of this Article XI or initiating an action or proceeding of the type described in Section 1(b) of this Article XI in a court other than a court specified in the corresponding subsection of Section 1 of this Article XI (a "<u>Foreign Action</u>") shall be deemed to have consented to (i) the personal jurisdiction of the courts specified in the corresponding subsection of Section 1 in an action or proceeding brought in any of those courts against the shareholder to enforce Section 1 of this Article XI (an "<u>Enforcement Action</u>") and (ii) having service of process in an Enforcement Action made upon the shareholder by United States mail addressed to the shareholder at the shareholder's address as it appears on the records of the Corporation or upon the shareholder's counsel in the Foreign Action by United States mail addressed to such counsel.

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## Ex-4

**EXHIBIT 4.4**

**AMPCO-PITTSBURGH CORPORATION**

**DESCRIPTION OF SECURITIES**

The following summary of certain provisions of the securities of Ampco-Pittsburgh Corporation ("we," "our" or the "Corporation") does not purport to be complete. You should refer to our Restated Articles of Incorporation, Amended and Restated By-laws, the Warrant Agreement, dated as of September 22, 2020, by and between the Corporation and Broadridge Corporate Issuer Solutions, Inc., as warrant agent (the "Warrant Agreement") and each of the other documents referenced herein, which are attached as exhibits to the Annual Report on Form 10-K to which this Description of Securities is part, each as amended from time to time. The summary below is also qualified by reference to the provisions of the Pennsylvania Business Corporation Law of 1988, as amended (the "PBCL"), as applicable.

**General**

Our authorized capital stock consists of 40,000,000 shares of common stock, par value $1.00 per share, and 3,000,000 shares of preference stock, without par value, the rights and preferences of which may be established from time to time by our board of directors.

**Common Stock**

Each share of common stock is entitled to one vote on all matters requiring a vote of shareholders and, subject to the rights of the holders of any outstanding shares of preference stock, each shareholder is entitled to receive any dividends, in cash, stock, or otherwise, as our board of directors may declare. Pennsylvania law prohibits the payment of dividends or the repurchase of our shares if we are insolvent or unable to pay our debts as they become due in the usual course of business, or if we would become so as a result of the dividend or repurchase. In the event of our liquidation, dissolution or winding up, either voluntarily or involuntarily, subject to the rights of the holders of any outstanding shares of preference stock, holders of common stock are entitled to share pro-rata in all of our remaining assets available for distribution after providing for claims of creditors as required by the PBCL.

Holders of common stock have no preemptive or conversion rights or other subscription rights, and there are no redemption or sinking fund provisions applicable to the common stock. The outstanding shares of common stock are fully paid and non-assessable. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preference stock that we may designate and issue in the future.

Under the PBCL, cumulative voting applies to the election of directors by holders of common stock (and holders of any series of preference stock that is entitled to vote in the election of directors).

**Preference Stock**

Under Pennsylvania law and our Restated Articles of Incorporation, our board of directors, without further action by the shareholders, is authorized to designate and issue preference stock in one or more series and to fix as to any series the annual dividend or dividend rate, the relative priority as to dividends, redemption prices, preferences on dissolution, the terms of any sinking fund, voting rights, conversion rights, if any, and any other preferences or special rights and qualifications. The board has authorized 150,000 shares of Series A Preference Stock in 1998. None of those Series A shares has been issued.

If we create one or more series of preference stock, it or they may rank senior to the common stock with respect to the payment of dividends or amounts upon liquidation, dissolution or winding up, or both. The authorized Series A preference stock contains such provisions. In addition, shares of preference stock may have class or series voting rights or rights to vote with the common stock, and may have more than one vote per share. Issuances of preference stock, while providing us with flexibility in connection with general corporate purposes, may, among other things,

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have an adverse effect on the rights of holders of common stock. We have no present plans to issue any preference stock, including any of the authorized Series A Preference Stock.

**Series A Warrants** 

We have issued warrants to purchase common stock, which are designated as Series A warrants. These Series A warrants are separately transferable through their expiration on August 1, 2025. The Series A warrants are listed for trading on NYSE American. The common stock underlying the Series A warrants, upon issuance, is listed for trading on the NYSE under the symbol "AP."

Exercisability. Each Series A Warrant is exercisable at any time and from time to time after the date of issuance and will expire on August 1, 2025. The Series A warrants will be exercisable, at the option of each holder, in whole or in part by delivering to us the warrant certificate or warrant, as applicable a duly executed exercise notice and payment in full for the number of shares of common stock purchased upon such exercise, except in the case of a cashless exercise as discussed below.

Cashless Exercise. If at the time of exercise of the Series A warrants there is no effective registration statement registering, or the prospectus contained therein is not available for issuance of, the shares issuable upon exercise of the warrant, the holder may exercise the warrant on a cashless basis. When exercised on a cashless basis, a portion of the warrant is cancelled in payment of the purchase price payable in respect of the number of shares of common stock purchasable upon such exercise.

Exercise Price. Each Series A warrant represents the right to purchase 0.4464 shares of common stock at an exercise price of $2.5668 per share (or $5.75 per whole share of common stock under the Series A warrants). In addition, the exercise price per share is subject to adjustment for stock dividends, distributions, subdivisions, combinations, reclassifications or certain similar transactions.

Transferability. Subject to applicable laws and restrictions, a holder may transfer a warrant upon surrender of the warrant to us with a completed and signed assignment in the form attached to the warrant. The transferring holder will be responsible for any tax that liability that may arise as a result of the transfer.

Rights as Shareholder. The holder of a Series A warrant, solely in such holder's capacity as a holder of a Series A warrant, will not be entitled to vote or to any of the other rights of our shareholders.

Amendments and Waivers. The provisions of each Series A warrant may be modified or amended or the provisions thereof waived with the written consent of us and the holders of a majority of the outstanding Series A warrants.

The Series A warrants are subject to the terms of the Warrant Agreement.

**Anti-Takeover Provisions**

Certain provisions of our charter and by-laws could have an anti-takeover effect. These provisions are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and in the policies formulated by it. They may also discourage an unsolicited takeover of our company if the board determines that the takeover is not in our best interests. These provisions could have the effect of discouraging certain attempts to acquire our company or remove incumbent management even if some or a majority of shareholders deemed such an attempt to be in their best interests.

These provisions in our charter include: (a) the classification of the board of directors into three classes; (b) a provision fixing the size of the board of directors to no more than 15 members and no fewer than five; and (c) the authority to issue additional shares of common stock or preference stock without shareholder approval.

Our charter also includes a provision requiring the affirmative vote of the holders of 75% of the voting power of the then outstanding capital stock of our company to (a) remove the entire board of directors, a class of the board

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of directors, or any individual member of the board of directors; provided, however that no individual director can be removed without cause (unless the entire board of directors or any class of directors is removed) in case the votes cast against such removal would be sufficient, if voted cumulatively for such director to elect him or her to the class of directors of which he or she is a member, or (b) approve amendments to our charter, unless such amendment, repeal or provision has been approved by at least a two-thirds vote of the whole board of directors, in which event the affirmative vote of the holders of not less than a majority of the voting power of the then outstanding shares of capital stock of our company entitled to vote in an annual election of directors, voting together as a single class, will be required.

The by-laws provide that any shareholder who desires to present a nomination of person(s) for election to the board of directors or a proposal of other business at a shareholders' meeting, or a proponent, must first provide timely written notice to our secretary. The by-laws set forth the deadlines and methods and procedures required for submitting such advance notice. the advance notice must set forth in reasonable detail (a) as to each person the shareholder proposes to nominate for election to the board, information concerning the proposed nominee, including such nominee's consent to serve as a director if elected and consent to being named in any proxy materials relating to the Corporation's next annual meeting or special meeting, as applicable, a representation that the nominating shareholder or beneficial owner, if any, intends to solicit the holders of shares representing at least 67% of the shares of voting stock in support of such director nominee other than the Corporation's nominees, and other specific information called for by the by-laws, or (b) as to any other business that the shareholder proposes to bring before the meeting, a description of the substance of the proposal. The advance notice must include all such information regarding the proponent and/or nominee(s) which would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC. The advance notice must also include a representation from the proponent that such person is a shareholder of record of our company, is entitled to vote at the shareholders' meeting, and intends to appear in person or by proxy at the meeting to present the nomination or other proposal specified in the notice, and a description of any agreements, arrangements, or understandings between the proponent and any other person or persons (naming such persons) pursuant to which the proposal is to be made by the proponent. Additionally, a shareholder who has delivered a notice adhering to all requirements set forth in the by-laws must comply with all requirements set forth in Rule 14a-19 promulgated under the Securities Exchange Act of 1934, as amended, and must certify to adhering to those requirements and must provide evidence that it has complied with such requirements no later than five business days prior to the annual or special meeting.

Any shareholder directly or indirectly soliciting proxies from other shareholders must use a proxy card other than white, which shall be reserved for exclusive use by the Corporation.

**PBCL Anti-Takeover Provisions**

The PBCL contains a number of statutory "anti-takeover" provisions, including Subchapters E, F, G and H of Chapter 25 and Sections 2513, 2521, 2524, 2538, and 2539 of the PBCL, which apply automatically to different categories of Pennsylvania registered corporations (usually a public company) unless the corporation elects to opt-out of those provisions. We are a Pennsylvania registered corporation of the type subject to the broadest number of those provisions, and as a result, except for the provisions from which we have opted out (as noted below), we are subject to the anti-takeover provisions described below. Descriptions of the anti-takeover provisions are qualified in their entirety by reference to the PBCL.

Subchapter F (relating to business combinations) generally delays for five years and imposes conditions upon "business combinations" between an "interested shareholder" and our company. The term "business combination" is defined broadly to include various transactions between a corporation and an interested shareholder including mergers, sales or leases of specified amounts of assets, liquidations, reclassifications and issuances of specified amounts of additional shares of stock of the corporation. An "interested shareholder" is defined generally as the beneficial owner of at least 20% of a corporation's voting shares.

Section 2513 of the PBCL authorizes the use of shareholder rights plans, or poison pills, that preclude or limit the exercise of such rights by persons making an offer to acquire a corporation's shares.

Section 2521 of the PBCL provides that shareholders are not entitled by statute to call special meetings of the shareholders and our by-laws do not give shareholders any right to call special meetings.

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Section 2524 provides that shareholders cannot act by partial written consent unless permitted in the articles of incorporation.

Section 2538 of the PBCL generally establishes certain shareholder approval requirements with respect to specified transactions with "interested shareholders."

Section 2539 of the PBCL prohibits a "short-form" merger of a registered corporation (which ordinarily could be done by an 80%-or-more shareholder vote of a target corporation, without further action by the target corporation's board or other shareholders) unless the board of directors of the target corporation approves the merger.

We have elected to opt out of Subchapters E, G, and H of Chapter 25 of the PBCL. Subchapter E (relating to control transactions) would have generally provided that if any person or group acquires 20% or more of the voting power of our company, the remaining holders of voting shares may demand from such person or group the fair value of their voting shares, including a proportionate amount of any control premium. Subchapter G would have required a shareholder vote to accord voting rights to control shares acquired by a 20% shareholder in a control-share acquisition. Subchapter H would have required a person or group to disgorge to us any profits received from a sale of our equity securities within 18 months after the person or group acquired, offered to acquire or publicly disclosed an intention to acquire 20% of our voting power or publicly disclosed an intention to acquire control of us.

Under the PBCL, directors owe a fiduciary duty to our company. In discharging that duty, directors may, in considering our best interests, consider, to the extent they deem appropriate, the effects of any action upon any or all groups affected, including shareholders, employees, customers, suppliers, and creditors and upon communities in which officers or other establishments of our company are located. The board of directors need not consider the interests of any particular group affected by an action as a dominant or controlling interest. Under the PBCL, the fiduciary duty of directors does not require the board of directors to redeem or modify or render inapplicable any shareholder rights plan, to render inapplicable or make any determinations under Subchapter F or any other provision of the PBCL relating to or affecting acquisitions or proposed acquisitions of control of our company, or otherwise act solely because of the effect that such action might have upon a potential or proposed acquisition of our company or the amount that might be offered or paid to shareholders in such an acquisition.

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## Ex-18

**EXHIBIT 18**

March 21, 2023

Board of Directors

Ampco-Pittsburgh Corporation

726 Bell Avenue, Suite 301

Carnegie, PA 15106

We have audited the consolidated balance sheets of Ampco-Pittsburgh Corporation (the Corporation) as of December 31, 2022 and 2021, and the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows for each of the two years in the period ended December 31, 2022, and have reported thereon under date of March 21, 2023. The aforementioned consolidated financial statements and our audit report thereon are included in the Corporation's annual report on Form 10-K for the year ended December 31, 2022. As stated in Notes 1 and 2 to those consolidated financial statements, the Corporation changed its method of accounting for certain inventories from the last-in, first-out (LIFO) method of inventory costing to the first-in, first-out (FIFO) method of inventory costing and states that the newly adopted accounting principle is preferable in the circumstances because it provides a better matching of costs with the physical flow of goods, more accurately reflects the current market value of inventory presented on the Corporation's consolidated balance sheet, standardizes the Corporation's inventory valuation methodology, and improves comparability with the Corporation's industry peers. In accordance with your request, we have reviewed and discussed with Corporation officials the circumstances and business judgment and planning upon which the decision to make this change in the method of accounting was based.

With regard to the aforementioned accounting change, authoritative criteria have not been established for evaluating the preferability of one acceptable method of accounting over another acceptable method. However, for purposes of the Corporation's compliance with the requirements of the Securities and Exchange Commission, we are furnishing this letter.

Based on our review and discussion, with reliance on management's business judgment and planning, we concur that the newly adopted method of accounting described in Notes 1 and 2 is preferable in the Corporation's circumstances.

Very truly yours,

/s/ BDO USA, LLP

Pittsburgh, Pennsylvania

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## Ex-21

**EXHIBIT 21**

**Subsidiaries**

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| | | |
|:---|:---|:---|
| **Name** | **Ownership** | **Jurisdiction of**<br>**Incorporation** |
| Air & Liquid Systems Corporation\* | 100% owned by<br>Ampco-Pittsburgh Corporation | Pennsylvania |
| Ampco-Pittsburgh Securities V Investment Corporation\* | 100% owned by<br>Ampco-Pittsburgh Securities V L.L.C. | Delaware |
| Ampco-Pittsburgh Securities V L.L.C.\* | 100% owned by<br>Ampco-Pittsburgh Corporation | Delaware |
| Union Electric Steel Corporation\* | 100% owned by<br>Ampco-Pittsburgh Securities V L.L.C. | Pennsylvania |
| Ampco UES Sub, Inc.\* | 100% owned by<br>Union Electric Steel Corporation | Delaware |
| The Davy Roll Company Limited\* | 100% owned by<br>FCEP Europe B.V. | England |
| Union Electric Steel UK Limited\* | 100% owned by<br>The Davy Roll Company Limited | England |
| Åkers AB\* | 100% owned by<br>FCEP Europe B.V. | Sweden |
| Åkers Sweden AB\* | 100% owned by<br>FCEP Europe B.V. | Sweden |
| Rolls Technology Inc.\* | 100% owned by<br>Ampco UES Sub, Inc. | Delaware |
| Åkers Valji Ravne d.o.o.\* | 100% owned by<br>FCEP Europe B.V. | Slovenia |
| Shanxi Åkers TISCO Roll Co. Ltd.\* | 59.88% owned by<br>Åkers AB | China |
| Alloys Unlimited and Processing, LLC\* | 100% owned by<br>Union Electric Steel Corporation | Pennsylvania |

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The financial statements of subsidiaries marked with an (\*) have been consolidated with those of the Corporation. Names of other subsidiaries have been omitted because, considered in the aggregate as a single subsidiary, they would not constitute a significant subsidiary.

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## Ex-23

**EXHIBIT 23.1**

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** 

Ampco-Pittsburgh Corporation

Carnegie, Pennsylvania

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-222626), Form S-8 (No. 333-174269, No. 333-211242 and No. 333-256094) and Form S-1 (No. 333-239446) of Ampco-Pittsburgh Corporation of our report dated March 21, 2023, relating to the consolidated financial statements, which appears in this Annual Report on Form-10K.

/s/ BDO USA, LLP

Pittsburgh, Pennsylvania

March 21, 2023

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## Ex-23

**EXHIBIT 23.2**

**CONSENT OF GNARUS ADVISORS LLC** 

GNARUS Advisors LLC ("GNARUS") consents to being named in Ampco-Pittsburgh Corporation's Annual Report ("Form 10-K") for the year ended December 31, 2022, in the form and context in which GNARUS is named and to the incorporation by reference of the Form 10-K in Registration Statement No. 333-222626 on Form S-3, Registration Statements Nos. 333-174269, 333-211242 and 333-256094 on Form S-8, and Registration Statement No. 333-239446 on Form S-1.

/s/ GNARUS Advisors LLC

GNARUS Advisors LLC

March 21, 2023

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## Ex-31

**EXHIBIT 31.1** 

**Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002** 

I, J. Brett McBrayer, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this annual report on Form 10-K of Ampco-Pittsburgh Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15(e) and 15d – 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

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| | | |
|:---|:---|:---|
| March 21, 2023 | By: | /s/ J. Brett McBrayer |
|  |  | Director and Chief Executive Officer |
|  |  | J. Brett McBrayer |

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## Ex-31

**EXHIBIT 31.2** 

**Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002** 

I, Michael G. McAuley, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this annual report on Form 10-K of Ampco-Pittsburgh Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15(e) and 15d – 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

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| | | |
|:---|:---|:---|
| March 21, 2023 | By: | /s/ Michael G. McAuley |
|  |  | Senior Vice President, Chief Financial Officer and Treasurer |
|  |  | Michael G. McAuley  |

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## Ex-32

**EXHIBIT 32.1** 

**Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** 

In connection with the Annual Report of Ampco-Pittsburgh Corporation (the "Company") on Form 10-K for the period ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

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| | | |
|:---|:---|:---|
| March 21, 2023 | By: | /s/ J. Brett McBrayer |
|  |  | Director and Chief Executive Officer |
|  |  | J. Brett McBrayer |

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## Ex-32

**EXHIBIT 32.2** 

**Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** 

In connection with the Annual Report of Ampco-Pittsburgh Corporation (the "Company") on Form 10-K for the period ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

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| | | |
|:---|:---|:---|
| March 21, 2023 | By: | /s/ Michael G. McAuley |
|  |  | Senior Vice President, Chief Financial Officer and Treasurer |
|  |  | Michael G. McAuley |

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