Jason Industries, Inc. Annual Report 2018

← All annual reports

FY2018 Annual Report · Jason Industries, Inc.

Loading PDF…

Improving
operations.
Building
credibility.

2018 ANNUAL REPORT
JASON INDUSTRIES, INC

PERFORMANCE

Safer. Simpler. Better.

Our facilities are safer, our footprint less
complex, and our performance improved.

45%

lost time rate
reduction

facilities
consolidated

190 bps

adjusted EBITDA
improvement

(in millions)

Operations
Net Sales

Adjusted EBITDA1

Adjusted EBITDA %

Capital Expenditures

Free Cash Flow2

2014

2015

2016

2017

2018

$702.5

$708.4

$705.5

$648.6

$612.9

77.8

81.2

64.2

67.8

67.2

11.1%

11.5%

9.1%

10.4%

11.0%

26.4

$(0.3)

32.8

$1.5

19.8

15.9

$11.7

$14.2

13.8

$16.0

Financial Position at December 31,

Total Assets

Cash and Cash Equivalents

Total Debt

788.7

62.3

427.7

697.1

35.9

447.4

583.8

40.9

437.6

546.3

48.9

410.7

503.6

58.2

400.5

Net Debt to Adjusted EBITDA Ratio3

4.7x

5.0x

6.2x

5.5x

5.1x

(1) The definition of Adjusted EBITDA and a reconciliation from Adjusted EBITDA to net income is included on pages 44 of the Jason

2018 Form 10-K, which is also available on Jason’s website at www.jasoninc.com or at the SEC’s website at www.sec.gov.

(2) Free Cash Flow is provided for annual periods following Jason’s 2014 Business Combination.

(3) Net debt is calculated as total debt less cash and cash equivalents.

2
2

2018 NET SALES
$612.9 Million

2018 ADJUSTED EBITDA
$67.2 Million

2018 GEOGRAPHIC
BUSINESS MIX

Finishing . . . . . . . . . . . . .34%
Components . . . . . . . . . .14%
Seating . . . . . . . . . . . . . .26%
Acoustics . . . . . . . . . . . .26%

Finishing . . . . . . . . . . . . .37%
Components . . . . . . . . . .12%
Seating . . . . . . . . . . . . . .25%
Acoustics . . . . . . . . . . . .26%

U.S. . . . . . . . . . . . . . . . . .70%
Europe . . . . . . . . . . . . . .22%
Mexico . . . . . . . . . . . . . . 7%
ROW . . . . . . . . . . . . . . . . 1%

NET SALES

ADJUSTED EBITDA

CAPITAL EXPENDITURES

2018 . . . . . . . . . . . . . .$612.9
2017 . . . . . . . . . . . . . .$648.6
2016 . . . . . . . . . . . . . .$705.5
2015 . . . . . . . . . . . . . .$ 708.4
2014 . . . . . . . . . . . . . . $702.5

2018 . . . . . . . . . . . . . . .$67.2
2017 . . . . . . . . . . . . . . .$67.8
2016 . . . . . . . . . . . . . . .$64.2
2015 . . . . . . . . . . . . . . .$81.2
2014 . . . . . . . . . . . . . . .$77.8

2018 . . . . . . . . . . . . . . .$13.8
2017 . . . . . . . . . . . . . . .$15.9
2016 . . . . . . . . . . . . . . .$19.8
2015 . . . . . . . . . . . . . . .$32.8
2014 . . . . . . . . . . . . . . .$26.4

(in millions)

3
3

BUSINESS OVERVIEW

Productivity. Safety. Comfort.

Increased end-user intimacy is shifting
our businesses from manufacturers to
solution providers.

INDUSTRIAL

ENGINEERED COMPONENTS

Leading producer of industrial brushes,
buffs and polishing compounds

Used for surface preparation, cutting,
finishing, polishing, and sealing

Only global provider supplying full product
portfolio range

85% consumable, high recurring, revenue

Customers:
Motion Industries, Kohler, Bosch, Vallen,
TDW, MSC Supply, EDE Group, Bauhaus

2018 Net Sales: $208M
Adjusted EBITDA Margin: 14%

Expanded and perforated metal solutions

Used in filter products, safety grating,
security fencing, railcars, and other
industrial equipment

Industry-leading engineering, coupled with
customized components and individualized
solutions

Customers:
Trinity Rail, Parker, Gunderson, Donaldson,
National Steel Car, Cummins

2018 Net Sales: $83M
Adjusted EBITDA Margin: 12%

24 hrs

Osborn core
product delivery
to customers

$60M

Milsco identified
new business
opportunities

99.97%

Janesville
on-time
delivery

Leading seating systems provider for niche
applications

Designs and manufactures comfort solutions
for heavy equipment, material handling, turf
care, and power sports

Market-leading industrial design and rapid
prototyping capability

Customers:
John Deere, MTD, Caterpillar, Mahindra,
CNH, Harley Davidson, Polaris, Husqvarna

FIBER SOLUTIONS

Leading manufacturer of lightweight molded
fiber panels and accessories

Provide content for over half of light vehicle
platforms in North America

Plastic to fiber technology conversion
expertise

Customers:
GM, FCA, Toyota, Tesla, Autoneum, Auria

2018 Net Sales: $160M
Adjusted EBITDA Margin: 12%

2018 Net Sales: $162M
Adjusted EBITDA Margin: 13%

Our team made a commitment two years
ago to generate cash, improve and simplify
our operations, and execute targeted growth
initiatives. We made progress in all areas
again this year.

A LETTER TO MY FELLOW SHAREHOLDERS

“

DEAR FELLOW SHAREHOLDER,

We took a second step forward in Jason’s
recovery journey during 2018, increasing our
free cash flow and further reducing our net debt
leverage by another one-half turn to 5.1 times.
We expanded margins and delivered results in
line with our annual plan despite $10 million of
rising input costs.

Our team made a commitment two years ago
to generate cash, improve and simplify our
operations, and execute targeted growth initiatives.
We made progress in all areas again this year.

GENERATING CASH
We increased our free cash flow for a second
consecutive year to $16 million inclusive of $5
million worth of restructuring expenses and
generated an additional $3 million of cash from
self-help initiatives. We pared our corporate
expenses by $1.5 million and completed the
final stages of our three-year, $25 million cost
reduction program during 2018. This attention
to cost control and cash generation helped us
end the year with a $58 million cash balance and
nearly $100 million of liquidity, our highest levels
since Jason’s go-public transaction.

IMPROVING OPERATIONS
We spoke of challenged plants in the past, now
we talk about our Lean transformation. Each of
our sites is at a different phase of continuous
improvement maturity, but every location is
participating. Consider our twelve largest plants.
Two-thirds have upgraded leadership, ten of the
twelve expanded margins and three-fourths

6
6

have improved on-time delivery and quality
performance. These core twelve sites now
account for 85% of Jason’s revenue, an increase
of $100 million from two years ago.

SIMPLIFYING OUR INFRASTRUCTURE
Janesville and Milsco each successfully
completed facility consolidation projects on time,
on budget, and achieved targeted cost savings
while maintaining OEM levels of quality and
service. We now operate 28 manufacturing sites,
down seven in the last two years.

DRIVING TARGETED GROWTH
We are generating growth where we focus.
Osborn’s investment in end-user specialists
and upgraded commercial leadership helped
drive double digit organic sales increases in our
national accounts and profitable lines of business
like LoadRunners™ and Roller Technologies.
Milsco tripled its commercial funnel and
continued to capture market share in the heavy
industry and zero-turn radius mower markets.
Janesville won 13 new platforms including
penetrating Japanese and Korean manufacturers
for the first time.

Our year could have been better if not for
select market conditions and self-inflicted
issues. Moderating growth in European and
Asian economies and ongoing softness in
automotive, power sports, and rail suppressed
our topline, while a combination of increased
competition and operational missteps hindered
our Metalex business.

All in, we generated $4 million more free cash
flow and $3 million more adjusted EBITDA than
two years ago and our 2018 results included
approximately $6 million worth of bonus expense
that was not imbedded in 2016, a nearly $10
million apples-to-apples improvement.

Our urgency remains at a high level and the
demands of managing both the day-to-day
activity and greater strategic imperatives
are increasing. Three items to watch in the
coming year are: continue our focus on cash,
simplification and growth.

First, markets are not likely to do us many favors.
We enter 2019 with muted first-half expectations
and to minimize the impact we are kicking off a new
cost reduction program. Our team has targeted
additional projects to flex our cost structure in areas
that continue to pose topline challenges.

Second, we simplified our segment reporting
structure for 2019, reducing the number of
reporting segments from four to three by
combining our former Components and Seating
segments under the banner of Engineered
Components. We also renamed our other two
segments, Finishing is now known as Industrial
and Acoustics is Fiber Solutions. Osborn does
more than finish surfaces and Janesville is no
longer only about acoustics.

Third, we are accelerating our shift of revenue
to less cyclical sources. Milsco is targeting

96%

High-potential
employee retention

$10M

material inflation
mitigated

$16M

free cash flow

$98M

liquidity

A LETTER TO MY FELLOW SHAREHOLDERS

continued share capture by leading a technology
shift from foam-in-place to cut-and-sew designs
and Janesville is doubling down on their exciting
packaging venture, aiming to generate $5 million
of sales in the coming year.

where we focus.

“We are generating growth

Industrial will have the greatest impact on
Jason’s transition away from cyclicality. Osborn
now generates nearly 40% of our consolidated
EBITDA and we truly have a franchise business.
Our extensive product breadth, global footprint,
and long history with blue-chip customers served
through multiple channels is difficult to replicate.
We are making $2 million worth of incremental
investments in commercial talent during 2019
to better drive organic growth while refining
our long-term vision of building a $350 million
to $500 million global brand of products that
clean, cut, prepare and finish surfaces. Growing
our business 3% to 5% organically each year
and supplementing with synergistic tuck-in
acquisitions in the range of 10% to 15% of the
prior year’s revenue achieves our vision in the
next three to five years.

tuck-in opportunities for Osborn, presenting true
cost synergies, line extensions and talent. We
take our capital allocation seriously and the $11
million purchase price for this approximately $20
million revenue polishing extension meets our
parameters for payback. Osborn becomes the
largest manufacturer and supplier of industrial
polishing solutions in North America with this
purchase and we expect the transaction to be
leverage neutral or better by year-end.

We are keeping an eye on the credit markets
seeking favorable conditions to refresh our
capital structure while we reduce our exposure
to cyclical end-markets, generate cash and drive
our leverage to below 5 turns.

Finally, I want to thank Ed Hotard for his
guidance and wish him well in his retirement
from our Board of Directors. After learning of
Ed’s intention, we opted to downsize our Board
roster in keeping with our simplification spirit.
I also want to thank our customers for the
opportunity to earn their business, our employees
for their continued effort and execution and our
investors for their ongoing support.

Sincerely,

Consistent with our vision to build the Industrial
segment, in April 2019 we completed the
acquisition of Schaffner Manufacturing Company,
Inc. Schaffner is a great example of the numerous

Brian Kobylinski
Chairman and Chief Executive Officer

8
8

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K/A
(Amendment No. 1)

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

For the fiscal year ended December 31, 2018

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

Commission File Number: 001-36051

JASON INDUSTRIES, INC.
(Exact name of registrant as specified in its charter

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

Delaware

46-2888322

833 East Michigan Street, Suite 900
Milwaukee, Wisconsin

(Address of principal executive offices)

53202

(Zip Code)

Registrant’s telephone number, including area code: (414) 277-9300

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share
Warrants to purchase Common Stock

JASN
JASNW

The NASDAQ Stock Market LLC
The NASDAQ Stock Market LLC

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes

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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.

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 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

Non-accelerated filer

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes

The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant, as of June 29, 2018, the last business
day of the registrant’s most recently completed second fiscal quarter, was approximately $41.5 million (based upon the closing price of $2.32
per share on The NASDAQ Stock Market as of such date).

There were 27,644,672 shares of common stock issued and outstanding as of February 26, 2019.

Documents Incorporated by Reference

Portions of the registrant’s definitive proxy statement relating to its 2019 Annual Meeting of Shareholders (the “2019 Proxy Statement”) are
incorporated by reference into Part III of this Annual Report on Form 10-K. The 2019 Proxy Statement will be filed with the U.S. Securities
and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-K/A amends the Annual Report on Form 10-K of Jason Industries, Inc. (“the

Company”) for the year ended December 31, 2018, initially filed with the Securities and Exchange Commission on March 5,
2019 (the “Original Filing”). This Form 10-K/A amends the Original Filing to correct the Company’s accounting for income
taxes. Specifically, the Company recorded a valuation allowance for deferred tax assets related to disallowed interest expense
deduction carryforwards under Internal Revenue Code Section 163(j) in 2018 which was not appropriate based on relevant
income tax guidance as management has determined that the deferred tax assets were more likely than not to be realized, as
more fully described in Note 2, “Restatement of Previously Reported Financial Information” in the notes to the consolidated
financial statements. As a result of this income tax error, which materially misstated the previously issued 2018 financial
statements, the consolidated financial statements of the Company as of and for the year ended December 31, 2018 have been
restated. This Amendment No. 1 amends and restates the Original Filing in its entirety. Revisions to the Original Filing have
been made to the following sections:

•
•
•
•
•
•
•

Item 6. Selected Financial Data
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9A. Controls and Procedures
Schedule II. Consolidated Valuation and Qualifying Accounts
Exhibit 23. Consent of PricewaterhouseCoopers LLP

Management has also reassessed its evaluation of the effectiveness of its internal control over financial reporting as
of December 31, 2018, based on the framework established in Internal Control-Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a result of that reassessment, management
identified a material weakness and, accordingly, has concluded that the Company did not maintain effective internal control
over financial reporting as of December 31, 2018. For a description of the material weakness in internal control over financial
reporting and actions taken, and to be taken, to address the material weakness, see Part II, Item 9A. “Controls and Procedures”
of this Annual Report on Form 10-K/A.

In addition, the Company’s principal executive officer and principal financial officer have provided new certifications

in connection with this Amendment No. 1 (Exhibits 31.1, 31.2, 32.1 and 32.2).

Except as described above, no other amendments have been made to the Original Filing. This Amendment continues

to speak as of the date of the Original Filing, and the Company has not updated the disclosure contained herein to reflect events
that have occurred since the date of the Original Filing. Accordingly, this Amendment should be read in conjunction with the
Company’s other filings made with the Securities and Exchange Commission subsequent to the filing of the Original Filing,
including any amendments to those filings.

[This page intentionally left blank]

JASON INDUSTRIES, INC.
TABLE OF CONTENTS

Business

Risk Factors

Unresolved Staff Comments

Properties

Legal Proceedings

Mine Safety Disclosures

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Selected Financial Data

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Quantitative and Qualitative Disclosures about Market Risk

Financial Statements and Supplementary Data

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Controls and Procedures

Other Information

Directors, Executive Officers and Corporate Governance

Executive Compensation

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Certain Relationships and Related Transactions, and Director Independence

Principal Accounting Fees and Services

Exhibits and Financial Statements Schedules

Form 10-K Summary

Consolidated Valuation and Qualifying Accounts

PART I.

Item 1.

Item 1A.

Item 1B.

Item 2.

Item 3.

Item 4.

PART II

Item 5.

Item 6.

Item 7.

Item 7A.

Item 8.

Item 9.

Item 9A.

Item 9B.

PART III

Item 10.

Item 11.

Item 12.

Item 13.

Item 14.

PART IV

Item 15.

Item 16.

Schedule II

SIGNATURES

108

109

110

111

112

116

Cautionary Note Regarding Forward-Looking Statements

Unless otherwise indicated, references to “Jason Industries,” the “Company,” “we,” “our” and “us” in this Annual

Report on Form 10-K refer to Jason Industries, Inc. and its consolidated subsidiaries.

This report contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995. Specifically, forward-looking statements may include statements relating to the
Company’s future financial performance, changes in the markets for the Company’s products, the Company’s expansion plans
and opportunities, and other statements preceded by, followed by or that include the words “estimate,” “plan,” “project,”
“forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions.

These forward-looking statements are based on information available to the Company as of the date of this report and

current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly,
forward-looking statements should not be relied upon as representing the Company’s views as of any subsequent date, and the
Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the
date they were made, whether as a result of new information, future events or otherwise, except as may be required under
applicable securities laws.

As a result of a number of known and unknown risks and uncertainties, the Company’s actual results or performance

may be materially different from those expressed or implied by these forward-looking statements. Some factors that could
cause actual results to differ include the following:

•

level of demand for the Company’s products;

competition in the Company’s markets;

volatility in the prices of raw materials and the Company’s ability to pass along increased costs;

the Company’s ability to grow and manage growth profitably;

the Company’s ability to access additional capital;

changes in applicable laws or regulations;

the Company’s ability to attract and retain qualified personnel;

the impact of proposed and potential regulations related to the U.S. Tax Cuts and Jobs Act;

the possibility that the Company may be adversely affected by other economic, business, trade, inflation and/or
competitive factors; and

other risks and uncertainties indicated in this report, including those discussed under “Risk Factors” in Item 1A of Part
I of this report, as such may be amended or supplemented in Part II, Item 1A, “Risk Factors”, of the Company’s
subsequently filed Quarterly Reports on Form 10-Q.

PART I

ITEM 1. BUSINESS

Our Business

Jason Industries, a Delaware corporation originally formed in May 2013, is a global industrial manufacturing company

with significant market share positions in each of its four businesses: finishing, components, seating and acoustics. Our
businesses provide critical components and manufacturing solutions to customers across a wide range of end markets,
industries and geographies through a global network of 28 manufacturing facilities and 15 sales, administrative and/or
warehouse facilities throughout the United States and 13 foreign countries. The Company has embedded relationships with
long standing customers, superior scale and resources and specialized capabilities to design and manufacture specialized
products on which our customers rely.

The Company focuses on markets with sustainable growth characteristics and where it is, or has the opportunity to
become, the industry leader. The Company’s finishing segment focuses on the production of industrial brushes, polishing buffs
and compounds, and abrasives that are used in a broad range of industrial and infrastructure applications. The components
segment is a diversified manufacturer of expanded and perforated metal components and slip resistant surfaces. The seating
segment supplies seating solutions to equipment manufacturers in the motorcycle, lawn and turf care, industrial, agricultural,
construction and power sports end markets. The acoustics segment manufactures engineered non-woven, fiber-based acoustical
products primarily for the automotive industry.

Presentation of Financial and Operating Data

On June 30, 2014, the Company and Jason Partners Holdings Inc. (“Jason” or “Seller”) completed a transaction in
which JPHI Holdings Inc. (“JPHI”), then a majority owned subsidiary of the Company, acquired all of the capital stock of
Jason from its then current owners, Saw Mill Capital, LLC, Falcon Investment Advisors, LLC and other investors (the
“Business Combination”) pursuant to a stock purchase agreement, dated as of March 16, 2014 (the “Purchase Agreement”). In
connection with the Business Combination, the Company entered into new senior secured credit facilities with a syndicate of
lenders in the aggregate amount of approximately $460.0 million, which was primarily used to refinance existing indebtedness,
pay transaction fees and expenses and pay a portion of the purchase price under the Purchase Agreement. The purchase price
under the Purchase Agreement was also funded with cash held in our initial public offering trust account, the contribution of
Jason common stock to JPHI by certain members of Seller and certain directors and management of Jason Incorporated
(collectively, the “Rollover Participants”) in exchange for JPHI stock, and the proceeds from the sale of our 8% Series A
Convertible Perpetual Preferred Stock (the “Series A Preferred Stock”) in a private placement that closed simultaneously with
the Business Combination. The Business Combination was accounted for using the acquisition method of accounting under the
provisions of Accounting Standards Codification Topic 805, “Business Combinations.” Accordingly, we are treated as the legal
and accounting acquirer and Jason is treated as the legal and accounting acquiree. As a result of the application of the
acquisition method of accounting as of the effective time of the acquisition, the financial statements for the predecessor period
and for the successor period are presented on a different basis and, therefore, the financial information and operating data
presented in this Annual Report on Form 10-K/A for the predecessor period is that of Jason Partners Holdings Inc and the
successor period is that of Jason Industries.

Description of Business Segments

Jason Industries’ global industrial platform encompasses a diverse group of industries, geographies and end markets.
Through our four business segments, we deliver an array of industrial consumables and critical manufactured components to a
number of industries, including industrial equipment, motorcycles, lawn and turf care, rail and automotive. The highly
fragmented nature of the Company’s end markets creates growth opportunities given our established global footprint and
leading share positions.

Net sales are distributed amongst the four segments as follows:

Net sales

Finishing

Components

Seating

Acoustics

Year ended December 31,

2018

2017

2016

33.9%

13.5%

26.2%

26.4%

100.0%

30.9%

12.7%

24.5%

31.9%

100.0%

27.9%

13.8%

22.8%

35.5%

100.0%

See more information regarding our segments and sales by geography within Part II, Item 8, Note 16 to the

Consolidated Financial Statements.

Finishing

Market/Industry Overview

The finishing segment’s product lines are comprised of industrial brushes, polishing buffs and compounds, and

abrasives used primarily in the metalworking, welding, construction and manufacturing industries. The market for finishing
products is highly fragmented with most participants having single or limited product lines and serving specific geographic
markets. While the finishing business competes with numerous domestic and international companies across a variety of
product lines, we do not believe that any one competitor directly competes with us on all of our product lines. We believe we
are the only market participant that reaches all regions of the world. End users of finishing products are broadly diversified
across many sectors of the economy. In the long-term, the finishing market is closely tied to overall growth in industrial
production, which we believe has fundamental long-term growth potential.

The finishing market is also characterized by the need for sophisticated manufacturing equipment, the ability to

produce a broad number of niche products and the flexibility in manufacturing operations to adapt to ever-changing customer
demands and schedules. We believe entry into markets by competitors with lower labor costs, including foreign competitors,
will be limited because labor is a relatively small portion of total manufacturing costs. The cost of labor, manufacturing,
shipping and logistics is dramatically rising in countries such as China and customers continue to have increasing demand for
shorter lead times and lower inventory and carrying costs.

Key Products

Through the finishing business, which represented 33.9% of the Company’s 2018 revenue, Jason Industries produces
and supplies industrial brushes, polishing buffs and compounds, and abrasives. Osborn has been in operation since 1887. Our
products are used in a variety of applications with no single customer or industry accounting for a significant portion of
business revenue. The Company has strategic facilities located globally, including production sites in low-cost locations such as
China, India, Portugal, Romania and Mexico.

The finishing business is a one-stop provider of standard and customized brush, polishing, and abrasives products used

across multiple industries, including aerospace, automotive, construction, engineering, plastic, steel, hardware, welding and
shipbuilding, among others. Our broad product suite is composed of brush types used for a variety of applications, including
power, maintenance, strip, punch, and roller brushes. These products are marketed under leading brand names that include
Osborn® and Sealeze®. Our buff products are sold under the JacksonLea® and Lippert Unipol® brands and are comprised of
industrial buffs and abrasives used primarily to finish parts requiring a high degree of luster and/or a satin or textured surface.
In addition to manufacturing buffs, the Company also produces the industry’s broadest product line of buffing compounds
available in liquid or bar form that are customized to specific end use requirements. Our abrasive products are marketed under
the DRONCO® and Osborn® brands and include bonded abrasives such as cutting and grinding wheels and flap discs, as well
as diamond cutting wheels and tools. We also service customers with products complementing our brush, polishing, and
abrasives lines, including heavy-duty idler rollers for high-capacity precision load handling sold under the Load Runners®
brand.

The Company has representatives who reach more than 30,000 customers in approximately 130 countries worldwide.

During 2018, the finishing segment derived approximately 33% of its sales from North America and the majority of the
remaining revenue from Europe. We service our diverse customer base through U.S. facilities in Indiana and Ohio and 12
foreign countries, including joint ventures in China and Taiwan. Our manufacturing and service locations allow us to work on a
regional and local basis with customers to develop custom products and provide significant technical support, resulting in
strong relationships with our top customers that average 25 years. In addition, the Company has invested in state-of-the-art
laboratories in Richmond, Indiana and Burgwald, Germany to provide further technical design, testing and support capabilities
for our customers.

Components

Market/Industry Overview

The market for component products is highly fragmented with most participants having single or limited product lines,

serving specific geographic markets or providing niche capabilities applicable to a limited customer base. While we compete
with certain domestic and international competitors across a portion of our product lines, we believe that no one competitor
directly competes with us across all of our product lines. End users of component products are diversified across various
sectors of the economy.

Demand in the components market is influenced by the broader industrial manufacturing market, as well as trends in

the perforated and expanded metal, rail and commercial equipment industries. The best gauge of domestic industrial production
is the U.S. Industrial Production Index, which measures the monthly level of output arising from the manufacturing, mining
and gas sectors.

Key Products

Through the components business, which represented 13.5% of the Company’s 2018 revenue, we manufacture a range

of expanded and perforated metal components and slip resistant surfaces. The Company is a provider of components that are
used in a broad array of products, including railcars, air and liquid filtration, hardware, off-road equipment and security
fencing. The components business operates through the Metalex and Morton brands. In 2016, we made the strategic decision to
discontinue product lines under the Assembled Products brand and in 2018, we also exited the non-core smart utility meter
subassemblies product lines.

Within each of the components business product categories, our strategy is to have engineers work alongside
customers to create value-added components and solutions for various end products. Our engineering resources, manufacturing
capabilities and low cost production availability through our operation in Mexico provide opportunities to deliver value to
customers. These characteristics drive long-standing relationships with our top customers that average over 20 years.

Seating

Market/Industry Overview

The seating business product line includes motorcycle seats; operator seats for construction, agriculture, lawn and turf

care and other industrial equipment markets; and seating for the power sports market. The market for seating products is
dominated by several large domestic and international participants, who are often awarded contracts as the sole supplier for a
particular motorcycle, riding lawn mower or other construction, agriculture or material handling platform. We believe that
competitive differentiation is based mostly on innovative styling, ergonomic comfort, manufacturing flexibility, quality, price
and delivery.

Motorcycle production has experienced a decline over the past several years and we believe future demand will mirror

global motorcycle market trends. The construction market is closely tied to overall growth in industrial production, which we
believe has long-term growth potential. Demand for lawn, turf care and power sports equipment is primarily dependent on
weather and trends in personal consumption expenditures, recreational and leisure activities, and residential and commercial
real estate construction and sales. The market for lawn and turf care equipment has remained relatively flat in the past year and
we expect it to mirror general economic conditions.

Key Products

Through the seating business, which represented 26.2% of the Company’s 2018 revenue, the Company provides static
and suspension seating solutions for a variety of applications, including motorcycle, agricultural, construction, industrial, lawn
and turf care, and power sports. Milsco has provided high-quality seats since 1934. The seating business operates under the
Milsco brand, which was originally established as a harness maker in 1924 and, early in its history, gained notice as the first
company to put padded seating on tractors and farm equipment.

The seating business offers a distinct vertically integrated operating model, which includes a full range of functions,

such as research and development, design and engineering, manufacturing of components and final assembly. Through our
broad manufacturing capabilities and high quality products, we have established longstanding relationships with our top
customers, which average over 30 years.

Acoustics

Market/Industry Overview

The market for automotive acoustical products is dominated by several large domestic and international participants.
These participants are often awarded contracts as the sole supplier for a particular automotive platform. Competition includes
manufacturers of mechanically bonded non-woven products, resin-bonded products, injection molded and thermoformed
plastic and urethane foam. Competition is based on innovative styling, price, acoustical performance, durability and weight.
Engineering, design and innovation, and manufacturing footprint, are key distinguishing factors because acoustical products
represent a small percentage of the total cost to manufacture an automobile.

Growth in the automotive acoustics market is driven by increasing demand for enhanced acoustics, lighter weight and
improved noise, vibration and harshness characteristics within the automotive market. As overall vehicle quality has improved,
consumers have increasingly equated quality with the acoustic performance of a vehicle. As a result, car manufacturers have
expended significant capital for sophisticated acoustical testing systems and laboratories. In addition, an increasing regulatory
focus on reducing vehicle mass, increasing fuel-efficiency and stringent end of vehicle life recycling standards have driven the
penetration of non-woven materials that are lighter than other acoustical products and that utilize recycled post-industrial textile
fibers and recycled PET containers. The replacement of interior and exterior products previously served by plastic-based
materials with structured non-woven acoustical products has created a trend in new vehicle designs with vehicle manufacturers,
which has helped to expand non-woven acoustical content per vehicle.

Key Products

Through the acoustics business, which represented 26.4% of the Company’s 2018 revenue, we manufacture

engineered non-woven, fiber-based acoustical and structural products primarily for the automotive industry. Janesville has
developed extensive design and manufacturing expertise over its 140 year history that allows it to provide custom acoustical
solutions for each vehicle platform it serves. We market our products as being lighter, having improved acoustical performance,
enhancing aesthetics, and being easier to install than other acoustical products manufactured by our competitors. As a result,
our products are used in a large share of light vehicles manufactured in North America today, including 10 of 2018’s top 20
models.

We believe the acoustics business offers a broad product line of value-added, higher margin components used in a

wide range of vehicles, including automobiles, sport utility vehicles, autonomous and light trucks, as well as in the industrial
and transportation markets. The Company has focused on developing premier lightweight fiber-based solutions that provide

competitive or superior acoustical properties. Our production of non-woven fiber-based products is organized by the form in
which it is supplied: (i) die cut, (ii) molded, (iii) rolls and blanks, and (iv) other non-woven products.

The acoustics business operates principally as an automotive Original Equipment Manufacturer (“OEM”) and Tier-1

supplier. The Company has focused on increasing sales directly to automotive OEMs, which allows us to integrate our
technology and value-added capabilities within OEM organizations. These efforts have shifted sales to what we believe is a
more desirable balance between OEMs and Tier-1 suppliers while also broadening the number of vehicle platforms that utilize
the Company’s products. Substantially all automotive products are sole sourced by customers for a particular vehicle and are
used for the life of the platform.

Competitive Strengths

The Company believes the following key characteristics provide a competitive advantage and position us for future

growth:

Established Industry Leader Across Our Four Businesses

The Company’s businesses have developed leading positions across various niche markets that enhance end user’s

comfort, safety and productivity. For example, in our turf care seats and polishing product lines, we believe we are more than
twice the size of the next largest direct competitor. The Company’s market share positions have created a stable platform upon
which to grow. Our products’ significant brand recognition helps to sustain our market share positions. The Company’s
products are often viewed as a brand of choice for quality, dependability, value and continuous innovation. As a result, we have
served many of our customers for over 25 years. Despite leading positions in many of our markets, we face competitive
challenges in others. In the Company’s finishing and components segments, certain of our competitors are small and family-
owned, operate with lower operating expenses, have lower profit expectations and/or supply lower cost commodity products,
which allows such competitors to compete with us on pricing. In our seating segment, specifically with respect to highly
technical seats for the agricultural and construction vehicle markets, the cost to customers of switching from a current
supplier’s products to ours is high, and we believe certain of our competitors have established long-term and entrenched
relationships with such customers. These costs and relationships make it challenging to convince such customers to purchase
products from us instead of from their existing supplier.

Superior Design & Manufacturing Solutions

The Company has a track record of providing customers with innovative, customized solutions through production

flexibility and collaboration with their design and manufacturing teams. We have consistently refined manufacturing processes
to incorporate design technologies that improve design capabilities, breadth of product offering, product quality and
manufacturing efficiency.

Across our businesses, we maintain teams of designers and a diverse product selection in numerous geographic

regions, which allows us to respond quickly to real-time customer needs. Our versatile design and manufacturing capabilities
enable us to deliver differentiated and highly-customized solutions for customers by leveraging experienced engineering staff
and technologically advanced manufacturing equipment. We believe our diverse product offerings and customized design and
manufacturing capabilities have made us a preferred choice within many industries and an entrenched key solutions provider to
customers.

We believe we have become a partner at each stage in product development, which has deepened our relationships

with an already entrenched customer base and driven revenue growth from existing accounts and new customers.

Scalable Business Philosophy

We use a consistent strategy and focus and deploy capital and resources across our businesses to projects with the

highest returns on invested capital. Through corporate strategic planning initiatives, we annually assess our three-year outlook
and goals, by using a policy deployment matrix disseminated throughout the organization. The Company’s management utilizes
the strategic plan and resulting policy deployment matrix to develop an annual budget and profit plan and monitors progress
towards long-term strategic goals.

Across the Company’s businesses, our management team is focused on enhancing product innovation, efficiency,

global accessibility and competitiveness. Shared best practices serve to continually improve the processes and products that our
customers depend on by delivering customized, value-added solutions across the platform. This global reach offers customers a
consistent and fully integrated manufacturing partner capable of serving their needs on a global, regional and local basis.

Diverse, Global Footprint with Growing Presence in Emerging Markets

The Company maintains 28 global manufacturing locations, consisting of 11 in the United States and 17 in foreign

countries, giving the Company a strong international presence. Approximately 30% of the Company’s 2018 revenue was
generated from products manufactured outside of the United States. In addition, our global presence enables us to take

advantage of low-cost manufacturing at our facilities in China, India, Portugal, Romania, and Mexico and to meet the needs of
local customers with operations in those regions. The Company continues to build upon its established presence in low-cost
production locations through the expansion of owned operations and the development of joint ventures and sourcing
relationships in Asia, Eastern Europe and Mexico. Our management believes that this global footprint also provides channels of
organic growth through the introduction of products into new markets. Our management frequently evaluates our
manufacturing, warehouse, distribution and sales locations to identify revenue enhancement opportunities, optimize production
costs and ensure proximity to key customers.

Growth Strategies

The Company is focused on delivering sustained profitable growth through a number of avenues. Our growth
initiatives are developed based on strategic plans conducted on an annual basis within each business. These plans are regularly
reviewed and updated by our leadership team. As a result, we have a uniform strategy that focuses all of our resources on the
following key initiatives:

Margin Growth

We are focused on continuous improvement in our profit margins through the development of higher-margin products,

continued operational improvements and active product portfolio management. We anticipate our strategy of shifting toward
innovative higher-value engineered products will continue to improve our pricing power and profitability. Among other
initiatives, the Company is focused on redesigning products to reduce materials costs, continuing to reduce labor-intensive
manufacturing processes and reducing logistics costs, which have traditionally been a significant component of overall costs
and an important consideration when choosing its strategic manufacturing locations.

The Company is focused on creating operational effectiveness at each of its business segments through deployment of

lean principles and implementation of continuous operational improvement initiatives. While many of these activities have
focused on implementing shop floor improvements, we have also targeted our selling and administrative functions in order to
reduce the cost of serving our customers. The Company is also focused on improving profitability through an active evaluation
of customer pricing and margins and a reduction in the number of parts and product variations that are produced. While these
initiatives may result in lower overall sales, they are focused on creating shareholder value through higher margins and
profitability, diversification, as well as lower inventory levels and working capital requirements.

The Company continuously evaluates its manufacturing footprint and utilization of manufacturing capacity. In recent
years, the Company has completed or announced the consolidation of manufacturing facilities across its businesses. Reduction
of fixed costs through optimization of manufacturing footprint and capacity will continue to be a driver of margin expansion
and improving profitability.

Market Share Gains

While our businesses pursue growth within new and existing markets through customized strategies targeted for the

markets we serve, all businesses are tasked with identifying and pursuing key growth opportunities through new products,
geographies, sales channels and diversifying end markets served. Management believes we have the potential to increase
market share due to the highly fragmented nature of our end markets. Each business has identified specific opportunities to
expand market share, with associated incremental revenue targets.

Product Innovation

Management believes that the Company’s strategy of developing innovative products will position us for continued
growth. Working in collaboration with key customers, the design and manufacture of customized products that deliver value
will support this growth. We believe that developing new products will allow us to deepen our value-added relationships with
customers, open new opportunities for revenue generation, improve pricing power and enhance profitability. The Company has
a focused and dedicated strategy for continuous innovation, which is supported by sophisticated manufacturing capabilities and
engineering expertise. Research and development costs incurred in the development of new products or significant
improvements to existing products were $3.2 million in the year ended December 31, 2018, $3.6 million in the year ended
December 31, 2017 and $4.2 million in the year ended December 31, 2016. This continued focus on innovation has driven
successful new product introductions, which we believe will enable continued growth.

Acquisitions

The Company uses acquisitions to increase revenues with existing customers and to expand revenues to both new

markets and customers. The Company intends to pursue acquisitions that are accretive to EBITDA (earnings before interest,
income taxes, depreciation and amortization) margins post-synergies, have a strategic focus that aligns with our core strategy
and generate the appropriate estimated return on investment as part of our capital resource and allocation process.

Customers

The Company has an entrenched base of blue chip customers that are leaders in their respective markets. Our customer

relationships often span decades in each business. Additionally, our customer base is diversified. In our finishing segment, no
customers were at or above 10% of the revenue of such segment. In our components segment, two customers were at or above
10% of the revenues of such segment. In our seating and acoustics segments, three customers were at or above 10% of the
revenues of such segments. Across all of Jason Industries, no customers were at or above 10% of 2018, 2017 or 2016 revenues.
In 2018, our five largest customers represent a combined 28% of 2018 revenues.

Suppliers and Raw Materials

Polyurethane foam, vinyl, plastics, steel, polyester fiber, bicomponent fiber and machined fiber are the primary raw
materials that we use to manufacture our products. There are a limited number of domestic and foreign suppliers of these raw
materials. The Company generally orders supplies on a purchase order basis and generally incurs inbound freight charges to get
the raw materials to our production facilities. Although our contracts and long term arrangements with our customers generally
do not expressly allow us to pass through increases in our raw materials, energy costs, freight charges and other inputs to our
customers, we endeavor to discuss price adjustments with our customers on a case by case basis where it makes business sense.
For the year ended December 31, 2018, the spend with our top three material suppliers accounted for less than 10% of total
material spend and our largest supplier accounted for approximately 3% of total spend. The Company makes an ongoing effort
to reduce and contain raw material costs. We do not engage in raw material commodity hedging contracts, and instead attempt
to reflect raw material price changes in the sale price of our products.

Seasonality

We experience seasonality of demand for our products in the seating business. Due to our experience in this market,

we have adapted our business operations to manage this seasonality. The business also depends upon general economic
conditions and other market factors beyond our control, and the Company serves customers in cyclical industries. See
“Seasonality and Working Capital” in the accompanying “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” contained herein for further discussion.

Employees

As of December 31, 2018, the Company had approximately 3,600 employees and manufactured products in 28
locations around the world. Approximately 55% of the seating segment’s hourly employees and 73% of the components
segment’s hourly employees are unionized. Contracts are negotiated on a local basis, significantly mitigating the risk of a
company-wide or segment level work stoppage. Additionally, approximately 800 of the Company’s employees reside in
Europe, where trade union membership is common. We believe we have a strong relationship with our employees, including
those represented by labor unions.

Environmental Matters

The Company’s operations and facilities are subject to extensive federal, state, local and foreign laws and regulations

related to pollution and the protection of the environment, health, safety and natural resources, including those governing,
among other things, emissions to air, discharges to water, the use, generation, handling, storage, treatment and disposal of
hazardous substances and wastes and other materials and the remediation of contaminated sites. The operation of
manufacturing plants entails risks in these areas, and a failure by the Company to comply with applicable environmental laws
and regulations, or to obtain and comply with the permits required for its operations, could result in civil or criminal fines,
penalties, enforcement actions, third party claims for property damage and personal injury, requirements to clean up property or
to pay for the capital or operating costs of cleanup, or regulatory or judicial orders enjoining or curtailing operations or
requiring corrective measures, including the installation of pollution control equipment or remedial actions. Moreover, if
applicable environmental, health and safety laws and regulations, or the interpretation or enforcement thereof, become more
stringent in the future, the Company could incur capital or operating costs beyond those currently anticipated.

Compliance with environmental laws has not historically had a material adverse effect on the Company’s capital

expenditures, earnings or competitive position, and we anticipate that such compliance will not have a material effect on its
business or financial condition in the future.

Available Information

The Company’s internet website address is www.jasoninc.com. The Company makes available free of charge (other

than an investor’s own internet access charges) through its internet website its Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, on the same day they are electronically filed
with, or furnished to, the U.S. Securities and Exchange Commission (the “SEC”). The Company is not including the
information contained on or available through its website as a part of, or incorporating such information by reference into, this
Annual Report on Form 10-K/A.

Executive Officers of the Registrant

The following table sets forth information concerning our executive officers as of February 25, 2018:

Name

Brian K. Kobylinski

Chad M. Paris

Kevin Kuznicki

John J. Hengel

Srivas Prasad

Keith A.Walz

Age

Position

President, Chief Executive Officer and Chairmen of the Board of Directors

Senior Vice President and Chief Financial Officer

Senior Vice President and General Counsel

Vice President—Finance, Treasurer and Assistant Secretary

Senior Vice President and General Manager—Acoustics

Senior Vice President and General Manager—Finishing

Brian K. Kobylinski has served as President and Chief Executive Officer since December 2016, and also as Chairman
of the Board of Directors since June 2018. Prior to being named Chief Executive Officer, Mr. Kobylinski served as President &
Chief Operating Officer since April 8, 2016. Prior to joining Jason Industries, Mr. Kobylinski served as Executive Vice
President, Energy Segment and China for Actuant Corporation based in Milwaukee, Wisconsin. During his 23 years with
Actuant Corporation, Mr. Kobylinski progressed through a number of management roles, including Vice President - Industrial
and Energy Segments, Vice President – Business Development and Global Business Leader – Hydratight. Mr. Kobylinski
received his Masters of Business Administration from the University of Wisconsin - Madison and his Bachelors of Art from St.
Norbert College.

Chad M. Paris has served as Senior Vice President and Chief Financial Officer since February 2018. Mr. Paris joined
Jason Industries in June 2014 and worked in several financial management roles at the Company, including Vice President and
Chief Financial Officer, Vice President - Finance Finishing Americas, Vice President of Investor Relations, Financial Planning
and Analysis, and Director of External Reporting. Prior to joining Jason Industries, Mr. Paris was a senior manager in the audit
practice at Deloitte & Touche LLP. Mr. Paris is a Certified Public Accountant and a member of the American Institute of
Certified Public Accountants. Mr. Paris earned a Bachelor of Business Administration degree in finance and real estate and a
Master of Science degree in management, with an accounting concentration, both from the University of Wisconsin-
Milwaukee.

Kevin Kuznicki has served as Senior Vice President and General Counsel since April 2018. Prior to joining Jason

Industries, Mr. Kuznicki held various roles with Polycom, Carrier Access Corporation, and Adient plc/Johnson Controls
International plc, and most recently served as VP and Deputy General Counsel of Adient. Mr. Kuznicki is or has been a
member of the CEB Legal Leadership Council, the American Bar Association – Business Law Section, and Europe, Chicago
and Colorado’s chapters of the Association of Corporate Counsel. He has been admitted to practice law in Indiana, Illinois,
Colorado, and Wisconsin. Mr. Kuznicki earned his Juris Doctorate and Bachelor of Arts in Political Science and studies in
Business from Indiana University, Bloomington.

John J. Hengel has served as our Vice President—Finance, Treasurer and Assistant Secretary since June 30, 2014 and

previously served as Vice President of Finance of Jason Incorporated since 1999. Prior to joining Jason Incorporated, Mr.
Hengel was a director in the audit and business advisory services practice at PricewaterhouseCoopers LLP from 1992 to 1999.
Mr. Hengel is a Certified Public Accountant and a member of both the American and Wisconsin Institutes of Certified Public
Accountants. He holds a Bachelor of Science in accounting from Carroll University.

Srivas Prasad has served as our Senior Vice President and General Manager—Acoustics since December 2016. Prior

to that, Mr. Prasad served as Senior Vice President and General Manager - Seating and Acoustics and as President of our
Seating segment. Prior to serving as the President of the Seating segment, he served as Vice President—Business Development
at Jason Incorporated from 2011 to 2014 and held key leadership positions in Jason Incorporated’s Acoustics segment from
2006 to 2010. Mr. Prasad holds a Bachelor’s degree in engineering from Bangalore University and a Masters in engineering
from Lamar University.

Keith A. Walz has served as our Senior Vice President and General Manager— Finishing since February 2018. Mr.

Walz previously served as the Vice President and General Manager— Finishing and Vice President of Corporate Development
and Strategy, joining Jason Industries in March 2015. Prior to joining Jason Industries, Mr. Walz served as the Vice President
of Corporate Development at Brady Corporation based in Milwaukee, Wisconsin. Prior to joining Brady Corporation, Mr.
Walz was a founding Partner of Kinsale Capital, a private investment firm focused on control equity investments in the middle
market from 2006 to 2010. Prior to forming Kinsale Capital, Mr. Walz served as Managing Director at ABN AMRO Capital.
Mr. Walz holds his bachelor’s degree in finance from the University of Arkansas and a Master of Business Administration from
DePaul University.

ITEM 1A. RISK FACTORS

An investment in our securities involves a high degree of risk. You should consider carefully all of the risks described
below and all of the other information contained in this report before deciding to invest in our securities. If any of the events or
developments described below occur, our business, financial condition and/or results of operations could be negatively
affected. In that case, the trading price of our securities could decline, and you could lose all or part of your investment.

Risk Factors Relating to Our Business

We are affected by developments in the industries in which our customers operate.

We derive our revenues largely from customers in the following industry sectors: agricultural, automotive,
motorcycles, construction, rail and industrial manufacturing. Factors affecting any of these industries in general, or any of our
customers in particular, could adversely affect us because our revenue growth largely depends on the continued growth of our
customers’ businesses in their respective industries. These factors include:

•

economic conditions in the markets in which our customers operate, in particular, the United States and Europe,
including recessionary periods such as the 2008/2009 global economic downturn;

product design changes or manufacturing process changes that may reduce or eliminate demand for the components
we supply;

loss of market share for our customers’ products, which may lead our customers to reduce or discontinue
purchasing our products and to reduce prices, thereby exerting pricing pressure on us;

our customers’ failure to successfully market their products, to gain or retain widespread commercial acceptance of
their products or to compete effectively in their industries; and

seasonality of demand for our customers’ products which may cause our manufacturing capacity to be underutilized
for periods of time.

We expect that future sales will continue to depend on the success of our customers. If economic conditions and

demand for our customers’ products deteriorate, we may experience a material adverse effect on our business, operating results
and financial condition.

Some of our business segments are cyclical. A downturn or weakness in overall economic activity can have a material
negative impact on us.

Historically, sales of products that we manufacture have been subject to cyclical variations caused by changes in

general economic conditions. During recessionary periods, we have been adversely affected by reduced demand for our
products. In addition, the strength of the economy generally may affect the rates of expansion, consolidation, renovation and
equipment replacement in the industries we serve.

Volatility in the prices of raw materials and energy prices and our ability to pass along increased costs to our customers
could adversely affect our results of operations.

The prices of raw materials critical to our business and performance, such as steel, are based on global supply and

demand conditions. Certain raw materials used by us, including polyurethane foam, vinyl, plastics, steel, polyester fiber,
bicomponent fiber and machined fiber are only available from a limited number of suppliers, and it may be difficult to find
alternative suppliers at the same or similar costs. Our material costs may also be adversely impacted by tariffs or other trade
duties on imports. Although our contracts and long term arrangements with our customers generally do not expressly allow us
to pass through increases in our raw materials, energy costs and other inputs to our customers, we endeavor to discuss price
adjustments with our customers on a case by case basis where it makes business sense. While we strive to pass through the
price of raw materials to our customers (other than increases in order amounts which are subject to negotiation), we may not be
able to do so in the future, and volatility in the prices of raw materials may affect customer demand for certain products. In
addition, we, along with our suppliers and customers, rely on various energy sources for a number of activities connected with
our business, such as the transportation of raw materials and finished products. Energy and utility prices, including electricity
and water prices, and in particular prices for petroleum-based energy sources, are volatile. Increased supplier and customer
operating costs arising from volatility in the prices of energy sources, such as increased energy and utility costs and
transportation costs, could be passed through to us and we may not be able to increase our product prices sufficiently or at all to
offset such increased costs. The impact of any volatility in the prices of energy or the raw materials on which we rely, including
the reduction in demand for certain products caused by such price volatility, could result in a loss of revenue and profitability
and adversely affect our results of operations.

We compete with numerous other manufacturers in each of our segments and competition from these providers may affect
the profitability of our business.

The industries we serve are highly competitive. We compete with numerous companies that manufacture finishing,

components, seating and automotive acoustics products. Many of our competitors have international operations and significant
financial resources and some have substantially greater manufacturing, research and design and marketing resources than us.
These competitors may, among others:

•

respond more quickly to new or emerging technologies;

have greater name recognition, critical mass or geographic market presence;

be better able to take advantage of acquisition opportunities;

adapt more quickly to changes in customer requirements;

devote greater resources to the development, promotion and sale of their products;

be better positioned to compete on price for their products, due to any combination of low-cost labor, raw materials,
components, facilities or other operating items, or willingness to make sales at lower margins than us;

consolidate with other competitors in the industry which may create increased pricing and competitive pressures on
our business; and

be better able to utilize excess capacity which may reduce the cost of their products or services.

Competitors with lower cost structures may have a competitive advantage when bidding for business with our

customers. We also expect our competitors to continue to improve the performance of their current products or services, to
reduce prices of their existing products or services and to introduce new products or services that may offer greater
performance and improved pricing. Additionally, we may face competition from new entrants to the industry in which we
operate. Any of these developments could cause a decline in sales and average selling prices, loss of market share of our
products or profit margin compression.

In addition, our level of indebtedness and financial condition may make it difficult for us to continue to negotiate

acceptable payment terms with our vendors and customers or may result in one or more of our suppliers making demand for
adequate assurance, which could include a demand for payment in advance. If we are unable to negotiate acceptable payment
terms with our customers, or if any of our material suppliers were to successfully demand payment in advance, and we were
unable to internally generate or externally raise cash in sufficient amounts to cover our resulting reduced liquidity, it could have
a material adverse effect on our liquidity and our competitive position, and it may also make it more difficult for us to obtain
future financing.

We face risks related to sales through distributors and other third parties.

We sell a portion of our products through third parties such as distributors, agents and channel partners (collectively

referred to as distributors). Using third parties for distribution exposes us to many risks, including competitive pressure,
concentration, credit risk, and compliance risks. Distributors may sell products that compete with our products, and we may
need to provide financial and other incentives to focus distributors on the sale of our products. We may rely on one or more key
distributors for a product, and the loss of these distributors could reduce our revenue. Distributors may face financial
difficulties, including bankruptcy, which could harm our collection of accounts receivable and financial results. Violations of
the Foreign Corrupt Practices Act or similar laws by distributors or other third-party intermediaries could have a material
impact on our business. Failing to manage risks related to our use of distributors may reduce sales, increase expenses, and
weaken our competitive position.

We may not be able to maintain our engineering, technological and manufacturing expertise.

The markets for our products are characterized by changing technology and evolving process development. The

continued success of our business will depend upon our ability to:

•

hire, retain and expand our pool of qualified engineering and technical personnel;

• maintain technological leadership in our industry;

•

successfully anticipate or respond to changes in manufacturing processes in a cost-effective and timely manner; and

successfully anticipate or respond to changes in cost to serve in a cost-effective and timely manner.

We cannot be certain that we will develop the capabilities required by our customers in the future. The emergence of
new technologies, industry standards or customer requirements may render our equipment, inventory or processes obsolete or
uncompetitive. We may have to acquire new technologies and equipment to remain competitive. The acquisition and

implementation of new technologies and equipment may require us to incur significant expense and capital investment, which
could reduce our margins and affect our operating results. When we establish or acquire new facilities, we may not be able to
maintain or develop our engineering, technological and manufacturing expertise due to a lack of trained personnel, effective
training of new staff or technical difficulties with machinery. Failure to anticipate and adapt to customers’ changing
technological needs and requirements or to hire and retain a sufficient number of engineers and maintain engineering,
technological and manufacturing expertise may have a material adverse effect on our business.

We may be unable to realize the expected benefits of capital expenditures, which could adversely affect our profitability and
operations.

We expect to continue to invest in our business through capital expenditures to support our facilities and purchases of

production equipment and acquisitions. There can be no assurance that these investments will generate any specific return on
investment.

Our goodwill and other intangible assets represent a substantial amount of our total assets. A decline in future operating
performance at one or more of our reporting units could result in the further impairment of goodwill or other intangible
assets, which could have a material adverse effect on our financial condition and results of operations.

At December 31, 2018, goodwill and other intangible assets totaled $160.6 million, or approximately 32% of our total

assets. The goodwill results from our acquisitions, representing the excess of cost over the fair value of the net tangible and
other identifiable intangible assets we have acquired. We assess annually whether there has been impairment in the value of our
goodwill. If future operating performance at one or more of our reporting units were to fall below current or planned levels, we
could be required to recognize a non-cash charge to operating earnings for goodwill (at our finishing reporting unit) or record
an impairment charge related to other intangible assets. In the fourth quarter of 2016, the Company recorded charges of $63.3
million for the impairment of goodwill. Given the continued significance of the Company’s goodwill and intangible assets, any
additional significant goodwill or intangible asset impairment could reduce earnings in such period and have a material adverse
effect on our financial condition and results of operations.

Divestitures and discontinued operations could negatively impact our business, and contingent liabilities from businesses
that we sell could adversely affect our financial results.

As part of our portfolio management process, we review our operations for businesses which may no longer be aligned

with our strategic initiatives and long-term objectives. Divestitures pose risks and challenges that could negatively impact our
business. For example, when we decide to sell a business, we may be unable to do so on satisfactory terms and within our
anticipated time-frame, and even after reaching a definitive agreement to sell a business, the sale may be subject to satisfaction
of pre-closing conditions, which may not be satisfied, as well as regulatory and governmental approvals, which may prevent us
from completing a transaction on acceptable terms. In addition, the impact of the divestiture on our revenue and net earnings
may be larger than projected, which could distract management, and disputes may arise with buyers. Dispositions may also
involve continued financial involvement, as we may be required to retain responsibility for, or agree to indemnify buyers
against contingent liabilities related to businesses sold, such as lawsuits, tax liabilities, product liability claims or environmental
matters. Under these types of arrangements, performance by the divested businesses or other conditions outside our control
could affect our future financial results.

If we fail to develop new and innovative products or if customers in our markets do not accept them, our results could be
negatively affected.

Our products must be kept current to meet our customers’ needs. To remain competitive, we therefore must develop

new and innovative products on an ongoing basis. If we fail to make innovations or the market does not accept our new
products, our sales and results would likely suffer. We invest significantly in the research and development of new products.
These expenditures do not always result in products that will be accepted by the market. To the extent they do not, whether as a
function of the product or the business cycle, we will have increased expenses without significant sales to benefit us. Failure to
develop successful new products may also cause potential customers to purchase competitors’ products, rather than invest in
products manufactured by us.

The potential impact of failing to deliver products on time could increase the cost of the products.

In most instances, we guarantee that we will deliver a product by a scheduled date. If we subsequently fail to deliver
the product as scheduled, we may be held responsible for cost impacts and/or other damages resulting from any delay. To the
extent that these failures to deliver may occur, the total damages for which we could be liable could significantly increase the
cost of the products; as such, we could experience reduced profits or, in some cases, a loss for that contract. Additionally,
failure to deliver products on time could result in damage to customer relationships, the potential loss of customers, and
reputational damage which could impair our ability to attract new customers.

Increasing costs of doing business in many countries in which we operate may adversely affect our business and financial
results.

Increasing costs such as labor, overhead costs and tariffs in the countries in which we operate may erode our profit

margins and compromise our price competitiveness. Historically, the low cost of labor in certain of the countries in which we
operate has been a competitive advantage but labor costs in these countries, such as China, have been increasing. Our
profitability also depends on our ability to manage and contain our other operating expenses such as the cost of utilities, factory
supplies, factory space costs, equipment rental, repairs and maintenance and freight and packaging expenses. In the event we
are unable to manage any increase in our tariffs, labor and other operating expenses in an environment where revenue does not
increase proportionately, our financial results would be adversely affected.

Our international scope requires us to obtain financing in various jurisdictions.

We operate manufacturing facilities in the United States and 13 foreign countries, which creates financing challenges
for us. These challenges include navigating local legal and regulatory requirements associated with obtaining financing in the
respective foreign jurisdictions in which we operate. In the event that we are not able to obtain financing on satisfactory terms
in any of these jurisdictions, it could significantly impair our ability to run our foreign operations on a cost effective basis or to
grow such operations. Failure to manage such challenges may adversely affect our business and results of operations.

We have operations in many countries and such operations may be subject to a number of risks specific to these countries.

Our international operations across many different jurisdictions may be subject to a number of risks specific to these

countries, including:

•

export duties, tariffs, import controls and trade barriers (including quotas);

adverse trade policies or adverse changes to any of the policies of either the United States or any of the foreign
jurisdictions in which we operate;

less flexible employee relationships which can be difficult and expensive to terminate;

labor unrest;

political and economic instability (including war and acts of terrorism);

inadequate infrastructure for our operations (i.e., lack of adequate power, water, transportation and raw materials);

health concerns and related government actions;

risk of governmental expropriation of our property;

less favorable, or relatively undefined, intellectual property laws;

unexpected changes in regulatory requirements and laws;

difficulty in repatriating cash (or the cost to do so);

longer customer payment cycles and difficulty in collecting trade accounts receivable;

adverse changes in tax rates or regulations;

legal or political constraints on our ability to maintain or increase prices;

burdens of complying with a wide variety of labor practices and foreign laws, including those relating to export and
import duties, environmental policies and privacy issues;

inability to utilize net operating losses incurred by our foreign operations against future income in the same
jurisdiction; and

economies that are emerging or developing, that may be subject to greater currency volatility, negative growth, high
inflation, limited availability of foreign exchange and other risks.

These factors may harm our results of operations, and any measures that we may implement to reduce the effect of

volatile currencies and other risks of our international operations may not be effective. In our experience, entry into new
international markets requires considerable management time as well as start-up expenses for market development, hiring and
establishing office facilities before any significant revenue is generated. As a result, initial operations in a new market may
operate at low margins or may be unprofitable.

Our international sales and operations are subject to applicable laws relating to trade, export controls and foreign corrupt
practices, the violation of which could adversely affect our operations.

We are subject to applicable international trade, customs, export controls and economic sanctions laws and regulations

of the United States and other countries and the Foreign Corrupt Practices Act and other anti-bribery laws that generally bar
bribes or unreasonable gifts to foreign governments or officials. Changes in such laws may restrict our business practices,
including cessation of business activities in sanctioned countries or with sanctioned entities, and may result in modifications to
compliance programs. Violation of these laws or regulations could result in sanctions or fines and could have a material adverse
effect on our financial condition, results of operations and cash flows. In addition, changes or modifications to existing trade
agreements between the United States and other countries could also have a material adverse effect on our financial condition,
results of operations and cash flows.

We are subject to risks of currency fluctuations and related hedging operations, and the devaluation of the currencies of
countries in which we conduct our manufacturing operations, particularly the Euro, that may negatively affect the
profitability of our business.

We report our financial results in U.S. dollars. Approximately 30% of our net sales in 2018 were in currencies other

than the U.S. dollar. Changes in exchange rates among other currencies, especially the Euro to the U.S. dollar, may negatively
affect our net sales, cost of sales, gross profit and net income where our expenses and revenues are denominated in different
currencies. We cannot predict the effect of future exchange rate fluctuations. We may from time to time use financial
instruments, primarily short-term forward contracts, to hedge Euro and other currency commitments arising from foreign
currency obligations. Where possible, we endeavor to match our non-functional currency exchange requirements to our
receipts. If our hedging activities are not successful or if we change or reduce these hedging activities in the future, we may
experience significant unexpected expenses from fluctuations in exchange rates.

We depend on our key executive officers, managers and skilled personnel and may have difficulty retaining and recruiting
qualified employees and managing the cost of labor.

Our success depends to a large extent upon the continued services of our executive officers, senior management

personnel, managers and other skilled personnel and our ability to recruit and retain skilled personnel to maintain and expand
our operations. We could be affected by the loss of any of our executive officers who are responsible for formulating and
implementing our business plan and strategy. In addition, we need to recruit and retain additional management personnel and
other skilled employees. However, competition is high for skilled technical personnel among companies that rely on
engineering and technology, and the loss of qualified employees or an inability to attract, retain and motivate additional skilled
employees required for the operation and expansion of our business could hinder our ability to conduct design, engineering and
manufacturing activities successfully and develop marketable products. We may not be able to attract the skilled personnel we
require or retain those whom we have trained at our own cost. If we are not able to do so, our business and our ability to
continue to grow could be negatively affected and we could face additional competition from those who leave and work for our
competitors.

We continue to be dependent on our production personnel to manufacture our products in a cost-effective and efficient

manner. We believe there is significant competition for production personnel with the skills and technical knowledge that we
require. Our ability to continue efficient operations, reduce production costs, and consolidate operations will depend, in large
part, on our success in recruiting, training, integrating and retaining sufficient numbers of production personnel to support our
production, cost savings and consolidation targets. New hires require significant training and it may take significant time before
they achieve full productivity. As a result, we may incur significant costs to attract, train and retain employees, including
significant expenditures related to salaries and benefits. If we are unable to hire and train sufficient numbers of effective
production personnel, our business would be adversely affected.

Many of our customers do not commit to long-term production schedules, which makes it difficult for us to schedule
production accurately and achieve maximum efficiency of our manufacturing capacity.

Generally, our customers do not commit to long-term contracts. Many of our customers do not commit to firm

production schedules and we continue to experience reduced lead-times in customer orders. Additionally, customers may
change production quantities or delay production with little lead-time or advance notice. Therefore, we rely on and plan our
production and inventory levels based on our customers’ advance orders, commitments or forecasts, as well as our internal
assessments and forecasts of customer demand. The volume and timing of sales to our customers may vary due to, among other
factors:

•

variation in demand for or discontinuation of our customers’ products;

our customers’ attempts to manage their inventory;

design changes;

•

changes in our customers’ manufacturing strategies; and

acquisitions of or consolidation among customers.

The variations in volume and timing of sales make it difficult to schedule production and optimize manufacturing

capacity. This uncertainty may require us to increase staffing and incur other expenses in order to meet an unexpected increase
in customer demand, potentially placing a significant burden on our resources. Additionally, an inability to respond to such
increases may cause customer dissatisfaction, which may negatively affect our customers’ relationships.

Further, in order to secure sufficient production scale, we may make capital investments in advance of anticipated

customer demand. Such investments may lead to low utilization levels if customer demand forecasts change and we are unable
to utilize the additional capacity. Because fixed costs make up a large proportion of our total production costs, a reduction in
customer demand can have a significant adverse impact on our gross profits and operating results. Additionally, we order
materials and components based on customer forecasts and orders and suppliers may require us to purchase materials and
components in minimum quantities that exceed customer requirements, which may have an adverse impact on our gross profits
and operating results. In the past, anticipated orders from some of our customers have failed to materialize and delivery
schedules have been deferred as a result of changes in our customers’ business needs. We have also allowed long-term
customers to delay orders to absorb excess inventory. Such order fluctuations and deferrals may have an adverse effect on our
business, operating results and/or financial conditions.

We may incur additional expenses and delays due to technical problems or other interruptions at our manufacturing
facilities or those of our suppliers.

Disruptions in operations due to technical problems or other interruptions such as floods or fire would adversely affect

the manufacturing capacity of our facilities or those of our suppliers. Such interruptions could cause delays in production and
cause us to incur additional expenses such as charges for expedited deliveries for products that are delayed. In addition, our
customers have the ability to cancel purchase orders in the event of any delays in production and may decrease future orders if
delays are persistent. Additionally, to the extent that such disruptions do not result from damage to our physical property, these
may not be covered by our business interruption insurance. Any such disruptions may adversely affect our business, operations,
and financial results.

We may be unable to realize the expected benefits of our restructuring actions, which could adversely affect our profitability
and operations.

In order to align our resources with our growth strategies, operate more efficiently and control costs, we have

periodically announced restructuring plans, which include workforce reductions, plant closures and consolidations, asset
impairments and other cost reduction initiatives. On March 1, 2016, as part of a strategic review of organizational structure and
operations, the Company announced a global cost reduction and restructuring program. This program includes entering into
severance and termination agreements with employees and footprint rationalization activities, including exit and relocation
costs for the consolidation and closure of plant facilities and lease termination costs. These activities were ongoing during 2017
and 2018 and are expected to be completed in 2019. We may undertake additional restructuring actions and workforce
reductions in the future. As these plans and actions are complex, unforeseen factors could result in expected savings and
benefits to be delayed or not realized to the full extent planned, and our operations and business may be disrupted.

The operations of our manufacturing facilities may be disrupted by union activities and other labor-related problems.

We have labor unions at certain of our facilities. As of December 31, 2018, we had approximately 500 unionized

personnel in the United States. For such employees, we have entered into collective bargaining agreements with the respective
labor unions. In the future, such agreements may limit our ability to contain increases in our labor costs as our ability to control
future labor costs depends partly on the outcome of wage negotiations with our employees. Any future collective bargaining
agreements may lead to further increases in our labor costs. Although our employees in certain other facilities are currently not
unionized, there can be no assurance that they will continue to remain as such.

Union activities and other labor-related problems not linked to union activities may disrupt our operations and

adversely affect our business and results of operations. We cannot provide any assurance that we will not be affected by any
such labor unrest, or increase in labor cost, or interruptions to the operations of our existing manufacturing plants or new
manufacturing plants that we may set up in the future. Any disruptions to our manufacturing facilities as a result of labor-
related disturbances could affect our ability to meet delivery and efficiency targets resulting in an adverse effect on our
customer relationships and our financial results. Such disruptions may not be covered by our business interruption insurance.

Any disruption in our information systems could disrupt our operations and would be adverse to our business and financial
operations.

We depend on various information systems to support our customers’ requirements and to successfully manage our

business, including managing orders, supplies, accounting controls and payroll. Any inability to successfully manage the
procurement, development, implementation or execution of our information systems and back-up systems, including matters
related to system security, reliability, performance and access, as well as any inability of these systems to fulfill their intended
purpose within our business, could have an adverse effect on our business and financial performance. Such disruptions may not
be covered by our business interruption insurance.

Security breaches and other disruptions could compromise our information and expose us to liability, which would cause
our business and reputation to suffer.

In the ordinary course of business, we collect and store sensitive data, including our proprietary business information
and that of our customers, suppliers and business partners, as well as personally identifiable information of our customers and
employees, in our data centers and on our networks. The secure processing, maintenance and transmission of this information is
critical to our operations and business strategy. Despite our security measures, our information technology, infrastructure and
business processes may be vulnerable to malicious attacks or breached due to employee error, malfeasance or other disruptions,
including as a result of rollouts of new systems. Any such breach could compromise our networks and the information stored
there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure, failure to protect, failure to ensure the
proper transfer or other loss of information could violate applicable privacy, data security and other laws and subject us to legal
claims or proceedings and/or regulatory penalties, disruption of our operations, damage of our reputation, financial loss through
unauthorized payments and/or cause a loss of confidence in our products and services, which could adversely affect our
business. For example, the General Data Protection Regulation (Regulation (EU) 2016/679) (the “GDPR”), which took full
effect on May 25, 2018, applies to all of our activities conducted from an establishment in the European Union or related to
products and services that we offer to European Union users. A breach in our network or failure to properly protect or prevent
the improper transfer of data could result in significant financial penalties for noncompliance (including possible fines of up to
4% of global annual turnover for the preceding financial year or €20 million (whichever is higher) for the most serious
infringements).

Natural disasters, epidemics and other events outside our control, and the ineffective management of such events, may harm
our business.

Some of our facilities are located in areas that may be affected by natural disasters such as hurricanes, earthquakes,

water shortages, tsunamis and floods. All facilities are subject to other natural or man-made disasters such as fires, acts of
terrorism, failures of utilities and epidemics. If such an event were to occur, our business could be harmed due to the event or
our inability to effectively manage the effects of the particular event. Potential harms include the loss of business continuity, the
loss of business data and damage to infrastructure.

Our production could be severely affected if our employees or the regions in which our facilities are located are
affected by a significant outbreak of any disease or epidemic. For example, a facility could be closed by government authorities
for a sustained period of time, some or all of our workforce could be unavailable due to quarantine, fear of catching the disease
or other factors, and local, national or international transportation or other infrastructure could be affected, leading to delays or
loss of production. In addition, our suppliers and customers are subject to similar risks, which could lead to a shortage of
components or a reduction in our customers’ demand for our services.

We rely on a variety of common carriers to transport our materials from our suppliers, and to transport products from
us to our customers. Problems suffered by any of these common carriers, whether due to a natural disaster, labor problem, act
of terrorism, increased energy prices or some other issue, could result in shipping delays, increased costs or some other supply
chain disruption and could therefore have a material adverse effect on our operations.

In addition, some of our facilities possess certifications, machinery, equipment or tooling necessary to work on

specialized products that our other locations lack. If work is disrupted at one of these facilities, it may not be practicable or
feasible to transfer such specialized work to another facility without significant costs and delays. Thus, any disruption in
operations at a facility possessing specialized certifications, machinery, equipment or tooling could adversely affect our ability
to provide products to our customers and thus negatively affect our relationships and financial results.

Political and economic developments could adversely affect our business.

Increased international political instability and social unrest, evidenced by the threat or occurrence of terrorist attacks,
enhanced national security measures and the related decline in consumer confidence may hinder our ability to do business. Any
escalation in these events or similar future events may disrupt our operations or those of our customers and suppliers and could
affect the availability of raw materials and components needed to manufacture our products or the means to transport those
materials to manufacturing facilities and finished products to customers. These events may have an adverse effect on the world

economy and consumer confidence and spending, which could adversely affect our revenue and operating results. The effect of
these events on the volatility of the world financial markets could in the future lead to volatility of the market price of our
securities and may limit the capital resources available to us, our customers and suppliers.

Sales of our products may result in exposure to product liability, intellectual property infringement and other claims.

Our manufactured products can expose us to potential liabilities. For instance, our manufacturing businesses expose us

to potential product liability claims resulting from injuries caused by defects in products we design or manufacture, as well as
potential claims that products we design or processes we use infringe on third-party intellectual property rights. Such claims
could subject us to significant liability for damages, subject the infringing portion of our business to injunction and, regardless
of their merits, could be time-consuming and expensive to resolve. We may also have greater potential exposure from warranty
claims and product recalls due to problems caused by product design. Although we have product liability insurance coverage, it
may not be sufficient to cover the full extent of our product liability, if at all, and may also be subject to the satisfaction of a
deductible. A successful product liability claim in excess or outside of our insurance coverage or any material claim for which
insurance coverage was denied or limited and for which indemnification was not available could have a material adverse effect
on our business, results of operations and/or financial condition.

If our manufacturing processes and products do not comply with applicable statutory and regulatory requirements, or if we
manufacture products containing design or manufacturing defects, demand for our products may decline and we may be
subject to liability claims.

Our designs, manufacturing processes and facilities need to comply with applicable statutory and regulatory

requirements. We may also have the responsibility to ensure that products we design satisfy safety and regulatory standards
including those applicable to our customers and to obtain any necessary certifications. In addition, our customers’ products and
the manufacturing processes that we use to produce them are often highly complex. As a result, products that we manufacture
may at times contain manufacturing or design defects, and our manufacturing processes may be subject to errors or not be in
compliance with applicable statutory and regulatory requirements or demands of our customers. Defects in the products we
manufacture or design, whether caused by a design, manufacturing or component failure or error, or deficiencies in our
manufacturing processes, may result in delayed shipments to customers, replacement costs or reduced or canceled customer
orders. If these defects or deficiencies are significant, our business reputation may also be damaged. The failure of the products
that we manufacture or our manufacturing processes and facilities to comply with applicable statutory and regulatory
requirements may subject us to legal fines or penalties and, in some cases, require us to shut down or incur considerable
expense to correct a manufacturing process or facility. In addition, these defects may result in liability claims against us or
expose us to liability to pay for the recall of a product or to indemnify our customers for the costs of any such claims or recalls
which they face as a result of using items manufactured by us in their products. Even if our customers are responsible for the
defects, they may not assume, or may not have resources to assume, responsibility for any costs or liabilities arising from these
defects, which could expose us to additional liability claims.

Compliance or the failure to comply with regulations and governmental policies could cause us to incur significant expense.

We are subject to a variety of local and foreign laws and regulations including those relating to labor and health and

safety concerns and import/export duties and customs. Such laws may require us to pay mandated compensation in the event of
workplace accidents and penalties in the event of incorrect payments of duties or customs. Additionally, we may need to obtain
and maintain licenses and permits to conduct business in various jurisdictions. If we or the businesses or companies we acquire
have failed or fail in the future to comply with such laws and regulations, then we could incur liabilities and fines and our
operations could be suspended. Such laws and regulations could also restrict our ability to modify or expand our facilities,
could require us to acquire costly equipment, or could impose other significant expenditures.

If our products are subject to warranty claims, our business reputation may be damaged and we may incur significant costs.

We generally provide warranties to our customers for defects in materials and workmanship and where our products
do not conform to specifications. A successful claim for damages arising as a result of such defects or deficiencies may affect
our business reputation. In addition, a successful claim for which we are not insured, where the damages exceed insurance
coverage, where we cannot recover from our vendors to the extent their materials or workmanship were defective, or any
material claim for which insurance coverage is denied or limited and for which indemnification is not available, could have a
material adverse effect on our business, operating results and financial condition. In addition, as we pursue new end-markets,
warranty requirements will vary and we may be less effective in pricing our products to appropriately capture the warranty
costs.

We are or may be required to obtain and maintain quality or product certifications for certain markets.

In some countries, our customers require or prefer that we obtain certain certifications for our products and testing

facilities with regard to specifications/quality standards. For example, we are required to obtain American Railroad Association
approval for certain of our products. Consequently, we need to obtain and maintain the relevant certifications so that our

customers are able to sell their products, which are manufactured by us, in these countries. If we are unable to meet and
maintain the requirements needed to secure or renew such certifications, we may not be able to sell our products to certain
customers and our financial results may be adversely affected.

Our income tax returns are subject to current tax legislation and review by taxing authorities, and the final determination of
our tax liability with respect to changes in tax legislation, tax audits and any related litigation could adversely affect our
financial results.

Although we believe that our tax estimates are reasonable and that we prepare our tax filings in accordance with all

applicable current tax laws, the final determination with respect to any tax audits and changes in tax legislation, and any related
litigation, could be materially different from our estimates or from our historical income tax provisions and accruals. The
results of an audit, tax reform or litigation could have a material effect on operating results and/or cash flows in the periods for
which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs,
settlements, penalties, and/or interest assessments. We are undergoing tax audits in various jurisdictions and we regularly assess
the likelihood of an adverse outcome resulting from such examinations to determine the adequacy of our tax reserves.

On December 22, 2017 the President of the United States signed into law comprehensive tax legislation commonly

referred to as the Tax Cuts and Jobs Act (the “Tax Reform Act”) which has and will continue to impact our provision for
income taxes. The legislation significantly changed U.S. tax law by, among other things, lowering corporate income tax rates,
implementing a territorial tax system, limiting the deductibility of interest payments and imposing a repatriation tax on deemed
repatriated earnings of foreign subsidiaries.

Failure of our customers to pay the amounts owed to us in a timely manner may adversely affect our financial condition
and operating results.

We generally provide payment terms ranging from 30 to 50 days. As a result, we generate significant accounts

receivable from sales to our customers, representing 30.9% and 33.6% of current assets as of December 31, 2018 and
December 31, 2017, respectively. Accounts receivable from sales to customers were $60.6 million and $68.6 million as of
December 31, 2018 and December 31, 2017, respectively. As of December 31, 2018, the largest amount owed by a single
customer was approximately 10% of total accounts receivable. As of December 31, 2018, our allowance for doubtful accounts
was approximately $1.8 million. If any of our significant customers have insufficient liquidity, we could encounter significant
delays or defaults in payments owed to us by such customers, and we may need to extend our payment terms or restructure the
receivables owed to us, which could have a significant adverse effect on our financial condition. Any deterioration in the
financial condition of our customers will increase the risk of uncollectible receivables. Global economic uncertainty could also
affect our customers’ ability to pay our receivables in a timely manner or at all or result in customers going into bankruptcy or
reorganization proceedings, which could also affect our ability to collect our receivables.

Our failure to comply with environmental laws could adversely affect our business and financial condition.

We are subject to various federal, state, local and foreign environmental laws and regulations, including regulations

governing the use, storage, discharge and disposal of hazardous substances used in our manufacturing processes.

We are also subject to laws and regulations governing the recyclability of products, the materials that may be included

in products, and our obligations to dispose of these products after end-users have finished with them. Additionally, we may be
exposed to liability to our customers relating to the materials that may be included in the components that we procure for our
customers’ products. Any violation or alleged violation by us of environmental laws could subject us to significant costs, fines
or other penalties.

We are also required to comply with an increasing number of product environmental compliance regulations focused

on the restriction of certain hazardous substances. Non-compliance could result in significant costs and penalties.

In addition, increasing governmental focus on climate change may result in new environmental regulations that may

negatively affect us, our suppliers and our customers by requiring us to incur additional direct costs to comply with new
environmental regulations, as well as additional indirect costs as a result of our customers or suppliers passing on additional
compliance costs. These costs may adversely affect our operations and financial condition.

Environmental liabilities that may arise in the future could be material to us.

Our operations, facilities and properties are subject to extensive and evolving laws and regulations pertaining to air
emissions, wastewater discharges, the handling and disposal of solid and hazardous materials and wastes, the remediation of
contamination, and otherwise relating to health, safety and the protection of the environment. As a result, we are involved from
time to time in administrative or legal proceedings relating to environmental and health and safety matters, and have in the past
and will continue to incur capital costs and other expenditures relating to such matters. We also cannot be certain that
identification of presently unidentified environmental conditions, more vigorous enforcement by regulatory authorities or other
unanticipated events will not arise in the future and give rise to additional environmental liabilities, compliance costs and/or

penalties that could be material. Further, environmental laws and regulations are constantly evolving and it is impossible to
predict accurately the effect they may have upon our financial condition, results of operations or cash flows.

Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business,
investments and results of operations.

We are subject to laws and regulations enacted by national, regional and local governments, including non-U.S.

governments. In particular, we are required to comply with certain SEC and other legal requirements. Compliance with, and
monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and
their interpretation and application may also change from time to time and those changes could have a material adverse effect
on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as
interpreted and applied, could have a material adverse effect on our business and results of operations.

We may encounter difficulties in completing or integrating acquisitions, which could adversely affect our operating results.

We expect to expand our presence in new end markets, expand our capabilities and acquire new customers, some of

which may occur through acquisitions. These transactions may involve acquisitions of entire companies, portions of companies,
the entry into joint ventures and acquisitions of businesses or selected assets. Potential challenges related to our acquisitions
and joint ventures include:

•

paying an excessive price for acquisitions and incurring higher than expected acquisition costs;

difficulty in integrating acquired operations, systems, assets and businesses;

difficulty in implementing financial and management controls, reporting systems and procedures;

difficulty in maintaining customer, supplier, employee or other favorable business relationships of acquired
operations and restructuring or terminating unfavorable relationships;

ensuring sufficient due diligence prior to an acquisition and addressing unforeseen liabilities of acquired
businesses;

• making acquisitions in new end markets, geographies or technologies where our knowledge or experience is

limited;

•

failing to realize the benefits from goodwill and intangible assets resulting from acquisitions which may result in
write-downs;

failing to achieve anticipated business volumes; and

• making acquisitions which force us to divest other businesses.

Any of these factors could prevent us from realizing the anticipated benefits of an acquisition, including additional

revenue, operational synergies and economies of scale. Our failure to realize the anticipated benefits of acquisitions could
adversely affect our business and operating results.

Acquisitions, expansions or infrastructure investments may require us to increase our level of indebtedness or issue
additional equity.

Should we desire to undertake significant additional expansion activities, make substantial investments in our

infrastructure or consummate significant additional acquisition opportunities, our capital needs would increase and we may
need to increase available borrowings under our credit facilities or access public or private debt and equity markets. There can
be no assurance, however, that we will be successful in raising additional debt or equity on terms that we would consider
acceptable.

An increase in the level of indebtedness could, among other things:

• make it difficult for us to obtain financing in the future for working capital, capital expenditures, debt service

requirements, acquisitions or other purposes;

limit our flexibility in planning for or reacting to changes in our business;

affect our ability to pay dividends;

•

• make us more vulnerable in the event of a downturn in our business; and

•

affect certain financial covenants with which we must comply in connection with our credit facilities.

Additionally, a further equity issuance could dilute the ownership interest of existing stockholders.

Risk Factors Relating to Our Indebtedness

We have a substantial amount of indebtedness, which may limit our operating flexibility and could adversely affect our
results of operations and financial condition.

We have approximately $400.5 million of indebtedness as of December 31, 2018, consisting of $382.4 million in U.S.

term loans, $17.5 million in borrowings under existing non-U.S. debt agreements, and $0.6 million of capital leases.

Our indebtedness could have important consequences to our investors, including, but not limited to:

•

increasing our vulnerability to, and reducing our flexibility to respond to, general adverse economic and industry
conditions;

requiring the dedication of a substantial portion of our cash flow from operations to the payment of principal, and
interest on our indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital
expenditures, acquisitions, joint ventures or other general corporate purposes;

limiting our flexibility in planning for, or reacting to, changes in our business, the competitive environment and the
industry in which we operate;

placing us at a competitive disadvantage as compared to our competitors that are not as highly leveraged; and

limiting our ability to borrow additional funds and increasing the cost of any such borrowing.

A breach of a covenant or restriction contained in our U.S. credit facility (the “Senior Secured Credit Facilities”) could
result in a default that could in turn permit the affected lenders to accelerate the repayment of principal and accrued interest on
our outstanding loans and terminate their commitments to lend additional funds. If the lenders under such indebtedness
accelerate the repayment of our borrowings, we cannot assure that we will have sufficient assets to repay those borrowings as
well as other indebtedness.

To the extent that our access to credit is restricted because of our own performance or conditions in the capital markets

generally, our financial condition would be materially adversely affected. Our level of indebtedness may make it difficult to
service our debt and may adversely affect our ability to obtain additional financing, use operating cash flow in other areas of
our business or otherwise adversely affect our operations.

Our Senior Secured Credit Facilities contain restrictive covenants that may impair our ability to conduct business.

The Senior Secured Credit Facilities contain a number of customary affirmative and negative covenants that, among

other things, limit or restrict the ability of Jason Incorporated, a wholly-owned subsidiary of Jason Industries, and its Restricted
Subsidiaries (as defined in the Senior Secured Credit Facilities) to: incur additional indebtedness (including guaranty
obligations); incur liens; engage in mergers, consolidations, liquidations and dissolutions; sell assets; pay dividends and make
other payments in respect of capital stock; make acquisitions, investments, loans and advances; pay and modify the terms of
certain indebtedness; engage in certain transactions with affiliates; enter into negative pledge clauses and clauses restricting
subsidiary distributions; and change its line of business, in each case, subject to certain limited exceptions. In addition, under
the revolving loan portion of our Senior Secured Credit Facilities, if the aggregate outstanding amount of all revolving loans,
swingline loans and certain letter of credit obligations exceeds $10 million at the end of any fiscal quarter, Jason Incorporated
and its Restricted Subsidiaries will be required to not exceed a specified consolidated first lien leverage ratio. As a result of
these covenants and restrictions, we are limited in how we conduct our business and we may be unable to raise additional debt
or other financing to compete effectively or to take advantage of new business opportunities. The terms of any future
indebtedness we may incur could include more restrictive covenants. Failure to comply with such restrictive covenants may
lead to default and acceleration under our Senior Secured Credit Facilities and may impair our ability to conduct business. We
may not be able to maintain compliance with these covenants in the future and, if we fail to do so, we may not be able to obtain
waivers from the lenders and/or amend the covenants, which may adversely affect our financial condition.

Upon the occurrence of an event of default under our Senior Secured Credit Facilities, the lenders could elect to accelerate
payments due and terminate all commitments to extend further credit. Consequently, we may not have sufficient assets to
repay the Senior Secured Credit Facilities, as well as other secured and unsecured indebtedness.

Upon the occurrence of an event of default under our Senior Secured Credit Facilities, the lenders thereunder could

elect to declare all amounts outstanding under the Senior Secured Credit Facilities to be immediately due and payable and
terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders under the Senior
Secured Credit Facilities could proceed against the collateral granted to them to secure that indebtedness. We have pledged a
significant portion of our assets as collateral under the Senior Secured Credit Facilities. If the lenders under our Senior Secured
Credit Facilities accelerate the repayment of borrowings, we cannot assure that we will have sufficient assets to repay the
Senior Secured Credit Facilities, as well as other secured and unsecured indebtedness.

An adverse change in the interest rates for our borrowings could adversely affect our financial condition.

We pay interest on outstanding borrowings under our Senior Secured Credit Facilities at interest rates that fluctuate

based upon changes in certain short term prevailing interest rates. An adverse change in these rates could have a material
adverse effect on our financial position, results of operations and cash flows and our ability to borrow money in the future. At
times, we will enter into interest rate swaps to hedge some of this risk. If the duration of interest rate swaps exceeds one month,
we will have to mark-to-market the value of such swaps which could cause us to recognize losses.

Risk Factors Relating to Our Securities and Capital Structure

General Securities and Capital Structure Risk Factors

The market price of our securities may decline.

Fluctuations in the price of our securities could contribute to the loss of all or part of your investment. Trading in our

common stock and warrants has been limited. There is also currently no market for our Series A Preferred Stock and it is
unlikely one will develop. If an active market for our securities develops and continues, the trading price of our securities could
be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the
factors listed below could have a material adverse effect on your investment and our securities may trade at prices significantly
below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may
experience a further decline.

Factors affecting the trading price of our securities may include:

•

actual or anticipated fluctuations in our financial results or the financial results of companies perceived to be
similar to us;

changes in the market’s expectations about our operating results;

success of competitors;

our operating results failing to meet the expectation of securities analysts or investors in a particular period;

changes in financial estimates and recommendations by securities analysts concerning the Company or its markets
in general;

operating and stock price performance of other companies that investors deem comparable to the Company;

our ability to market new and enhanced products on a timely basis;

changes in laws and regulations affecting our business;

commencement of, or involvement in, litigation involving the Company;

changes in the Company’s capital structure, such as future issuances of securities or the incurrence of additional
debt;

the volume of securities available for public sale;

any major change in our board or management;

sales of substantial amounts of our securities by our directors, executive officers or significant shareholders or the
perception that such sales could occur; and

general economic and political conditions such as recession; interest rate, fuel price, and international currency
fluctuations; and acts of war or terrorism.

As of December 31, 2018, there were 27,394,978 shares of our common stock issued and outstanding. While our

common shares trade on Nasdaq, our stock is thinly traded (approximately 0.4%, or 97,000 shares, of our stock traded on an
average daily basis during the year ended December 31, 2018), and you may have difficulty in selling your shares quickly.

In addition, the market price of our common stock could also be affected by possible sales of our common stock by

investors who view the Series A Preferred Stock as a more attractive means of equity participation in us and by hedging or
arbitrage trading activity involving our common stock. The hedging or arbitrage could, in turn, affect the trading price of the
Series A Preferred Stock or any common stock that holders receive upon conversion of the Series A Preferred Stock.

Many of the factors listed above are beyond our control. In addition, broad market and industry factors may materially

harm the market price of our securities irrespective of our operating performance. The stock market in general, and Nasdaq,
have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance
of the particular companies affected. The trading prices and valuations of these stocks, and of our common stock and warrants

which trade on Nasdaq, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of
other companies which investors perceive to be similar to the Company could depress the price of our securities regardless of
our business, prospects, financial conditions or results of operations. A decline in the market price of our securities also could
adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

Our inability to comply with the continued listing requirements of the Nasdaq Capital Market could result in our common
stock and/or warrants being delisted, which could adversely affect the market price and liquidity of our securities and could
have other adverse effects.

To remain in compliance with the continued listing requirements on The Nasdaq Capital Market, among other things,
(1) the market value of listed securities must remain equal to or greater than $35 million, the Company must have stockholders’
equity of $2.5 million or more, or the Company must have net income from continuing operations of $500,000 in the most
recently completed fiscal year and (2) the Company’s common stock must have a bid price of at least $1.00 per share.

If the Company does not remain in compliance with the continuing listing requirements, Nasdaq could provide written

notice that the Company’s common stock and/or warrants are subject to delisting from The Nasdaq Capital Market. In that
event, Nasdaq rules permit the Company to appeal such determination to a Nasdaq hearings panel. If our common stock and/or
warrants are delisted, it could be more difficult to buy or sell our securities and to obtain accurate quotations, and the price of
our common stock and/or warrants could suffer a material decline. In addition, a delisting could impair the Company’s ability
to raise capital through the public markets, could deter broker-dealers from making a market in or otherwise seeking or
generating interest in our securities and might deter certain institutions and persons from investing in our securities at all.

Our business and/or reputation could be negatively affected as a result of actions of activist shareholders, and such activism
could impact the trading value of our securities.

Certain of our shareholders have made, and may in the future make strategic proposals, suggestions, or requests for

changes concerning the operation of our business, our business strategy, corporate governance considerations, or other matters
that may not be fully aligned with our own. Responding to actions by activist shareholders can be costly and time-consuming,
disrupt our operations and divert the attention of management and our employees. Perceived uncertainties as to our future
direction may result in the loss of potential business opportunities, damage to our reputation, and may make it more difficult to
attract and retain qualified directors, personnel and business partners. These actions could also cause our stock price to
experience periods of volatility.

Two of our largest shareholders have significant influence over our management and affairs and could exercise this
influence against other shareholders’ best interests.

At February 26, 2019, Mr. Nelson Obus, one of our directors and, through Wynnefield Partners Small Cap Value LP
and various other entities, one of our largest shareholders, beneficially owned approximately 18.6% of our outstanding shares
of common stock. In addition, at February 26, 2019, Mr. Jeffry N. Quinn, one of our directors and largest shareholders,
beneficially owned approximately 10.9% of our outstanding shares of common stock. As a result, pursuant to our bylaws and
applicable laws and regulations, Messrs. Obus and Quinn, together with our executive officers and other directors, are able to
exercise significant influence over our company, including, but not limited to, any shareholder approvals for the election of our
directors and, indirectly, the selection of our senior management, the amount of dividend payments, if any, our annual budget,
increases or decreases in our share capital, new securities issuance, mergers and acquisitions and any amendments to our
bylaws. Furthermore, this concentration of ownership may delay or prevent a change of control or discourage a potential
acquirer from making a tender offer or otherwise attempting to obtain control of us, which could decrease the market price of
our shares.

A significant number of additional shares of our common stock may be issued upon the exercise or conversion of existing
securities, which issuances would substantially dilute existing shareholders and may depress the market price of our
common stock.

As of February 26, 2019, there were 27,644,672 shares of our common stock outstanding. In addition, (i) 13,993,773

shares of common stock can be issued upon the exercise of outstanding warrants, (ii) 3,296,882 shares of common stock can be
issued upon conversion of our Series A Preferred Stock, which includes 1,506,053 shares of common stock potentially issuable
upon conversion of additional shares of Series A Preferred Stock received as dividends over the next five years and assumes
that the conversion ratio is not adjusted, and (iii) 6,667,319 shares of common stock are available for future issuance under our
2014 Omnibus Incentive Plan. From time to time, the Company may seek to obtain Board of Directors approval for additional
future issuances of common stock. The issuance of shares of common stock would substantially dilute the proportionate
ownership and voting power of existing security holders, and their issuance, or the possibility of their issuance, may depress the
market price of our common stock.

Anti-takeover provisions contained in our certificate of incorporation and bylaws, the increased conversion rate triggered by
a “fundamental change”, as well as provisions of Delaware law, could impair a takeover attempt.

The Company’s second amended and restated certificate of incorporation (the “certificate of incorporation”) and

bylaws contain provisions that could have the effect of delaying or preventing changes in control or changes in our
management without the consent of our Board of Directors. These provisions include:

•

no cumulative voting in the election of directors, which limits the ability of minority shareholders to elect director
candidates;

the exclusive right of our Board of Directors to elect a director to fill a vacancy created by the expansion of the
Board of Directors or the resignation, death, or removal of a director, which prevents shareholders from being able
to fill vacancies on our Board of Directors;

the ability of our Board of Directors to determine whether to issue shares of our preferred stock and to determine
the price and other terms of those shares, including preferences and voting rights, without shareholder approval,
which could be used to significantly dilute the ownership of a hostile acquirer;

a prohibition on shareholder action by written consent, which forces shareholder action to be taken at an annual or
special meeting of our shareholders;

the requirement that a special meeting of shareholders may be called only by the chairman of the Board of
Directors, the chief executive officer, or the Board of Directors, which may delay the ability of our shareholders to
force consideration of a proposal or to take action, including the removal of directors;

limiting the liability of, and providing indemnification to, our directors and officers;

controlling the procedures for the conduct and scheduling of shareholder meetings;

providing that directors may be removed prior to the expiration of their terms by shareholders only for cause; and

advance notice procedures that shareholders must comply with in order to nominate candidates to our Board of
Directors or to propose matters to be acted upon at a shareholders’ meeting, which may discourage or deter a
potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or
otherwise attempting to obtain control of the Company.

These provisions, alone or together, could delay hostile takeovers and changes in control of the Company or changes

in our Board of Directors and management. In addition, the increased conversion rate of the Series A Preferred Stock into
shares of our common stock that would be triggered by a “fundamental change” (as defined in the Certificate of Designations,
Preferences, Rights and Limitations of the Series A Preferred Stock (the “Certificate of Designations”)) could discourage a
potential acquirer, including potential acquirers that otherwise seek a transaction with us that would be attractive.

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware

General Corporation Law, which prevents some shareholders holding more than 15% of our outstanding common stock from
engaging in certain business combinations without approval of the holders of substantially all of our outstanding common
stock.

Any provision of our certificate of incorporation, bylaws, Certificate of Designations or Delaware law that has the

effect of delaying or deterring a change in control could limit the opportunity for our security holders to receive a premium for
their securities and could also affect the price that some investors are willing to pay for our securities.

Our only significant asset is our indirect ownership of Jason Incorporated and such ownership may not be sufficient to pay
dividends or make distributions or loans to enable us to pay any dividends on our common stock or preferred stock or satisfy
our other financial obligations.

As of February 26, 2019, we have no direct operations and no significant assets other than the indirect ownership of

Jason Incorporated. We depend on Jason Incorporated for distributions, loans and other payments to generate the funds
necessary to meet our financial obligations, including our expenses as a publicly traded company, and to pay any dividends
with respect to our preferred stock and common stock. Legal and contractual restrictions in agreements governing our senior
secured credit facilities and future indebtedness of Jason Incorporated, as well as the financial condition and operating
requirements of Jason Incorporated, may limit our ability to obtain cash from Jason Incorporated. The earnings from, or other
available assets of, Jason Incorporated may not be sufficient to pay dividends or make distributions or loans to enable us to pay
any dividends on our common stock or satisfy its other financial obligations. In addition, the terms of our Series A Preferred
Stock may from time to time prevent us from paying cash dividends on our common stock.

Series A Preferred Stock Risk Factors

We are not obligated to pay dividends on the Series A Preferred Stock if prohibited by law; the terms of our financing
agreements may limit our ability to pay such dividends; and we will not be able to pay cash dividends if we have insufficient
cash to do so.

Under Delaware law, dividends on capital stock may only be paid from “surplus” or, if there is no “surplus,” from the

corporation’s net profits for the then-current or the preceding fiscal year. Unless we operate profitably, our ability to pay
dividends on the Series A Preferred Stock would require the availability of adequate “surplus,” which is defined as the excess,
if any, of our net assets (total assets less total liabilities) over our capital.

Financing agreements, whether ours or those of our subsidiaries and whether in place now or in the future, may

contain restrictions on our ability to pay cash dividends on our capital stock, including the Series A Preferred Stock. These
limitations may cause us to be unable to pay dividends on the Series A Preferred Stock unless we can refinance amounts
outstanding under those agreements. Since we are not obligated to declare or pay cash dividends, we do not intend to do so to
the extent we are restricted by any of our financing agreements.

The dividends payable by us on the Series A Preferred Stock may exceed our current and accumulated earnings and

profits, as calculated for U.S. federal income tax purposes. If that occurs, it will result in the amount of the dividends that
exceed such earnings and profits being treated for U.S. federal income tax purposes first as a return of capital to the extent of
the beneficial owner’s adjusted tax basis in the Series A Preferred Stock, and the excess, if any, over such adjusted tax basis as
capital gain. Such treatment will generally be unfavorable for corporate beneficial owners and may also be unfavorable to
certain other beneficial owners.

Further, even if adequate surplus is available to pay dividends on the Series A Preferred Stock, we may not have

sufficient cash to pay cash dividends on the Series A Preferred Stock. Even if we do have sufficient cash to pay dividends, our
capital allocation strategy may result in the Company electing to pay dividends in additional shares of Series A Preferred Stock.
We have in the past, and may elect in the future, to pay dividends on the Series A Preferred Stock in shares of additional Series
A Preferred Stock; however, our ability to pay dividends in shares of our Series A Preferred Stock may be limited by the
number of shares of Series A Preferred Stock we are authorized to issue under our certificate of incorporation. As of January 1,
2019 we had 40,612 shares of our Series A Preferred Stock issued and outstanding out of 100,000 authorized shares.

The Series A Preferred Stock does not have an established trading market, which may negatively affect its market value and
the ability to transfer or sell such shares.

The shares of Series A Preferred Stock do not have an established trading market. Since the Series A Preferred Stock

has no stated maturity date, investors seeking liquidity will be limited to selling their shares in the secondary market or
converting their shares to common shares and selling in the secondary market. We do not intend to list the Series A Preferred
Stock on any securities exchange. We cannot assure you that an active trading market in the Series A Preferred Stock will
develop or, even if it develops, we cannot assure you that it will last. In either case, the trading price of the Series A Preferred
Stock could be adversely affected and the ability of a holder of Series A Preferred Stock to transfer shares of Series A Preferred
Stock will be limited. We are not aware of any entity making a market in the shares of our Series A Preferred Stock which we
anticipate may further limit liquidity.

The conversion rate of the Series A Preferred Stock may not be adjusted for all dilutive events.

The number of shares of our common stock that a holder of Series A Preferred Stock is entitled to receive upon
conversion of the Series A Preferred Stock is subject to adjustment for certain specified events, including, but not limited to, the
issuance of certain stock dividends on our common stock, the issuance of certain rights or warrants, subdivisions,
combinations, distributions of capital stock, indebtedness, or assets, cash dividends and certain issuer tender or exchange offers,
as set forth in the Certificate of Designations. However, the conversion rate may not be adjusted for other events, such as the
exercise of stock options or other equity awards held by our employees or offerings of our common stock or securities
convertible into common stock (other than those set forth in the Certificate of Designations) for cash or in connection with
acquisitions, which may adversely affect the market price of our common stock. Further, if any of these other events adversely
affects the market price of our common stock, we expect it to also adversely affect the market price of our Series A Preferred
Stock. In addition, the terms of our Series A Preferred Stock do not restrict our ability to offer common stock or securities
convertible into common stock in the future or to engage in other transactions that could dilute our common stock. We have no
obligation to consider the interests of the holders of our Series A Preferred Stock in engaging in any such offering or
transaction. If we issue additional shares of common stock, those issuances may materially and adversely affect the market
price of our common stock and, in turn, those issuances may adversely affect the trading price of the Series A Preferred Stock.

Series A Preferred Stock holders may be adversely affected if a “fundamental change” occurs

If a “fundamental change” (as defined in the Certificate of Designations) occurs, we will under certain circumstances

increase the conversion rate by a number of additional shares of our common stock for shares of Series A Preferred Stock
converted in connection with such fundamental change as described in the Certificate of Designations. While this feature is
designed to, among other things, compensate holders of Series A Preferred Stock for lost option time value of their shares of
Series A Preferred Stock as a result of the fundamental change, it may not adequately compensate holders of Series A Preferred
Stock for their loss as a result of such transaction. In addition, the conversion rate as adjusted will not exceed the $1,000
liquidation preference, divided by 66 2/3% of $10.49, the closing sale price of our common stock on June 30, 2014. However, if
the adjustment is based on an amount per share that is less than the floor of 66 2/3% of $10.49, holders will likely receive a
number of shares of common stock worth less than the $1,000 liquidation preference per share of Series A Preferred Stock, plus
any accumulated and unpaid dividends thereon. Holders of our Series A Preferred Stock will have no claim against the
Company for the difference between the value of the consideration received upon a conversion in connection with a
fundamental change and the $1,000 liquidation preference per share of Series A Preferred Stock, plus any accumulated and
unpaid dividends thereon.

These provisions will not afford protection to holders of Series A Preferred Stock in the event of other transactions that

could adversely affect the value of the Series A Preferred Stock. For example, transactions such as leveraged recapitalizations,
refinancings, restructurings, or acquisitions initiated by us may not constitute a fundamental change. In the event of any such
transaction, holders would not have the protection afforded by the provisions applicable to a fundamental change even though
each of these transactions could increase the amount of our indebtedness, or otherwise adversely affect our capital structure or
any credit ratings, thereby adversely affecting the holders of Series A Preferred Stock.

In addition, holders of Series A Preferred Stock will have no additional rights upon a fundamental change, and will

have no right not to convert the Series A Preferred Stock into shares of our common stock.

Our obligation to satisfy the additional shares requirement could be considered a penalty, in which case the

enforceability thereof would be subject to general principles of reasonableness and equitable remedies.

We have reserved a number of shares of our common stock for issuance upon the conversion of the Series A Preferred Stock
equal to the aggregate conversion rate, which, under limited circumstances, is less than the maximum number of shares of
common stock that we might be required to issue upon such conversion.

On issuance of the Series A Preferred Stock, we reserved, and are obligated under the terms of the Series A Preferred

Stock to keep reserved at all times, a number of shares of our common stock equal to the aggregate liquidation preference
divided by the closing sale price of our common stock on the date of the closing of our issuance of the Series A Preferred
Stock. This is less than the maximum number of shares of our common stock issuable upon conversion of the Series A
Preferred Stock in connection with a fundamental change where we could, depending on the stock price at the time, be required
to issue upon conversion of the Series A Preferred Stock, shares of common stock representing the $1,000 liquidation
preference per share divided by 66 2/3% of $10.49, the closing sale price of our common stock on June 30, 2014. In that
circumstance, we would not have reserved the full amount of shares of our common stock issuable upon conversion of the
Series A Preferred Stock. While we may satisfy our obligation to issue shares upon conversion of the Series A Preferred Stock
by utilizing authorized, unreserved and unissued shares of common stock, if any, or by redesignating reserved shares or
purchasing shares in the open market, there can be no assurance that we would be able to do so at that time.

We may issue additional series of preferred stock that rank equally to the Series A Preferred Stock as to dividend payments
and liquidation preference and these future issuances may adversely affect the market price for our common stock.

Neither our Certificate of Incorporation nor the Certificate of Designations prohibits us from issuing additional series
of preferred stock that would rank equally to the Series A Preferred Stock as to dividend payments and liquidation preference.
Our certificate of incorporation provides that we have the authority to issue up to 5,000,000 shares of preferred stock, including
up to 100,000 shares of Series A Preferred Stock. The issuances of other series of preferred stock could have the effect of
reducing the amounts available to the Series A Preferred Stock in the event of our liquidation, winding-up or dissolution. It may
also reduce cash dividend payments on the Series A Preferred Stock if we do not have sufficient funds to pay dividends on all
Series A Preferred Stock outstanding and outstanding parity preferred stock.

Additional issuances and sales of preferred stock, or the perception that such issuances and sales could occur, may

cause prevailing market prices for our common stock to decline and may adversely affect our ability to raise additional capital
in the financial markets at times and prices favorable to us.

Holders of our Series A Preferred Stock have no voting rights except under limited circumstances.

Except with respect to certain material and adverse changes to the Series A Preferred Stock as described in the
Certificate of Designations, holders of Series A Preferred Stock do not have voting rights and will have no right to vote for any
members of our Board of Directors, except as may be required by Delaware law.

Holders of our Series A Preferred Stock may be subject to tax if we make or fail to make certain adjustments to the
conversion rate of the Series A Preferred Stock even though the holders of Series A Preferred Stock do not receive a
corresponding cash distribution.

The conversion rate of the Series A Preferred Stock is subject to adjustment in certain circumstances, including the

payment of cash dividends. If the conversion rate is adjusted as a result of a distribution that is taxable to our common
shareholders, such as a cash dividend, holders of Series A Preferred Stock may be deemed to have received a dividend subject
to U.S. federal income tax without the receipt of any cash. In addition, a failure to adjust (or to adjust adequately) the
conversion rate after an event that increases a holder of Series A Preferred Stock’s proportionate interest in us could be treated
as a deemed taxable dividend to the holder of Series A Preferred Stock. If a “fundamental change” (as defined in the Certificate
of Designations) occurs, under some circumstances, we will increase the conversion rate for shares of Series A Preferred Stock
converted in connection with such fundamental change. Such increase may also be treated as a distribution subject to U.S.
federal income tax as a dividend. If a holder of Series A Preferred Stock is a non-U.S. holder, any deemed dividend may be
subject to U.S. federal withholding tax at a 30% rate, or such lower rate as may be specified by an applicable treaty, which may
be set off against subsequent payments on the Series A Preferred Stock.

Warrants Risk Factors

There is no guarantee that the warrants will ever be in the money, and they may expire worthless and the terms of our
warrants may be amended.

The exercise price for our warrants is $12.00 per share. There is no guarantee that the warrants will ever be in the

money prior to their expiration, and as such, the warrants may expire worthless. Our warrants expire on June 30, 2019.

In addition, the warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us

provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any
defective provision, but requires the approval by the holders of at least 65% of the then outstanding warrants originally issued
as part of units in our initial public offering (the “Public Warrants”) to make any change that adversely affects the interests of
the registered holders. Accordingly, we may amend the terms of the warrants in a manner adverse to a holder if holders of at
least 65% of the then outstanding Public Warrants approve of such amendment. Although our ability to amend the terms of the
warrants with the consent of at least 65% of the then outstanding Public Warrants is unlimited, examples of such amendments
could be amendments to, among other things, increase the exercise price of the warrants, shorten the exercise period or
decrease the number of shares of our common stock purchasable upon exercise of a warrant.

We may redeem the Public Warrants prior to their exercise at a time that is disadvantageous to warrantholders, thereby
making their warrants worthless.

We have the ability to redeem the outstanding Public Warrants at any time after they become exercisable and prior to

their expiration at a price of $0.01 per warrant, provided that (i) the last reported sale price of our common stock equals or
exceeds $18.00 per share for any 20 trading days within the 30 trading-day period ending on the third business day before we
send the notice of such redemption and (ii) on the date we give notice of redemption and during the entire period thereafter
until the time the warrants are redeemed, there is an effective registration statement under the Securities Act of 1933 covering
the shares of our common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is
available. Redemption of the outstanding Public Warrants could force holders of Public Warrants:

•

to exercise their warrants and pay the exercise price therefore at a time when it may be disadvantageous for them to
do so;

to sell their warrants at the then-current market price when they might otherwise wish to hold their warrants; or

to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is
likely to be substantially less than the market value of their warrants.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

As of December 31, 2018, Jason Industries owned or leased the following facilities:

Number of Locations

Square Footage

Finishing

Components

Seating

Acoustics

Corporate

Manufacturing

Warehouse

Sales /
Distribution /
Admin

—

Total

Owned

Leased

Total

493,000

—

164,000

65,000

565,000

295,000

559,000

1,058,000

295,000

723,000

1,054,000

1,119,000

—

19,000

722,000

2,492,000

3,214,000

We consider our facilities suitable and adequate for the purposes for which they are used and do not anticipate difficulty
in renewing existing leases as they expire or in finding alternative facilities. Our largest facilities are located in the United States,
Mexico and Germany. We also maintain a presence in China, France, India, Portugal, Romania, Singapore, Spain, Sweden, Taiwan
and the United Kingdom. See Note 10, “Leases” in the notes to the consolidated financial statements for information regarding
our lease commitments.

ITEM 3. LEGAL PROCEEDINGS

From time to time, the Company is subject to litigation incidental to its business, as well as other litigation of a non-

material nature in the ordinary course of business. See Note 17, “Commitments and Contingencies” under the heading
“Litigation Matters” in the notes to the consolidated financial statements for further information.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

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

The Company’s common stock and warrants are currently quoted on Nasdaq under the symbols “JASN” and
“JASNW,” respectively. There is no established trading market for the Series A Preferred Stock, but the shares trade in the over
the counter market under the symbol “JSSNP.”

Holders

As of December 31, 2018, there were 27,394,978 shares of common stock outstanding, held of record by 75 holders,
and 39,818 shares of Series A Preferred Stock outstanding, held of record by 5 holders. On January 1, 2019, an additional 794
shares of Series A Preferred Stock were issued to the 5 holders of record. In addition, 13,993,773 shares of common stock are
issuable upon exercise of 13,993,773 warrants, held of record by 7 holders. The number of record holders of our common
stock, Series A Preferred Stock and warrants does not include DTC participants or beneficial owners holding shares through
nominee names.

Dividends

The Company has not paid any dividends on its common stock to date. It is the present intention of the Company to

retain any earnings for use in its business operations and, accordingly, the Company does not anticipate the Board of Directors
declaring any dividends in the foreseeable future on our common stock. In addition, certain of our loan agreements restrict the
payment of dividends and the terms of our Series A Preferred Stock may from time to time prevent us from paying cash
dividends on our common stock.

Recent Issuer Purchases of Equity Securities

The following table contains detail related to the repurchase of common stock based on the date of trade during the

three months ended December 31, 2018:

2018 Fiscal Month

September 29 to November 2

November 3 to November 30

December 1 to December 31

Total

Total Number of
Shares Purchased (a)
—

—

Average Price
Paid per Share

—

Total Number of
Shares Purchased as
Part of Publicly
Plans or Programs
Announced (b)
—

—

Maximum Number of
Shares that May Yet Be
Purchased Under the
Plans or Programs

N/A

(a) Represents shares of common stock that employees surrendered to satisfy withholding taxes in connection with the vesting
of restricted stock unit awards. The 2014 Omnibus Incentive Plan and the award agreements permit participants to satisfy all or
a portion of the statutory federal, state and local withholding tax obligations arising in connection with plan awards by electing
to (1) have the Company reduce the number of shares otherwise deliverable or (2) deliver shares already owned, in each case
having a value equal to the amount to be withheld. During the year ended December 31, 2018, the Company withheld 2,837
shares that employees presented to the Company to satisfy withholding taxes in connection with the vesting of restricted stock
unit awards.

(b) The Company is not currently participating in a share repurchase program.

Comparative Share Performance Graph

The following information in this Item 5 is not deemed to be “soliciting material” or to be “filed” with the SEC or

subject to Regulation 14A or 14C under the Securities Exchange Act of 1934 or to the liabilities of Section 18 of the Securities
Exchange Act of 1934, and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates it by reference into such a
filing.

The following graph shows a comparison of cumulative total shareholder return, calculated on a dividend reinvested

basis, for (1) the Company’s common stock, (2) the Standard & Poor’s SmallCap 600 Index, and (3) the Dow Jones U.S.
Diversified Industrials Index, for the five-year period ended December 31, 2018. The graph assumes the value of the
investment in our common stock and each index was $100.00 on December 31, 2013 and that all dividends were reinvested.
Note that historic stock price performance is not necessarily indicative of future stock price performance.

Jason Industries, Inc.

S&P SmallCap 600

Dow Jones US Diversified Industrials

12/31/2013

12/31/2014

12/31/2015

12/31/2016

12/31/2017

12/31/2018

100.00

97.52

105.76

101.05

37.43

103.67

114.02

17.82

131.20

126.52

23.47

148.56

118.18

13.56

135.96

88.53

ITEM 6. SELECTED FINANCIAL DATA

The selected financial data as of December 31, 2018 and 2017, and for the years ended December 31, 2018, 2017 and
2016 have been derived from Jason Industries’ audited consolidated financial statements, including the notes thereto, appearing
elsewhere in this Annual Report on Form 10-K/A. Such consolidated financial data reflects the correction of an error discussed
in the Explanatory Note to this Form 10-K/A and in Note 2, “Restatement of Previously Reported Financial Information”. The
selected financial data as of and for the year ended December 31, 2015, for the period June 30, 2014 through December 31,
2014 and the period January 1, 2014 through June 29, 2014 have been derived from Jason’s historical consolidated financial
statements not included herein.

Upon completion of the Business Combination on June 30, 2014 (the “Closing Date”), the Company was identified as
the acquirer for accounting purposes, and Jason is the acquiree and accounting predecessor. The Company’s financial statement
presentation distinguishes Jason as the “Predecessor” for periods prior to the Closing Date. The Company was subsequently re-
established as Jason Industries, Inc. and is the “Successor” for periods after the Closing Date, which includes consolidation of
Jason Industries, Inc. subsequent to the Business Combination on June 30, 2014. The acquisition was accounted for as a
business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of
accounting that is based on the fair value of net assets acquired. As a result of the application of the acquisition method of
accounting as of the effective time of the acquisition, the financial statements for the Predecessor period and for the Successor
period are presented on a different basis and, therefore, are not comparable.

The historical results presented below are not necessarily indicative of the results to be expected for any future period.

This information should be read in conjunction with “Risk Factors,” “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” and the Company’s consolidated financial statements and the related notes included
elsewhere in this Annual Report on Form 10-K/A.

(in thousands, except per share data)

2018
(Restated1)

Statement of Operations Data:

Successor

Year Ended December 31,

2017

2016

2015

June 30, 2014
Through
December 31,
2014

Predecessor

January 1,
2014
Through
June 29, 2014

612,948

648,616

705,519

708,366

325,335

Net sales

Cost of goods sold

Gross profit

Selling and administrative expenses

Impairment charges

(Gain) loss on disposals of property,
plant and equipment - net

Restructuring

Transaction-related expenses

Operating income (loss)

Interest expense

Gain on extinguishment of debt

Equity income

Loss on divestiture

Gain from sale of joint ventures

Other income - net

Loss before income taxes

Tax benefit

Net loss

Less net gain (loss) attributable to
noncontrolling interests

Net loss attributable to Jason
Industries

Accretion of preferred stock dividends
and redemption premium

Net loss available to common
shareholders of Jason Industries

Loss per share: Basic and diluted

Weighted-average shares outstanding:

486,668

126,280

106,470

—

(1,142)

4,458

—

16,494

(33,437)

—

1,024

—

654

(15,265)

(2,105)

517,764

130,852

103,855

—

(759)

4,266

—

23,490

(33,089)

2,201

952

(8,730)

—

319

(14,857)

(10,384)

574,412

131,107

113,797

63,285

880

7,232

—

(54,087)

(31,843)

—

681

—

900

561,076

147,290

129,371

94,126

109

3,800

886

(81,002)

(31,835)

—

884

—

270,676

54,659

57,183

—

1,131

2,533

(6,245)

(16,172)

—

381

—

167

(84,349)

(6,296)

(111,856)

(22,255)

(21,869)

(7,889)

(13,160) $

(4,473) $

(78,053) $

(89,601) $

(13,980)

—

(10,818)

(15,143)

(2,362)

377,151

294,175

82,976

54,974

—

338

2,554

27,783

(2,673)

(7,301)

—

831

—

3,508

107

(5,528)

(573)

(4,955)

—

(13,160) $

(4,478) $

(67,235) $

(74,458) $

(11,618)

(4,955)

4,070

3,783

3,600

1,810

—

(17,230) $

(8,261)

(70,835) $

(78,058) $

(13,428)

(0.62) $

(0.32) $

(3.15) $

(3.53) $

(0.61)

(4,955)

(4,955.00)

Basic and diluted

27,595

26,082

22,507

22,145

21,991

(in thousands)

Consolidated Balance Sheet Data:

Cash and cash equivalents

Total assets

Long-term debt

Total liabilities

Total stockholders’ (deficit) equity

Successor

As of December 31,

2018
(Restated1)

2017

2016

2015

2014

58,169

48,887

40,861

35,944

503,597

387,244

511,380

(7,783)

546,323

391,768

540,639

5,684

583,836

416,945

586,978

(3,142)

697,092

426,150

612,098

84,994

62,279

788,733

404,635

606,058

182,675

1 Amounts have been restated for the correction of an error as described within Note 2, “Restatement of Previously Reported

Financial Information”.

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

The following discussion and analysis of financial condition and results of operations of the Company should be read

in conjunction with the consolidated financial statements for the years ended December 31, 2018, 2017 and 2016, including the
notes thereto, included elsewhere in this Annual Report on Form 10-K/A. The Company’s actual results may not be indicative
of future performance. This discussion and analysis contains forward-looking statements and involves numerous risks and
uncertainties, including, but not limited to, those discussed in “Cautionary Note Regarding Forward-Looking Statements” and
“Risk Factors” included in Part I, Item IA or in other parts of this Annual Report on Form 10-K/A. Actual results may differ
materially from those contained in any forward-looking statements.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains

certain financial measures, in particular EBITDA and Adjusted EBITDA, which are not presented in accordance with
accounting principles generally accepted in the United States of America (“GAAP”). These non-GAAP financial measures are
being presented because management believes that they provide readers with additional insight into the Company’s operational
performance relative to earlier periods and relative to its competitors. EBITDA and Adjusted EBITDA are key measures used
by the Company to evaluate its performance. The Company does not intend for these non-GAAP financial measures to be a
substitute for any GAAP financial information. Readers of this MD&A should use these non-GAAP financial measures only in
conjunction with the comparable GAAP financial measures. Reconciliations of EBITDA and Adjusted EBITDA to net income,
the most comparable GAAP measure, are provided in this MD&A.

Fiscal Year

The Company’s fiscal year ends on December 31. Throughout the year, the Company reports its results using a fiscal
calendar whereby each three month quarterly reporting period is approximately thirteen weeks in length and ends on a Friday.
The exceptions are the first quarter, which begins on January 1, and the fourth quarter, which ends on December 31. For 2018,
the Company’s fiscal quarters were comprised of the three months ended March 30, June 29, September 28 and December 31.
In 2017, the Company’s fiscal quarters were comprised of the three months ended March 31, June 30, September 29, and
December 31.

Restatement of the Consolidated Financial Statements

During the first quarter of 2019, we identified an error in the income tax provision presented within the consolidated

financial statements for the year ended December 31, 2018. As a result of this income tax error, which materially misstated the
previously issued 2018 financial statements, the consolidated financial statements of the Company as of and for the year ended
December 31, 2018 have been restated. This MD&A has been revised to reflect the restatement of the income tax provision.
See the Explanatory Note to this Form 10-K/A and Note 2, “Restatement of Previously Reported Financial Information” in the
notes to the consolidated financial statements for further information.

Overview

Jason Industries is a global industrial manufacturing company with significant market share positions in each of its
four segments: finishing, components, seating, and acoustics. The Company provides critical components and manufacturing
solutions to customers across a wide range of end markets, industries and geographies through its global network of 28
manufacturing facilities and 15 sales, administrative and/or warehouse facilities throughout the United States and 13 foreign
countries. The Company has embedded relationships with long standing customers, superior scale and resources and
specialized capabilities to design and manufacture specialized products on which our customers rely.

The Company focuses on markets with sustainable growth characteristics and where it is, or has the opportunity to
become, the industry leader. The finishing segment focuses on the production of industrial brushes, polishing buffs and
compounds, and abrasives that are used in a broad range of industrial and infrastructure applications. The components segment
is a diversified manufacturer of expanded and perforated metal components and slip resistant surfaces. The seating segment
supplies seating solutions to equipment manufacturers in the motorcycle, lawn and turf care, industrial, agricultural,
construction and power sports end markets. The acoustics segment manufactures engineered non-woven, fiber-based acoustical
products primarily for the automotive industry.

During the years ended December 31, 2018, 2017 and 2016, approximately 30%, 32% and 30%, respectively, of the

Company’s sales were derived from customers outside the United States. As a diversified, global business, the Company’s
operations are affected by worldwide, regional and industry-specific economic and political factors. The Company’s geographic
and industry diversity, as well as the wide range of its products, help mitigate the impact of industry or economic fluctuations.
Given the broad range of products manufactured and industries and geographies served, management primarily uses general
economic trends to predict the overall outlook for the Company. The Company’s individual businesses monitor key competitors
and customers, including, to the extent possible, their sales, to gauge relative performance and the outlook for the future.

General Market Conditions and Trends; Business Performance and Outlook

Demand for the Company’s products was mixed in 2018 when compared with 2017, with higher sales in the finishing
and seating segments, offset by lower sales in the acoustics segment. Sales in the components segment were consistent with the
prior year. Demand was mixed in 2017 when compared with 2016, with higher sales in the finishing segment, offset by lower
sales in the components, seating and acoustics segments.

Demand in the Company’s finishing segment is largely dependent upon overall industrial production levels in the

markets it serves. Management believes that gross domestic product (“GDP”) and industrial production levels in the
Company’s served markets will continue to grow modestly in the near term. However, if there is no growth, or if GDP or
production levels do not increase or shrink, there could be reduced demand for the finishing segment’s products, which would
have a material negative impact on the finishing segment’s net sales and/or income from continuing operations.

Sales levels for the components segment are dependent upon new railcars built in the U.S., as well as general U.S.
industrial production levels. Railcar production increased in 2018 compared to a decline in 2017, and management expects
modest increase in demand in the near term. Management believes U.S. GDP and industrial production will grow modestly.
However, if the North American rail industry declines or experiences less growth than anticipated, customers in-source
production, and/or U.S. GDP is flat or shrinks, there could be reduced demand for the components segment’s products, which
would have a material negative impact on the components segment’s net sales and/or income from continuing operations.
During 2018, the Company announced that it would be exiting the non-core smart meter product line with final production and
sales occurring in the fourth quarter of 2018. Sales in the components segment for 2019 will be negatively impacted by this
exit as this product line generated $21.8 million of sales in 2018.

The seating segment is principally impacted by demand from U.S.-based original equipment manufacturers serving the

motorcycle, lawn and turf care, construction, agricultural and power sports market segments. In recent years, power sports
production and the lawn and turf care equipment market have grown modestly, and global construction activity has improved.
Management believes that, in the near term, power sports, construction and agriculture equipment industries will continue to
show stability, while the lawn and turf care industry will experience normal seasonal demand, and the motorcycle industry will
soften. However, if such industries weaken (or, in the case of the motorcycle industry, soften more than anticipated), there
could be reduced demand for the seating segment’s products, which would have a material negative impact on the seating
segment’s net sales and/or income from continuing operations.

Demand for products manufactured by the Company’s acoustics segment is primarily influenced by production levels

and mix of vehicles produced in the North American automobile industry. Management believes that North American
automotive lightweight vehicle production, which peaked in 2016, decreased approximately 4% in 2017 and remained flat in
2018, will modestly cycle down over the next several years. In 2018, car production decreased 11% from 2017, while the
production of light trucks and SUVs increased 4.8%. If the industry weakens more than anticipated, or if the mix of cars, light
trucks, SUVs and vans that are produced shifts significantly, there could be reduced demand for the acoustics segment’s
products, which would have a material negative impact on the acoustics segment’s net sales and/or income from continuing
operations.

The Company expects overall market conditions to remain challenging due to macro-economic uncertainties and
monetary and fiscal policies of countries where we do business. While individual businesses and end markets continue to
experience volatility, the Company expects to benefit as general economic conditions in North America and Western Europe are
expected to experience modest growth. Regarding economic conditions, as discussed above, we expect the following in the
near term:

• modest global GDP growth;

•

increasing global industrial production;

slowing demand in the North American automotive industry;

lower demand in the motorcycle industry;

• modest increase in demand in the North American rail industry;

•

continued strength in the construction industry; and

normal seasonal demand in the lawn and turf care market.

Strategic Initiatives

The Company’s strategic initiatives support an overall capital allocation strategy that focuses on decreasing leverage

through maximizing earnings and free cash flow. On March 1, 2016, the Company announced a global cost reduction and
restructuring program designed to expand Adjusted EBITDA margins. To achieve this target, our strategic initiatives include:

Margin Expansion - The Company is focused on creating operational effectiveness at each of its business segments

through deployment of lean principles and implementation of continuous operational improvement initiatives. While many of
these activities have focused on implementing shop floor improvements, we have also targeted our selling and administrative
functions in order to reduce the cost of serving our customers. The Company is also focused on improving profitability through
an active evaluation of customer pricing and margins and a reduction in the number of parts and product variations that are
produced. While these initiatives may result in lower overall sales, they are focused on creating shareholder value through
higher margins and profitability, as well as lower inventory levels and working capital requirements.

Continued footprint rationalization - The Company serves its customers through a global network of manufacturing

facilities, sales offices, warehouses and joint venture facilities throughout the United States and 13 foreign countries. The
Company’s geographic footprint has evolved over time with a focus on maximizing geographic coverage while optimizing
costs. Over the past several years, the Company has closed several facilities in higher cost, mature markets and replaced them
with facilities in higher growth, lower cost regions such as Mexico, India and Eastern Europe. The Company continuously
evaluates its manufacturing footprint and utilization of manufacturing capacity. In recent years, the Company has completed or
announced the consolidation of manufacturing facilities across its businesses. Reduction of fixed costs through optimization of
manufacturing footprint and capacity will continue to be a driver of margin expansion and improving profitability.

In 2018, the Company closed the Richmond, Indiana manufacturing facility in the acoustics segment and the United

Kingdom manufacturing facility in the seating segment. In 2017, the Company closed the finishing segment’s Richmond,
Virginia facility and moved the production to its existing facility in Richmond, Indiana. It also consolidated two facilities in
Libertyville, Illinois in the components segment. In 2016, the Company wound down operations of the finishing segment
facility in Brazil, and the components facility in Buffalo Grove, Illinois. The Company believes that geographic proximity to
existing and potential customers provides logistical efficiencies, as well as important strategic and cost advantages, and has also
taken steps to realign its footprint. The Company anticipates that costs associated with any future rationalization activities, as
well as the capital required for any new facilities, will be funded by cash generated from operating activities.

Product Innovation - During the past several years, the Company’s research and development activities have placed
more focus on developing new products that are of higher value to our customers with superior performance over alternative
and competitive products, thereby providing customers with a better value proposition. The Company believes that developing
new and innovative products will allow it to deepen its value-added relationships with customers, open new opportunities for
revenue generation, enhance pricing power and improve margins. This strategy has been particularly effective in the
Company’s acoustics segment where new fiber based products have been developed to capitalize on industry trends requiring
quieter automobiles and products that meet end of vehicle life recycling standards and lower weight.

Acquisitions - The Company uses acquisitions to increase revenues with existing customers and to expand revenues to
both new markets and customers. The Company intends to pursue acquisitions that are accretive to EBITDA (earnings before
interest, income taxes, depreciation and amortization) margins post-synergies, have strategic focus that aligns with our core
strategy and generate the appropriate estimated return on investment as part of our capital resource and allocation process.

Factors that Affect Operating Results

The Company’s results of operations and financial performance are influenced by a number of factors, including the
timing of new product introductions, general economic conditions and customer buying behavior. The Company’s business is
complex, with multiple segments serving a broad range of industries worldwide. The Company has manufacturing and sales
facilities around the world, and it operates in numerous regulatory and governmental environments. Comparability of future
results could be impacted by any number of unforeseen issues.

Key Events

In addition to the factors described above, the following strategic and operational events, which occurred during the

years ended December 31, 2018, 2017 and 2016, affected the Company’s results of operations:

Divestitures. On August 30, 2017, the Company completed the divestiture of the European operations within the

acoustics segment located in Germany (“Acoustics Europe”) for a net purchase price of $8.1 million, which included cash of
$0.2 million, long-term debt assumed by the buyer of $3.0 million and other purchase price adjustments. The divestiture
resulted in an $8.7 million pre-tax loss.

Tax Cuts and Jobs Act. On December 22, 2017, the President of the United States signed into law the Tax Reform Act.
The legislation significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, implementing a
territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The Tax Reform
Act also added many new provisions including changes to bonus depreciation and the deductions for executive compensation
and interest expense, among others. The Tax Reform Act permanently reduced the U.S. corporate income tax rate from a
maximum of 35% to a flat 21% rate, effective January 1, 2018. See further discussion of the Tax Reform Act within
“Consolidated Results of Operations” below.

Impairment charges. In performing the first step of the annual goodwill impairment test in the fourth quarter of 2016,

the Company determined that the estimated fair values of the acoustics and components reporting units were lower than the
carrying values of the respective reporting units, requiring further analysis under the second step of the impairment test. The
decline in the estimated fair value of the acoustics reporting unit was primarily due to lower long-term revenue growth
expectations resulting from the strategic review of capital allocation and investment priorities as compared to the Company’s
prior growth plan for the business. The fair value of the acoustics reporting unit was also negatively impacted by a projected
cyclical decline in the North American automotive industry end-market. The decline in the estimated fair value of the
components reporting unit was primarily due to lower long-term revenue expectations resulting from the annual budgeting and
strategic planning process as compared to the Company’s prior plan for the business, primarily due to projected longer-term
weakness in the rail end-market.

In performing the second step of the impairment testing, the Company performed a theoretical purchase price

allocation for the acoustics and components reporting units to determine the implied fair values of goodwill which were
compared to the recorded amounts of goodwill for each reporting unit. Upon completion of the second step of the goodwill
impairment test, the Company recorded non-cash goodwill impairment charges of $63.0 million, representing full goodwill
impairments of $29.8 million and $33.2 million in the acoustics and components reporting units, respectively. The goodwill
impairment charges are recorded as impairment charges in the consolidated statements of operations.

In connection with the evaluation of the goodwill impairment in the acoustics and components reporting units, the

Company assessed tangible and intangible assets for impairment prior to performing the first step of the goodwill impairment
test. As a result of this analysis, the undiscounted future cash flows of each asset group within the reporting units exceeded the
recorded carrying values of the net assets within each asset group, and as such, no non-cash impairment charges resulted from
such assessment.

In connection with the goodwill impairment test in 2016, the Company engaged a third-party valuation firm to assist

management with determining fair value estimates for the reporting units in the goodwill impairment test. The third-party
valuation firm was also involved in estimating fair values of tangible and intangible assets used in the second step of the
goodwill impairment test. In connection with obtaining an independent third-party valuation, management provided certain
information and assumptions that were utilized in the fair value calculation. Significant assumptions used in determining
reporting unit fair value include forecasted cash flows, revenue growth rates, adjusted EBITDA margins, weighted average cost
of capital (discount rate), assumed tax treatment of a future sale of the reporting unit, terminal growth rates, capital
expenditures, sales and EBITDA multiples used in the market approach, and the weighting of the income and market
approaches. The fair value of the reporting units was determined using a weighted average of an income approach primarily
based on the Company’s three year strategic plan and a market approach based on implied valuation multiples of public
company peer groups for each reporting unit. Both approaches were deemed equally relevant in determining reporting unit
enterprise value, and as a result, weightings of 50 percent were used for each. This fair value determination was categorized as
Level 3 in the fair value hierarchy.

Key Financial Definitions

Net sales. Net sales reflect the Company’s sales of its products net of allowances for variable consideration, including

rebates, discounts and product returns. Several factors affect net sales in any period, including general economic conditions,
weather conditions, the timing of acquisitions and divestitures and the purchasing habits of its customers.

Cost of goods sold. Cost of goods sold includes all costs of manufacturing the products the Company sells. Such costs

include direct and indirect materials, direct and indirect labor costs, including fringe benefits, supplies, utilities, depreciation,
facility rent, insurance, pension benefits and other manufacturing related costs. The largest component of cost of goods sold is
the cost of materials, which typically represents approximately 60% of net sales. Fluctuations in cost of goods sold are caused
primarily by changes in sales levels, changes in the mix of products sold, productivity of labor, and changes in the cost of raw
materials. In addition, following acquisitions, cost of goods sold will be impacted by step-ups in the value of inventories
required in connection with the accounting for acquired businesses.

Selling and administrative expenses. Selling and administrative expenses primarily include the cost associated with the

Company’s sales and marketing, finance, human resources, and administration, engineering and technical services functions.
Certain corporate level administrative expenses such as payroll and benefits, incentive compensation, travel, accounting,
auditing and legal fees and certain other expenses are kept within its corporate results and not allocated to its business
segments.

Impairment charges. As required by GAAP, when certain conditions or events occur, the Company recognizes

impairment losses to reduce the carrying value of goodwill, other intangible assets and property, plant and equipment to their
estimated fair values. During the year ended December 31, 2018, the Company recognized no impairment charges.

Gain (loss) on disposals of fixed assets-net. In the ordinary course of business, the Company disposes of fixed assets

that are no longer required in its day to day operations with the intent of generating cash from those sales.

Restructuring. In the past several years, the Company has made changes to its worldwide manufacturing footprint to

reduce its fixed cost base. These actions have resulted in employee severance and other related charges, changes in its operating
cost structure, movement of manufacturing operations and product lines between facilities, exit costs for consolidation and
closure of plant facilities, employee relocation and lease termination costs, and impairment charges. It is likely that the
Company will incur such costs in future periods as well. These operational changes and restructuring costs affect comparability
between periods and segments.

Interest expense. Interest expense consists of interest paid to the Company’s lenders under its worldwide credit

facilities, cash paid on interest rate hedge contracts and amortization of deferred financing costs.

Gain on extinguishment of debt. Gain on extinguishment of debt primarily consists of gains recorded related to the

repurchases of second lien term loan debt, net of the associated write-off of previously unamortized debt discount and deferred
financing costs on the second lien term loans related to the extinguishment.

Equity income. The Company maintains non-controlling interests in Asian joint ventures that are part of its finishing
segment and records a proportional share in the earnings of these joint ventures as required by GAAP. The amount of equity
income recorded is dependent upon the underlying financial results of the joint ventures.

Loss on divestiture. On August 30, 2017, the Company completed the divestiture of its Acoustics Europe business.

The loss on divestiture relates to the excess of the net assets of the business over the sales price less costs to sell and
recognition of cumulative foreign currency translation adjustments upon closing of the divestiture.

Other income-net. Other income is principally comprised of royalty income received from non-U.S. licensees, rental
income from subleasing activities and the employee benefit plan non-service cost components of net periodic benefit costs.

Tax benefit. The Company’s tax benefit is impacted by a number of factors, including the amount of taxable earnings

derived in foreign jurisdictions with tax rates that are different than the U.S. federal statutory rate, state tax rates in the
jurisdictions where the Company does business, tax minimization planning and its ability to utilize various tax credits and net
operating loss carryforwards. Income tax expense also includes the impact of provision to return adjustments, changes in
valuation allowances and changes in reserve requirements for unrecognized tax benefits. In 2017 and 2018, the income tax
benefit was also impacted by the provisions of the Tax Reform Act.

Accretion of preferred stock dividends and redemption premium. The Company records accretion of preferred stock
dividends to reflect cumulative dividends on its preferred stock. The redemption premium relates to the exchange of Series A
Preferred Stock for common stock of Jason Industries, Inc. and represents the excess of the exchange conversion rate over the
agreement conversion rate. The accretion amounts are subtracted from net loss to arrive at the net loss available to common
shareholders for the purposes of calculating the Company’s net loss per share available to common shareholders.

General Factors Affecting the Results of Continuing Operations

Foreign exchange. The Company has a significant portion of its operations outside of the U.S. As such, the results of

the Company’s operations are based on currencies other than the U.S. dollar. Changes in foreign currency exchange rates
influence its financial results, and therefore the ability to compare results between periods and segments.

Seasonality. The Company’s seating segment is subject to seasonal variation due to the markets it serves and the

stocking requirements of its customers. The peak season has historically been during the period from November through May.
Sales during these months are typically greater due to the shipments required to fill the inventory at retail stores and customer
warehouses. There are, however, variations in the seasonal demands from year to year depending on weather, customer
inventory levels, and model year changes. This seasonality and annual variations of this seasonality could impact the ability to
compare results between time periods.

Consolidated Results of Operations

The following table sets forth our consolidated results of operations:

(in thousands)

Net sales

Cost of goods sold

Gross profit

Selling and administrative expenses

Impairment charges

(Gain) loss on disposals of property, plant and equipment - net

Restructuring

Operating income (loss)

Interest expense

Gain on extinguishment of debt

Equity income

Loss on divestiture

Other income - net

Loss before income taxes

Tax benefit

Net loss

Less net gain (loss) attributable to noncontrolling interests

Net loss attributable to Jason Industries

Accretion of preferred stock dividends and redemption premium

Net loss available to common shareholders of Jason Industries

Total other comprehensive (loss) income

Other financial data: (1)

(in thousands, except percentages)

Consolidated

Net sales

Net loss

Net loss as a % of net sales

Adjusted EBITDA

Adjusted EBITDA as a % of net sales

(in thousands, except percentages)

Consolidated

Net sales

Net loss

Net loss as a % of net sales

Adjusted EBITDA

Adjusted EBITDA as a % of net sales

Year Ended
December 31, 2018

Year Ended
December 31, 2017

Year Ended
December 31, 2016

(Restated)

612,948

648,616

486,668

126,280

106,470

—

(1,142)

4,458

16,494

(33,437)

—

1,024

—

654

(15,265)

(2,105)

517,764

130,852

103,855

—

(759)

4,266

23,490

(33,089)

2,201

952

(8,730)

319

(14,857)

(10,384)

(13,160) $

(4,473) $

—

(13,160) $

4,070

(17,230) $

(4,478) $

3,783

(8,261) $

705,519

574,412

131,107

113,797

63,285

880

7,232

(54,087)

(31,843)

—

681

—

900

(84,349)

(6,296)

(78,053)

(10,818)

(67,235)

3,600

(70,835)

(3,383) $

12,232

(6,475)

Year Ended
December 31,
2018
(Restated)

Year Ended
December 31,
2017

Increase/(Decrease)

612,948

648,616

$ (35,668)

(5.5)%

(13,160)

2.1%

67,211

11.0%

(4,473)

8,687

194.2

0.7%

67,752

10.4%

140 bps

(541)

(0.8)

60 bps

Year Ended
December 31,
2017

Year Ended
December 31,
2016

Increase/(Decrease)

648,616

705,519

$ (56,903)

(8.1)%

(4,473)

0.7%

67,752

10.4%

(78,053)

(73,580)

(94.3)

11.1%

(1,040) bps

64,160

3,592

5.6

9.1%

130 bps

(1) Adjusted EBITDA and Adjusted EBITDA as a % of net sales are financial measures that are not presented in accordance

with GAAP. See “Key Measures the Company Uses to Evaluate Its Performance” below for our definition of Adjusted
EBITDA and a reconciliation of Adjusted EBITDA to net income.

Year ended December 31, 2018 and the year ended December 31, 2017

Net sales. Net sales were $612.9 million for the year ended December 31, 2018, a decrease of $35.7 million, or 5.5%,
compared with $648.6 million for the year ended December 31, 2017, reflecting decreased net sales in the acoustics segment of
$44.6 million, partially offset by increased net sales in the finishing segment of $7.4 million, the seating segment of $1.2
million and the components segment of $0.4 million. The decrease of $44.6 million in the acoustics segment was partially due
to a $22.9 million decrease related to the sale of the Acoustics Europe business.

See “Segment Financial Data” within this Item 7, “Management’s Discussion and Analysis”, for further discussion on

net sales for each segment.

Changes in foreign currency exchange rates compared with the U.S. dollar had a net positive impact of $5.2 million on

consolidated net sales during the year ended December 31, 2018 compared with 2017, positively impacting the finishing and
seating segments’ net sales by $4.6 million and $0.6 million, respectively. This was due principally to the net weakening of the
U.S. dollar against the Euro and British Pound during the year ended December 31, 2018.

Cost of goods sold. Cost of goods sold was $486.7 million for the year ended December 31, 2018, compared with

$517.8 million for the year ended December 31, 2017. The decrease in cost of goods sold was primarily due to lower
manufacturing costs in the acoustics segment due to lower volumes and the sale of the Acoustics Europe business of $19.0
million, lower labor and material usage costs in the acoustics and seating segments as a result of operational efficiencies, lower
repair and maintenance costs in the acoustics segment, and reduced costs resulting from the Company’s global cost reduction
and restructuring program. The decrease was partially offset by increased cost of goods sold related to raw material inflation
and higher freight costs across all segments, a $3.8 million increase related to foreign currency exchange rates, higher labor and
material usage costs in the components segment as result of operational inefficiencies and higher net sales volume in the
finishing and seating segments.

The reduced costs resulting from the Company’s global cost reduction and restructuring program were due to lower

manufacturing costs as a result of the closure of the Richmond, Virginia facility in the finishing segment, closure of the
Richmond, Indiana facility in the acoustics segment and the wind down of a facility in Brazil in the finishing segment.

Gross profit. For the reasons described above, gross profit was $126.3 million for the year ended December 31, 2018,

compared with $130.9 million for the year ended December 31, 2017.

Selling and administrative expenses. Selling and administrative expenses were $106.5 million for the year ended

December 31, 2018, compared with $103.9 million for the year ended December 31, 2017, an increase of $2.6 million.

The increase is primarily due to the acceleration of amortization expense of $2.3 million on intangible assets in the
components segment related to the exit from non-core product lines for smart utility meter subassemblies in 2018, increased
share-based compensation expense of $1.6 million, a $1.1 million increase related to foreign currency exchange rates and
higher headcount due to open positions in 2017 and in the finishing segment due to additional selling personnel in 2018. The
increase was partially offset by reduced selling and administrative expenses in the acoustics segment due to the divestiture of
the Acoustics Europe business of $2.5 million and decreased incentive compensation of $1.6 million.

Impairment charges. There were no non-cash impairment charges for the years ended December 31, 2018 and 2017.

(Gain) loss on disposals of property, plant and equipment—net. Gain on disposals of property, plant and equipment -
net for the year ended December 31, 2018 was $1.1 million, compared to $0.8 million for the year ended December 31, 2017.
The gain on disposals of property, plant and equipment - net for the year ended December 31, 2018 includes a gain of $1.3
million on the sale of a building related to the closure of the seating segment’s U.K. facility, partially offset by a $0.2 million
loss from the disposition of equipment in connection with the consolidation of two U.S. facilities in the components segment.
The gain on disposals of property, plant and equipment - net for the year ended December 31, 2017 includes a gain of $0.5
million on the sale of a building related to the closure of the finishing segment’s Richmond, Virginia facility and a gain of $0.4
million on the sale of equipment related to the closure of the components segment’s Buffalo Grove, Illinois facility. Changes in
the level of fixed asset disposals are dependent upon a number of factors, including changes in the level of asset sales,
operational restructuring activities, and capital expenditure levels.

Restructuring. Restructuring costs were $4.5 million for the year ended December 31, 2018 compared to $4.3 million
for the year ended December 31, 2017. During 2018 and 2017, such costs primarily relate to actions resulting from the global
cost reduction and restructuring program announced on March 1, 2016. During 2018, such costs were primarily move costs
related to the consolidation of two U.S. facilities in the components segment, the closure of a U.S. facility in the acoustics
segment, the closure of a U.S. facility in the finishing segment and the closure of a U.K. facility in the seating segment,
partially offset by a reduction in expense as a result of the statute of limitations expiring on certain unasserted employment
matter claims in Brazil that were reserved within the finishing segment. During 2017, such costs were primarily severance and

move costs related to the consolidation of two U.S. facilities in the components segment, the consolidation of two U.S. facilities
in the finishing segment and the closure of a facility in Brazil in the finishing segment.

Interest expense. Interest expense was $33.4 million for the year ended December 31, 2018 compared with $33.1

million for the year ended December 31, 2017. The increase in interest expense primarily relates to higher interest rates for the
year ended December 31, 2018 as compared to the year ended December 31, 2017, partially offset by a decrease in outstanding
long-term debt balances. The effective interest rate on the Company’s total outstanding indebtedness for the year ended
December 31, 2018 was 8.2% as compared to 7.6% for the year ended December 31, 2017.

See “Senior Secured Credit Facilities” in the Liquidity and Capital Resources section of this MD&A for further

discussion.

Gain on extinguishment of debt. Gain on extinguishment of debt was $2.2 million for the year ended December 31,

2017 and relates to the repurchase of $20.0 million of second lien term loans for $16.8 million in the second and third quarters
of 2017. In connection with the repurchase, the Company wrote off $0.4 million of previously unamortized debt discount and
$0.4 million of previously unamortized deferred financing costs, which were recorded as a reduction to the gain on
extinguishment of debt.

See “Senior Secured Credit Facilities” in the Liquidity and Capital Resources section of this MD&A for further

discussion.

In the fourth quarter of 2017, the Company retired $2.4 million of foreign debt with cash received from the sale of

Acoustics Europe and incurred a $0.2 million prepayment fee, which was recorded as an offset to the gain on extinguishment of
debt.

Equity income. Equity income was $1.0 million for both the years ended December 31, 2018 and 2017.

Loss on divestiture. Loss on divestiture was $8.7 million for the year ended December 31, 2017. On August 30, 2017,

the Company completed the divestiture of its Acoustics Europe business. The divestiture resulted in an $8.7 million pre-tax
loss.

See Note 4, “ Divestiture” in the notes to the consolidated financial statements for further information.

Other income —net. Other income-net was $0.7 million for the year ended December 31, 2018, compared with $0.3

million for the year ended December 31, 2017. During 2018 and 2017, other income-net consisted of certain rental and royalty
income streams. During 2018, other income-net also includes $0.4 million of legal settlement income related to proceeds from
a supplier claim in the seating segment associated with periods prior to the Company’s go public business combination and $0.1
million of employee benefit plan non-service costs.

Loss before income taxes. For the reasons described above, loss before income taxes was $15.3 million for the year

ended December 31, 2018 compared with $14.9 million for the year ended December 31, 2017.

Tax benefit. The tax benefit was $2.1 million for the year ended December 31, 2018, compared with $10.4 million for

the year ended December 31, 2017. The effective tax rate for the year ended December 31, 2018 was 13.8%, compared with
69.9% for the year ended December 31, 2017. The Company’s tax benefit is impacted by a number of factors, including,
among others, the amount of taxable income or loss at the U.S. federal statutory rate, the amount of taxable earnings derived in
foreign jurisdictions in which the majority have tax rates higher than the U.S. federal statutory rate after enactment of the Tax
Reform Act, permanent items, state tax rates in jurisdictions where we do business and the ability to utilize various tax credits
and net operating loss carry forwards to reduce income tax expense. The income tax benefit also includes the impact of
provision to return adjustments, adjustments to valuation allowances and reserve requirements for unrecognized tax positions.
For the years ended December 31, 2018 and 2017, the tax benefit was impacted by the enactment of the Tax Reform Act.

The 2018 effective tax rate of 13.8% differs from the U.S. federal statutory rate of 21% due primarily to the provisions
in the Tax Reform Act that require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of
an allowable return on the foreign subsidiary’s tangible assets which is referred to as the global intangible low-taxed income
(“GILTI”) provision. This provision resulted in an increase to the 2018 tax provision of $2.1 million. Also impacting the
effective tax rate are state taxes and the impact of higher foreign tax rates when compared to the 21% U.S. federal statutory tax
rate (primarily in Germany and Mexico).

The 2017 effective tax rate of 69.9% differs from the U.S. federal statutory rate of 35% due primarily to the provision

subsidiary earnings, change in assertion regarding permanent reeinvestment of earnings in our wholly-owned foreign
subsidiaries and the vesting and forfeiture of share-based compensation for which no tax benefit will be realized.

The Company recognized the provisional impact of the Tax Reform Act in its consolidated financial statements for the

year ended December 31, 2017. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the
Tax Reform Act, the Company revalued its ending net deferred tax liabilities at December 31, 2017 and recognized a
provisional $11.1 million tax benefit in the Company’s consolidated statements of operations for the year ended December 31,
2017. The Company had an estimated $54.5 million of undistributed foreign earnings and profits subject to the deemed
mandatory repatriation and recognized a provisional $5.3 million of income tax expense in the Company’s consolidated
statements of operations for the year ended December 31, 2017. During the year ended December 31, 2018, the Company
finalized the accounting for these items and recorded an adjustment to reduce the amount of income tax expense attributable to
the deemed mandatory repatriation of foreign subsidiary earnings and profits by $0.5 million. The final adjustment required to
revalue net deferred tax liabilities was immaterial.

See Note 14, “Income Taxes” in the consolidated financial statements for a complete reconciliation of the U.S.
statutory tax rate to the effective tax rate and more information on the Tax Reform Act and tax events in 2018 and 2017
affecting each year’s respective tax rates.

Net loss. For the reasons described above, net loss was $13.2 million for the year ended December 31, 2018 compared

with $4.5 million for the year ended December 31, 2017.

Net gain (loss) attributable to noncontrolling interests. There was no net gain attributable to noncontrolling interests

for the year ended December 31, 2018, compared with an immaterial net gain attributable to noncontrolling interests for the
year ended December 31, 2017. Noncontrolling interests represented the Rollover Participants (as defined in “Item 1.
Business”) interest in JPHI which was reduced to 0% as of February 23, 2017.

See Note 11, “Shareholders’ (Deficit) Equity” in the consolidated financial statements for further discussion.

Other comprehensive (loss) income. Other comprehensive loss was $3.4 million for the year ended December 31, 2018

compared with an other comprehensive gain of $12.2 million for the year ended December 31, 2017. The decrease was driven
by less favorable foreign currency translation adjustments in 2018 compared to 2017 and less favorable employee retirement
plan adjustments in 2018 compared to 2017, partially offset by the change in unrealized gains (losses) on cash flow hedges.

Other comprehensive loss for foreign currency translation adjustments was $4.6 million for the year ended December
31, 2018 compared with other comprehensive income for foreign currency translation adjustments of $10.5 million for the year
ended December 31, 2017. Foreign currency translation adjustments are based on fluctuations in the value of foreign
currencies (primarily the Euro) against the U.S. Dollar each period.

Employee retirement plan adjustments was a loss of $0.2 million for the year ended December 31, 2018, compared

with a gain of $0.4 million for the year ended December 31, 2017. The employee retirement plan adjustments are based on
actuarial valuations using a December 31 measurement date that include key assumptions regarding discount rates, expected
returns on plan assets, retirement and mortality rates, future compensation increases, and health care cost trend rates. The
employee retirement plan gain for the year ended December 31, 2017 primarily relates to actuarial gains recognized in U.S.
pension and postretirement health care benefit plans within our finishing segment due to higher actual plan asset returns
compared with the expected returns on plan assets and a decrease in expected future claim costs, respectively, partially offset by
actuarial losses recognized in a German pension plan within our finishing segment due to an increase in future expected
compensation.

Other comprehensive income for unrealized gains on cash flow hedges was $1.3 million for both the year ended
December 31, 2018 and 2017. The net change in unrealized gains on cash flow hedges is based on the changes in current
interest rates and market expectations of the timing and amount of future interest rate changes. In both 2018 and 2017, the fair
value of the hedging instruments increased, based on actual and future expectations for interest rate increases.

Adjusted EBITDA. For the year ended December 31, 2018, Adjusted EBITDA was $67.2 million, or 11.0% of net

sales, compared with $67.8 million, or 10.4% of net sales, for the year ended December 31, 2017, a decrease of $0.5 million.
The decrease reflects lower Adjusted EBITDA in the acoustics segment of $6.5 million and the components segment of $0.1
million, partially offset by increased Adjusted EBITDA in the seating segment of $3.4 million, the finishing segment of $1.3
million and lower corporate expenses of $1.4 million. The change in Adjusted EBITDA in the acoustics segment includes a
$2.1 million decrease from the sale of the Acoustics Europe business. Changes in foreign currency exchange rates compared
with the U.S dollar had a positive impact of $0.7 million on consolidated Adjusted EBITDA for the year ended December 31,
2018 compared with the year ended December 31, 2017, positively impacting the finishing and seating segments’ Adjusted
EBITDA by $0.6 million and $0.1 million, respectively.

See “Segment Financial Data” within this Item 7, “Management’s Discussion and Analysis,” for further discussion on

Adjusted EBITDA for each segment.

Year ended December 31, 2017 and the year ended December 31, 2016

Net sales. Net sales were $648.6 million for the year ended December 31, 2017, a decrease of $56.9 million, or 8.1%,
compared with $705.5 million for the year ended December 31, 2016, reflecting decreased net sales in the acoustics segment of
$43.3 million, the components segment of $15.0 million and the seating segment of $1.9 million, partially offset by increased
net sales in the finishing segment of $3.4 million.

The decrease of $43.3 million in the acoustics segment was partially due to a $10.5 million decrease related to the sale

of the Acoustics Europe business. The decrease of $15.0 million in the components segment was partially due to a decrease of
$8.9 million as a result of the strategic decision to discontinue certain product lines selling under the Assembled Products brand
in 2016. The increase of $3.4 million in the finishing segment was net of a $4.7 million decrease associated with the wind down
of a facility in Brazil.

Changes in foreign currency exchange rates compared with the U.S. dollar had a net positive impact of $1.2 million on

consolidated net sales during the year ended December 31, 2017 compared with 2016, positively impacting the finishing
segment’s net sales by $1.5 million and negatively impacting the seating segment’s net sales by $0.3 million. This was due
principally to the weakening of the U.S. dollar against the Euro during the year ended December 31, 2017.

See “Segment Financial Data” within Item 7, “Management’s Discussion and Analysis”, for further discussion on net

sales for each segment.

Cost of goods sold. Cost of goods sold was $517.8 million for the year ended December 31, 2017, compared with

$574.4 million for the year ended December 31, 2016. The decrease in cost of goods sold was primarily due to lower net sales
volumes in the acoustics, components and seating segments, lower labor and material usage costs in the acoustics segment as a
result of operational efficiencies, reduced costs resulting from the Company’s global cost reduction and restructuring program
and decreased health care and workers compensation costs due to lower claims, partially offset by higher organic net sales
volumes in the finishing segment, operational inefficiencies in the components and seating segments and a $1.0 million
negative impact related to foreign currency exchange rates.

The reduced costs resulting from the Company’s global cost reduction and restructuring program were due to lower
manufacturing costs in the finishing segment as a result of the wind down of a facility in Brazil, lower manufacturing costs in
the components segments due to the strategic decision to discontinue certain product lines selling under the Assembled Products
brand in 2016 and lower manufacturing costs in the acoustics segment due to the sale of the Acoustics Europe business of $7.8
million.

Gross profit. For the reasons described above, gross profit was $130.9 million for the year ended December 31, 2017,

compared with $131.1 million for the year ended December 31, 2016.

Selling and administrative expenses. Selling and administrative expenses were $103.9 million for the year ended

December 31, 2017, compared with $113.8 million for the year ended December 31, 2016, a decrease of $9.9 million.

The decrease is primarily due to reduced selling and administrative expenses resulting from the Company’s global cost

reduction and restructuring program of $6.1 million, which includes $3.1 million related to the closure of facilities in the
components and finishing segments, as well as decreased corporate expenses of $4.1 million primarily related to professional
fees associated with supply chain consulting incurred in 2016, a decrease due to the sale of the Acoustics Europe business and a
reduction of bad debt expenses of $1.6 million due to improved collections. The decrease was partially offset by increased
incentive compensation of $4.4 million, an increase in share-based compensation expense of $1.9 million, primarily due to a
decrease in assumed vesting of Adjusted EBITDA based awards in the second quarter of 2016, which resulted in a $2.5 million
reversal of previously recorded expense, and a $0.5 million negative impact related to foreign currency exchange rates.

Impairment charges. There were no non-cash impairment charges for the year ended December 31, 2017. Non-cash
impairment charges for the year ended December 31, 2016 were $63.3 million, primarily relating to charges of $29.8 million
and $33.2 million for the impairment of goodwill in the acoustics and components segments, respectively.

See “Factors that Affect Operating Results - Key Events” in this MD&A and Note 8, “Goodwill and Other Intangible

Assets” of the accompanying consolidated financial statements for further information.

(Gain) loss on disposals of property, plant and equipment-net. Gain on disposals of property, plant and equipment - net

for the year ended December 31, 2017 was $0.8 million, compared to a loss of $0.9 million for the year ended December 31,
2016. The gain on disposals of property, plant and equipment - net for the year ended December 31, 2017 includes a gain of
$0.5 million on the sale of a building related to the closure of the finishing segment’s Richmond, Virginia facility and a gain of
$0.4 million on the sale of equipment related to the closure of the components segment’s Buffalo Grove, Illinois facility. The

loss on disposals of property, plant and equipment - net for the year ended December 31, 2016 includes a loss of $0.6 million on
a sale of a seating segment facility. Changes in the level of fixed asset disposals are dependent upon a number of factors,
including changes in the level of asset sales, operational restructuring activities, and capital expenditure levels.

Restructuring. Restructuring costs were $4.3 million for the year ended December 31, 2017 compared to $7.2 million
for the year ended December 31, 2016. During 2017 and 2016, such costs primarily relate to actions resulting from the global
cost reduction and restructuring program announced on March 1, 2016. During 2017, such costs were primarily severance and
move costs related to the consolidation of two U.S. facilities in the components segment, the consolidation of two U.S. facilities
in the finishing segment and the closure of a facility in Brazil in the finishing segment. During 2016, such costs primarily
related to severance actions in all segments, including costs related to the closure of the components segment’s facility in
Buffalo Grove, Illinois and the wind down of the finishing segment’s facility in Brazil. Included within the restructuring costs
for the wind down of the Brazil facility are charges related to a loss contingency for certain employment matter claims.

Interest expense. Interest expense was $33.1 million for the year ended December 31, 2017 compared with $31.8

million for the year ended December 31, 2016. The increase in interest expense for the year ended December 31, 2017
primarily relates to $1.9 million recognized in 2017 related to the Company’s interest rate swaps which were effective
December 30, 2016. The effective interest rate on the Company’s total outstanding indebtedness for the year ended December
31, 2017 was 7.6% as compared to 7.0% for the year ended December 31, 2016.

See “Senior Secured Credit Facilities” in the Liquidity and Capital Resources section of this MD&A for further

discussion.

Gain on extinguishment of debt. Gain on extinguishment of debt was $2.2 million for the year ended December 31,

2017. The gain on extinguishment of debt in 2017 relates to the repurchase of $20.0 million of second lien term loans for $16.8
million in the second and third quarters of 2017. In connection with the repurchase, the Company wrote off $0.4 million of
previously unamortized debt discount and $0.4 million of previously unamortized deferred financing costs, which were
recorded as a reduction to the gain on extinguishment of debt.

See “Senior Secured Credit Facilities” in the Liquidity and Capital Resources section of this MD&A for further

discussion.

In the fourth quarter of 2017, the Company retired $2.4 million of foreign debt with cash received from the sale of

Acoustics Europe and incurred a $0.2 million prepayment fee, which was recorded as an offset to the gain on extinguishment of
debt.

Equity income. Equity income was $1.0 million for the year ended December 31, 2017, compared with $0.7 million for

the year ended December 31, 2016.

Loss on divestiture. Loss on divestiture was $8.7 million for the year ended December 31, 2017. On August 30, 2017,

the Company completed the divestiture of its Acoustics Europe business. The divestiture resulted in an $8.7 million pre-tax
loss, of which $7.9 million was recorded in the second quarter of 2017 when the business was classified as held for sale and
written down to estimated fair value less costs to sell and $0.8 million was recorded in the third quarter of 2017 based on
changes in the net assets of the business and additional foreign currency translation adjustments upon closing of the divestiture.

See Note 4, “ Divestiture” in the notes to the consolidated financial statements for further information.

Other income -net. Other income-net was $0.3 million for the year ended December 31, 2017, compared with $0.9

million for the year ended December 31, 2016. During 2017 and 2016, other income-net consisted of certain rental and royalty
income streams. During 2016, other income-net also included other one-time transactions within our finishing segment.

Loss before income taxes. For the reasons described above, loss before income taxes was $14.9 million for the year

ended December 31, 2017 compared with $84.3 million for the year ended December 31, 2016.

Tax benefit. The tax benefit was $10.4 million for the year ended December 31, 2017, compared with $6.3 million for

the year ended December 31, 2016. The effective tax rate for the year ended December 31, 2017 was 69.9%, compared with
7.5% for the year ended December 31, 2016. The Company’s tax benefit is impacted by a number of factors, including, among
others, the amount of taxable income or loss at the U.S. federal statutory rate, the amount of taxable earnings derived in foreign
jurisdictions that all have tax rates lower than the U.S. federal statutory rate prior to enactment of the Tax Reform Act,
permanent items, state tax rates in jurisdictions where we do business and the ability to utilize various tax credits and net
operating loss carry forwards to reduce income tax expense. The income tax benefit also includes the impact of provision to
return adjustments, adjustments to valuation allowances and reserve requirements for unrecognized tax positions. For the year
ended December 31, 2017, the tax benefit was impacted by the enactment of the Tax Reform Act.

The 2017 effective tax rate of 69.9% differs from the U.S. federal statutory rate of 35% due primarily to the provision

in the Tax Reform Act that reduces the U.S. federal income tax rate to 21% from 35% effective January 1, 2018, state tax
benefits, the impact of lower foreign tax rates when compared to the 35% U.S. federal 2017 statutory tax rate (primarily in
Germany and Mexico) and the reversal of the valuation allowance on the deferred tax assets at a foreign subsidiary. These items
were partially offset by the impact of the tax on the one-time deemed mandatory repatriation of undistributed foreign subsidiary
earnings, change in assertion regarding permanent reinvestment of earnings in our wholly-owned foreign subsidiaries and the
vesting and forfeiture of share-based compensation for which no tax benefit will be realized.

On December 22, 2017, the President of the United States signed into law comprehensive tax legislation commonly
referred to as the Tax Reform Act. The legislation significantly changed U.S. tax law by lowering corporate income tax rates,
implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries,
among others. The Tax Reform Act also added many new provisions including changes to bonus depreciation and the
deductions for executive compensation and interest expense. The Tax Reform Act permanently reduces the U.S. corporate
income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018.

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax

assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
reverse. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Reform Act, the
Company revalued its ending net deferred tax liabilities at December 31, 2017 and recognized a provisional $11.1 million tax
benefit in the Company’s consolidated statements of operations for the year ended December 31, 2017.

The Tax Reform Act provided for a one-time deemed mandatory repatriation of post-1986 undistributed foreign

subsidiary earnings and profits through the year ended December 31, 2017. The Company had an estimated $54.5 million of
undistributed foreign earnings and profits subject to the deemed mandatory repatriation and recognized a provisional $5.3
million of income tax expense in the Company’s consolidated statements of operations for the year ended December 31, 2017.
After the utilization of existing net operating loss carryforwards, the Company will not incur any U.S. federal cash taxes
resulting from the deemed mandatory repatriation.

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the

application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or
analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax
Reform Act. The Company recognized the provisional tax impacts related to deemed repatriated earnings and the revaluation of
deferred tax assets and liabilities and included those estimated amounts in its consolidated financial statements for the year
ended December 31, 2017.

The 2016 effective tax rate of 7.5% differs from the U.S. federal statutory rate of 35.0% due primarily to the impact of

non-deductible impairment charges recorded for the components and acoustics segments, the change in assertion regarding
permanent reinvestment of earnings in our non-majority joint venture holding and increases in valuation allowances, partially
offset by state tax benefits, the impact of lower foreign tax rates when compared to the U.S. federal statutory tax rate (primarily
in Germany and Mexico) and a reduction in the reserve for uncertain tax positions as a result of the lapsing of the statute of
limitations in one of the Company’s non U.S. tax jurisdictions. The change in assertion at the joint venture was driven by
several factors. Prior to the second quarter of 2016, the Company had the ability and intent to block the payment of
distributions; the Company changed its stance in the second quarter of 2016 to be open to joint venture distributions. This
change coincided with the a re-evaluation of the joint venture partners during that quarter of the willingness and ability of the
entity to distribute excess cash balances given the maturity, stability and revised growth expectations of the joint venture
operations. The impact of this change in assertion was to reduce the income tax benefit for the year ended December 31, 2016
by $2.9 million.

See Note 14, “Income Taxes” in the consolidated financial statements for a complete reconciliation of the U.S.
statutory tax rate to the effective tax rate and more information on tax events in 2017 and 2016 affecting each year’s respective
tax rates.

Net loss. For the reasons described above, net loss was $4.5 million for the year ended December 31, 2017 compared

with $78.1 million for the year ended December 31, 2016.

Net gain (loss) attributable to noncontrolling interests. Net gain attributable to noncontrolling interests was immaterial
for the year ended December 31, 2017, compared with a net loss attributable to noncontrolling interests of $10.8 million for the
year ended December 31, 2016. Noncontrolling interests represented the Rollover Participants interest in JPHI which was
reduced to 0% as of February 23, 2017.

See Note 11, “Shareholders’ (Deficit) Equity” in the consolidated financial statements for further discussion.

Other comprehensive (loss) income. Other comprehensive income was $12.2 million for the year ended December 31,

2017 compared with an other comprehensive loss of $6.5 million for the year ended December 31, 2016. The increase was
driven by more favorable foreign currency translation adjustments in 2017 compared to 2016, the change in unrealized gains
(losses) on cash flow hedges and employee retirement plan adjustments.

Foreign currency translation adjustments are based on fluctuations in the value of foreign currencies (primarily the

Euro) against the U.S. Dollar each period.

Other comprehensive income for unrealized gains (losses) on cash flow hedges increased for the year ended December
31, 2017 as compared to the year ended December 31, 2016 due to a shift from an unrealized loss to an unrealized gain position
on cash flow hedges in 2017 compared to an increase in the unrealized loss position on cash flow hedges in 2016. The net
change in unrealized gains (losses) on cash flow hedges is based on the changes in current interest rates and market
expectations of the timing and amount of future interest rate changes. In 2017, the hedging instruments shifted to a net gain
position, based on future expectations for interest rate increases.

Employee retirement plan adjustments was a gain of $0.4 million for the year ended December 31, 2017, compared

with a loss of $0.6 million for the year ended December 31, 2016. The employee retirement plan adjustments are based on
actuarial valuations using a December 31 measurement date that include key assumptions regarding discount rates, expected
returns on plan assets, retirement and mortality rates, future compensation increases, and health care cost trend rates. The
employee retirement plan gain for the year ended December 31, 2017 primarily related to actuarial gains recognized in U.S.
pension and postretirement health care benefit plans within our finishing segment due to higher actual plan asset returns
compared with the expected returns on plan assets and a decrease in expected future claim costs, respectively, partially offset by
actuarial losses recognized in a German pension plan within our finishing segment due to an increase in future expected
compensation. The employee retirement plan loss for the year ended December 31, 2016 primarily related to actuarial losses
recognized in a UK pension plan within our finishing segment related to decreasing discount rates.

Adjusted EBITDA. For the year ended December 31, 2017, Adjusted EBITDA was $67.8 million, or 10.4% of net

sales, compared with $64.2 million, or 9.1% of net sales, for the year ended December 31, 2016, an increase of $3.6 million.
The increase reflects higher Adjusted EBITDA in the finishing segment of $3.5 million, the seating segment of $0.2 million, the
acoustics segment of $0.1 million and lower corporate expenses of $4.1 million, partially offset by decreased Adjusted EBITDA
in the components segment of $4.4 million. The change in Adjusted EBITDA in the acoustics segment includes a $1.2 million
decrease from the sale of the Acoustics Europe business. Changes in foreign currency exchange rates compared with the U.S.
dollar had a positive impact of $0.1 million on consolidated adjusted EBITDA for the year ended December 31, 2017 compared
with the year ended December 31, 2016.

See “Segment Financial Data” within this MD&A for further discussion on Adjusted EBITDA for each segment.

Key Measures the Company Uses to Evaluate Its Performance

EBITDA and Adjusted EBITDA. The Company uses “Adjusted EBITDA” as the primary measure of profit or loss for

the purposes of assessing the operating performance of its segments. The Company defines EBITDA as net income (loss)
before interest expense, provision (benefit) for income taxes, depreciation and amortization. The Company defines Adjusted
EBITDA as EBITDA, excluding the impact of operational restructuring charges and non-cash or non-operational losses or
gains, including goodwill and long-lived asset impairment charges, gains or losses on disposal of property, plant and
equipment, divestitures and extinguishment of debt, integration and other operational restructuring charges, transactional legal
fees, other professional fees, purchase accounting adjustments, and non-cash share based compensation expense.

Management believes that Adjusted EBITDA provides a more clear picture of the Company’s operating results by

eliminating expenses and income that are not reflective of the underlying business performance. The Company uses this metric
to facilitate a comparison of the Company’s operating performance on a consistent basis from period to period and to analyze
the factors and trends affecting its segments. The Company’s internal plans, budgets and forecasts use Adjusted EBITDA as a
key metric and the Company uses this measure to evaluate its operating performance and segment operating performance and
to determine the level of incentive compensation paid to its employees.

The Senior Secured Credit Facilities (defined in Note 9, “Debt and Hedging Instruments”, and below) definition of

EBITDA excludes income of partially owned affiliates, unless such earnings have been received in cash.

Set forth below is a reconciliation of Adjusted EBITDA to net loss (in thousands) (unaudited):

Net loss

Tax benefit

Interest expense

Depreciation and amortization

EBITDA

Adjustments:

Impairment charges(1)
Restructuring(2)
Integration and other restructuring costs(3)
Share-based compensation(4)
(Gain) loss on disposals of property, plant and equipment - net (5)
Gain on extinguishment of debt (6)
Loss on divestiture (7)

Total adjustments

Adjusted EBITDA

Year Ended
December 31,
2018
(Restated)

Year Ended
December 31,
2017

Year Ended
December 31,
2016

(13,160) $

(4,473) $

(2,105)

33,437

42,604

60,776

—

4,458

410

2,709

(1,142)

—

6,435

(10,384)

33,089

38,934

57,166

—

4,266

(569)

1,119

(759)

(2,201)

8,730

10,586

67,211

67,752

(78,053)

(6,296)

31,843

44,041

(8,465)

63,285

7,232

1,980

(752)

880

—

72,625

64,160

(1)

(2)

(3)

(4)

(5)

Impairment charges for the year ended December 31, 2016 primarily relate to non-cash impairment of goodwill of
$29.8 million and $33.2 million in the acoustics and components segments, respectively. See “Factors that Affect
Operating Results - Key Events” within this MD&A and Note 8, “Goodwill and Other Intangible Assets” of the
accompanying consolidated financial statements for further information.

Restructuring includes costs associated with exit or disposal activities as defined by GAAP related to facility
consolidation, including one-time employee termination benefits, costs to close facilities and relocate employees,
and costs to terminate contracts other than capital leases. See Note 5, “Restructuring Costs” of the accompanying
consolidated financial statements for further information.

In 2018, integration and other restructuring costs included $0.3 million for costs related to the exit of the non-core
smart meter product line in the components segment, $0.2 million for expected settlement costs related to a legal
claim in the former Assembled Products business in the components segment associated with periods prior to the
Company’s go public business combination, $0.1 million related to legal entity restructuring activities and $0.1
million associated with the insurance deductible related to a force majeure incident at a supplier in the seating
segment. The supplier incident had resulted in incremental costs to maintain production throughout 2018, with
such costs offset by insurance recoveries received during the third and fourth quarters of 2018. These costs were
partially offset by $0.4 million of legal settlement income related to proceeds from a supplier claim in the seating
segment associated with periods prior to the Company’s go public business combination. Such costs are not
included in restructuring for GAAP purposes.

In 2017, integration and restructuring costs includes the reversal of a liability recorded in acquisition accounting
from the Business Combination in 2014. In 2016, integration and other restructuring costs includes costs
associated with the start-up of new acoustics segment facilities in Warrensburg, Missouri and Richmond, Indiana.
Additionally, the costs include a $0.6 million reversal of a reserve related to the Newcomerstown fire recorded in
acquisition accounting for the Business Combination in 2014 and $0.7 million of charges recorded to reduce
inventory balances to estimated net realizable value at our Brazil location within the finishing segment.

Represents share-based compensation expense for awards under the Company’s 2014 Omnibus Incentive Plan.
During 2016, share based compensation included $2.5 million of income due to a decrease in assumed vesting
levels of Adjusted EBITDA based awards. See Note 12, “Share-Based Compensation” of the accompanying
consolidated financial statements for further information.

(Gain) loss on disposals of property, plant and equipment - net for the year ended December 31, 2018 includes a
gain of $1.3 million on the sale of a building related to the closure of the seating segment’s U.K. facility, partially
offset by a $0.2 million loss from the disposition of equipment in connection with the consolidation of two U.S.

facilities in the components segment. Gain on disposals of property, plant and equipment - net for the year ended
December 31, 2017 includes a gain of $0.5 million on the sale of a building related to the closure of the finishing
segment’s Richmond, Virginia facility and a gain of $0.4 million on the sale of equipment related to the closure of
the components segment’s Buffalo Grove, Illinois facility. Loss on disposals of property, plant and equipment - net
for the year ended December 31, 2016 includes a loss of $0.6 million on the sale of a seating segment facility.

Represents gains on extinguishment of Second Lien Term Loan debt, net of a prepayment fee to retire foreign debt
in the fourth quarter of 2017. See Note 9, “Debt and Hedging Instruments” of the accompanying consolidated
financial statements for further information.

On August 30, 2017, the Company completed the divestiture of its Acoustics Europe business. The divestiture
resulted in an $8.7 million pre-tax loss. See Note 4, “Divestiture” of the accompanying consolidated financial
statements for further information.

(6)

(7)

Adjusted EBITDA percentage of net sales. Adjusted EBITDA as a percentage of net sales is an important metric that

the Company uses to evaluate its operational effectiveness and business segments.

Segment Financial Data

The table below presents the Company’s net sales, Adjusted EBITDA and Adjusted EBITDA as a percentage of net

sales for each of its reportable segments for the years ended December 31, 2018 and 2017. The Company uses Adjusted
EBITDA as the primary measure of profit or loss for purposes of assessing the operating performance of its segments. See
“Key Measures the Company Uses to Evaluate Its Performance” above for our definition of Adjusted EBITDA and a
reconciliation of the Company’s consolidated Adjusted EBITDA to Net Loss, which is the nearest GAAP measure.

(in thousands, except percentages)

Finishing

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Components

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Seating

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Acoustics

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Corporate

Adjusted EBITDA

Consolidated

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Year Ended
December 31,
2018

Year Ended
December 31,
2017

Increase/(Decrease)

207,637

200,284

28,979

14.0%

27,661

13.8%

7,353

1,318

3.7 %

4.8

20 bps

83,028

82,621

9,746

11.7%

9,888

12.0%

407

(142)

0.5 %

(1.4)

(30) bps

160,322

159,129

19,747

12.3%

16,348

10.3%

1,193

3,399

0.7 %

20.8

200 bps

161,961

206,582

$ (44,621)

(21.6)%

20,868

12.9%

27,341

(6,473)

(23.7)

13.2%

(30) bps

(12,129)

612,948

67,211

11.0%

(13,486)

1,357

10.1 %

648,616

$ (35,668)

67,752

10.4%

(541)

60 bps

(5.5)%

(0.8)

The table below presents the Company’s net sales, Adjusted EBITDA and Adjusted EBITDA as a percentage of net

sales for each of its reportable segments for the years ended December 31, 2017 and 2016.

(in thousands, except percentages)

Finishing

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Components

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Seating

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Acoustics

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Corporate

Adjusted EBITDA

Consolidated

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Finishing Segment

(in thousands, except percentages)

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Year Ended
December 31,
2017

Year Ended
December 31,
2016

Increase/(Decrease)

200,284

196,883

27,661

13.8%

24,200

12.3%

3,401

3,461

1.7 %

14.3

150 bps

82,621

9,888

12.0%

97,667

14,249

$ (15,046)

(15.4)%

(4,361)

(30.6)

14.6%

(260) bps

159,129

161,050

(1,921)

(1.2)%

16,348

10.3%

16,122

10.0%

226

1.4

30 bps

206,582

249,919

$ (43,337)

(17.3)%

27,341

13.2%

27,202

10.9%

139

0.5

230 bps

(13,486)

648,616

67,752

10.4%

(17,613)

4,127

23.4 %

705,519

$ (56,903)

(8.1)%

64,160

3,592

5.6

9.1%

130 bps

Year Ended
December 31,
2018

Year Ended
December 31,
2017

207,637

200,284

28,979

14.0%

27,661

13.8%

Increase/(Decrease)

7,353

1,318

3.7%

4.8

20 bps

For the year ended December 31, 2018, net sales were $207.6 million, an increase of $7.4 million, or 3.7%, compared
with $200.3 million for the year ended December 31, 2017. On a constant currency basis (net positive currency impact of $4.6
million for the year ended December 31, 2018), revenues increased by $2.8 million for the year ended December 31, 2018.
Excluding currency impact, the increase in net sales for the year ended December 31, 2018 was primarily due to increases in
volume in industrial end markets globally and increased pricing, partially offset by a $0.6 million decrease associated with the
wind down of the finishing segment’s facility in Brazil and decreases in volume associated with strategic decisions related to
exiting unprofitable customers and products.

Adjusted EBITDA for the year ended December 31, 2018 increased $1.3 million to $29.0 million (14.0% of net sales)

from $27.7 million (13.8% of net sales) for the year ended December 31, 2017. On a constant currency basis (net positive
impact of $0.6 million for the year ended December 31, 2018), Adjusted EBITDA increased $0.7 million for the year ended
December 31, 2018. Excluding currency impact, the increase in Adjusted EBITDA for the year ended December 31, 2018 was
primarily due to increases in sales volume in industrial end markets globally, increased pricing and decreased incentive
compensation, partially offset by increased compensation costs due to additional selling personnel in 2018 supporting
commercial growth iniatives, raw material inflation, increased freight costs and increased manufacturing costs due to
operational inefficiencies related to the Richmond, Virginia plant closure and move of production to the Richmond, Indiana
facility.

(in thousands, except percentages)

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Year Ended
December 31,
2017

Year Ended
December 31,
2016

200,284

196,883

27,661

13.8%

24,200

12.3%

Increase/(Decrease)

3,401

3,461

1.7%

14.3

150 bps

For the year ended December 31, 2017, net sales were $200.3 million, an increase of $3.4 million, or 1.7%, compared
with $196.9 million for the year ended December 31, 2016. On a constant currency basis (net positive currency impact of $1.5
million for the year ended December 31, 2017), revenues increased by $1.9 million for the year ended December 31, 2017.
Excluding currency impact, the increase in net sales for the year ended December 31, 2017 was primarily due to increases in
demand from industrial end markets in Europe and North America, partially offset by a $4.7 million decrease associated with
the wind down of the finishing segment’s facility in Brazil and decreases in volume associated with strategic decisions related
to exiting unprofitable customers and products.

Adjusted EBITDA for the year ended December 31, 2017 increased $3.5 million to $27.7 million (13.8% of net sales)
from $24.2 million (12.3% of net sales) for the year ended December 31, 2016. Changes in foreign currency exchange rates did
not significantly impact Adjusted EBITDA. The increase in Adjusted EBITDA for the year ended December 31, 2017 primarily
resulted from increases in sales volume to industrial end markets in Europe and North America, savings in selling and
administrative expenses as a result of the Company’s global cost reduction and restructuring program and other spending
controls, partially offset by increased incentive compensation.

Components Segment

(in thousands, except percentages)

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Year Ended
December 31,
2018

Year Ended
December 31,
2017

Increase/(Decrease)

83,028

82,621

9,746

11.7%

9,888

12.0%

407

(142)

0.5%

(1.4)

(30) bps

For the year ended December 31, 2018, net sales were $83.0 million, an increase of $0.4 million or 0.5%, compared

with $82.6 million for the year ended December 31, 2017. The increase in net sales was primarily due to increased pricing and
higher sales volumes in smart utility meters in connection with the phase out of this product line, partially offset by lower sales
volumes in rail and perforated and expanded metal products.

Adjusted EBITDA decreased $0.1 million, or 1.4%, for the year ended December 31, 2018 to $9.7 million (11.7% of

net sales) compared to $9.9 million (12.0% of net sales) for the year ended December 31, 2017. The decrease in Adjusted
EBITDA for the year ended December 31, 2018 primarily resulted from raw material inflation for steel, lower sales volumes in
rail and perforated and expanded metal products, increased freight costs and higher labor and material usage costs as result of
operational inefficiencies, partially offset by increased pricing, decreased incentive compensation and reduced manufacturing
costs due to continuous improvement initiatives.

(in thousands, except percentages)

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Year Ended
December 31,
2017

Year Ended
December 31,
2016

Increase/(Decrease)

82,621

9,888

12.0%

97,667

14,249

$ (15,046)

(15.4)%

(4,361)

(30.6)

14.6%

(260) bps

For the year ended December 31, 2017, net sales were $82.6 million, a decrease of $15.0 million or 15.4%, compared

with $97.7 million for the year ended December 31, 2016. The decrease in net sales was primarily due to a decrease of $8.9
million as a result of the strategic decision to discontinue certain product lines selling under the Assembled Products brand in
2016 and lower sales volumes in the rail market.

Adjusted EBITDA decreased $4.4 million, or 30.6%, for the year ended December 31, 2017 to $9.9 million (12.0% of

net sales) compared to $14.2 million (14.6% of net sales) for the year ended December 31, 2016. The decrease in Adjusted
EBITDA for the year ended December 31, 2017 primarily resulted from lower volume in the rail market and unfavorable
product mix, increases in raw material prices primarily due to steel purchases, lower labor productivity on decreased volumes
and increased incentive compensation due to increased attainment percentages, partially offset by decreased selling and
administrative expenses from other spending controls and $0.9 million as a result of the strategic decision to discontinue certain
product lines selling under the Assembled Products brand in 2016 that were not profitable.

Seating Segment

(in thousands, except percentages)

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Year Ended
December 31,
2018

Year Ended
December 31,
2017

160,322

159,129

19,747

12.3%

16,348

10.3%

Increase/(Decrease)

1,193

3,399

0.7%

20.8

200 bps

For the year ended December 31, 2018, net sales were $160.3 million, an increase of $1.2 million, or 0.7%, compared
with $159.1 million for the year ended December 31, 2017. On a constant currency basis (net positive currency impact of $0.6
million for the year ended December 31, 2018), revenues increased by $0.6 million for the year ended December 31, 2018. The
increase in net sales for the year ended December 31, 2018 was primarily due to increases in sales volume in the construction
and agriculture markets and improved pricing, partially offset by a decrease in sales volume in the motorcycle market and
lower volume in the turf care market due to a late start to spring resulting in a shortened selling season.

For the year ended December 31, 2018, Adjusted EBITDA was $19.7 million (12.3% of net sales), compared to $16.3
million (10.3% of net sales) for the year ended December 31, 2017. On a constant currency basis (net positive currency impact
of $0.1 million for the year ended December 31, 2018), Adjusted EBITDA increased by $3.3 million for the year ended
December 31, 2018. The increase in Adjusted EBITDA for the year ended December 31, 2018 was primarily due to improved
pricing, increased sales volume in the construction and agriculture markets and lower material usage and labor costs from
continuous improvement projects, partially offset by decreased sales volume in the motorcycle and turf care markets, increased
incentive compensation, raw material inflation and higher freight costs.

(in thousands, except percentages)

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Year Ended
December 31,
2017

Year Ended
December 31,
2016

Increase/(Decrease)

159,129

161,050

(1,921)

(1.2)%

16,348

10.3%

16,122

10.0%

226

1.4

30 bps

For the year ended December 31, 2017, net sales were $159.1 million, a decrease of $1.9 million, or 1.2%, compared
with $161.1 million for the year ended December 31, 2016. On a constant currency basis (net negative currency impact of $0.3
million for the year ended December 31, 2017), revenues decreased by $1.6 million for the year ended December 31, 2017. The
decrease in net sales for the year ended December 31, 2017 was primarily due to decreases in volume in the turf care,
motorcycle and power sports markets, partially offset by an increase in volume in the construction market and higher pricing.

For the year ended December 31, 2017, Adjusted EBITDA was $16.3 million (10.3% of net sales), compared to $16.1

million (10.0% of net sales) for the year ended December 31, 2016. Changes in foreign currency exchange rates did not
significantly impact Adjusted EBITDA. The increase in Adjusted EBITDA for the year ended December 31, 2017 was
primarily due to savings in cost of goods sold and selling and administrative expenses resulting from the Company’s global cost
reduction program, supply chain initiatives, improved pricing, and other spending controls, partially offset by decreased sales
volume and operational inefficiencies resulting in higher material usage and increased freight costs.

Acoustics Segment

(in thousands, except percentages)

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Year Ended
December 31,
2018

Year Ended
December 31,
2017

Increase/(Decrease)

161,961

206,582

$ (44,621)

(21.6)%

20,868

12.9%

27,341

(6,473)

(23.7)

13.2%

(30) bps

For the year ended December 31, 2018, net sales were $162.0 million, a decrease of $44.6 million, or 21.6%,

compared with $206.6 million for the year ended December 31, 2017. Changes in foreign currency exchange rates did not
significantly impact net sales. The decrease was primarily due to $22.9 million of lower sales as a result of the divestiture of the
Acoustics Europe business in August 2017, a net decrease in vehicle platforms, a decrease in demand for car platforms due to a
shift from passenger cars to light trucks and sport utility vehicles and lower pricing on existing platforms.

For the year ended December 31, 2018, Adjusted EBITDA was $20.9 million (12.9% of net sales), compared with

$27.3 million (13.2% of net sales) for the year ended December 31, 2017. Changes in foreign currency exchange rates did not
significantly impact Adjusted EBITDA. The decrease in Adjusted EBITDA for the year ended December 31, 2018 was
primarily due to lower sales volumes, lower pricing on existing platforms, raw material inflation, higher freight costs, increased
manufacturing costs due to operational inefficiencies related to the Richmond, Indiana plant consolidation and $2.1 million due

to the divestiture of the Acoustics Europe business, partially offset by lower material usage and labor costs as a result of
operational continuous improvement initiatives, lower repair and maintenance costs and decreased incentive compensation.

(in thousands, except percentages)

Net sales

Adjusted EBITDA

Adjusted EBITDA % of net sales

Year Ended
December 31,
2017

Year Ended
December 31,
2016

Increase/(Decrease)

206,582

249,919

$ (43,337)

(17.3)%

27,341

13.2%

27,202

10.9%

139

0.5

230 bps

For the year ended December 31, 2017, net sales were $206.6 million, a decrease of $43.3 million, or 17.3%,

compared with $249.9 million for the year ended December 31, 2016. Changes in foreign currency exchange rates did not
significantly impact net sales. The decrease was primarily due to lower overall North American vehicle demand and a
significant decrease in demand for car platforms due to a shift from cars to light trucks and sport utility vehicles. The decrease
was also due to $10.5 million of lower sales as a result of the sale of the Acoustics Europe business which was sold on August
30, 2017, lower sales volumes as a result of a net decrease in vehicle platforms, and nonrecurring 2016 sales volumes related to
a competitor bankruptcy.

For the year ended December 31, 2017, Adjusted EBITDA was $27.3 million (13.2% of net sales), compared with

$27.2 million (10.9% of net sales) for the year ended December 31, 2016. Changes in foreign currency exchange rates did not
significantly impact Adjusted EBITDA. The increase in Adjusted EBITDA for the year ended December 31, 2017 was
primarily due to savings in cost of goods sold from lower labor costs and lower material usage costs from improved production
efficiencies and supply chain initiatives and savings in selling and administrative expenses resulting from the Company’s global
cost reduction programs and other spending controls. The increase in Adjusted EBITDA was partially offset by lower sales
volumes, increased incentive compensation and $1.2 million due to the sale of the Acoustics Europe business which was sold
on August 30, 2017.

Corporate

(in thousands, except percentages)

Adjusted EBITDA

Year Ended
December 31,
2018

Year Ended
December 31,
2017

Increase/(Decrease)

(12,129)

(13,486)

1,357

10.1%

Corporate expense is principally comprised of the costs of corporate operations, including the compensation and

benefits of the Company’s executive team and personnel responsible for treasury, finance, insurance, legal, information
technology, human resources, tax compliance and planning and the administration of employee benefits. Corporate expense
also includes third party legal, audit, tax and other professional fees and expenses, board of director compensation and
expenses, and the operating costs of the corporate office.

The decrease of $1.4 million in corporate expense for the year ended December 31, 2018 compared to the prior year
primarily resulted from lower third party professional fees and decreased incentive compensation, partially offset by increased
compensation costs due to higher headcount from open positions in 2017.

(in thousands, except percentages)

Adjusted EBITDA

Year Ended
December 31,
2017

Year Ended
December 31,
2016

Increase/(Decrease)

(13,486)

(17,613)

4,127

23.4%

The decrease of $4.1 million in corporate expense for the year ended December 31, 2017 compared to the prior year

primarily resulted from $2.8 million of non-recurring third-party professional fees associated with investments in
manufacturing and supply chain improvement initiatives incurred during the year ended December 31, 2016, the transition of
the Company’s Chief Executive Officer and Chief Operating Officer and other spending controls, partially offset by increased
incentive compensation.

Liquidity and Capital Resources

Background

The Company’s primary sources of liquidity are cash generated from its operations, available cash and borrowings

under its U.S. and foreign credit facilities. As of December 31, 2018, the Company had $58.2 million of available cash,
$29.4 million of additional borrowings available under the revolving credit facility portion of its U.S. credit agreement, and
$11.8 million available under revolving loan facilities that the Company maintains outside the U.S. As of December 31, 2018,
available borrowings under its U.S. revolving credit facility were reduced by outstanding letters of credit of $4.9 million.
Included in the Company’s consolidated cash balance of $58.2 million at December 31, 2018 is cash of $34.9 million held at
the Company’s non-U.S. operations. These funds, with some restrictions and tax implications, are available for repatriation as
deemed necessary by the Company. The Company’s U.S. credit agreement and foreign revolving loan facilities are available for
working capital requirements, capital expenditures and other general corporate purposes. We believe our existing cash on hand,
expected future cash flows from operating activities, and additional borrowings available under our U.S. and foreign credit
facilities provide sufficient resources to fund ongoing operating requirements as well as future capital expenditures, and debt
service requirements.

As of December 31, 2017, the Company had $48.9 million of available cash, $33.9 million of additional borrowings
available under the revolving credit facility portion of its U.S. credit agreement, and $12.7 million available under short-term
revolving loan facilities that the Company maintains outside the U.S. As of December 31, 2017, available borrowings under its
U.S. revolving credit facility were reduced by outstanding letters of credit of $6.1 million. Included in the Company’s
consolidated cash balance of $48.9 million at December 31, 2017 was $24.3 million of cash held at Jason’s non-U.S.
operations.

Indebtedness

As of December 31, 2018, the Company’s total outstanding indebtedness of $393.8 million was comprised of term

loans outstanding under its Senior Secured Credit Facilities of $375.7 million (net of a debt discount of $2.7 million and
deferred financing costs of $4.1 million), various foreign bank term loans and revolving loan facilities of $17.5 million and
capital lease obligations of $0.6 million. No borrowings were outstanding under the U.S. revolving loan facility portion of the
Senior Secured Credit Facilities as of December 31, 2018.

As of December 31, 2017, the Company’s total outstanding indebtedness of $401.5 million was comprised of
aggregate term loans outstanding under its Senior Secured Credit Facilities of $378.8 million (net of a debt discount of
$3.6 million and deferred financing costs of $5.6 million), various foreign bank term loans and revolving loan facilities of
$21.8 million and capital lease obligations of $0.8 million. No amounts were outstanding under the revolving credit facility
portion of the Senior Secured Credit Facilities as of December 31, 2017.

The Company maintains various bank term loan and revolving loan facilities outside the U.S. for local operating and

investing needs. Borrowings under these facilities totaled $17.5 million as of December 31, 2018, including borrowings of
$15.0 million incurred by the Company’s subsidiaries in Germany, and borrowings totaled $21.8 million as of December 31,
2017, including borrowings of $18.0 million incurred by the Company’s subsidiaries in Germany. The foreign debt obligations
in Germany primarily relate to term loans within our finishing segment of $15.0 million at December 31, 2018 and $18.0
million at December 31, 2017. The borrowings bear interest at fixed and variable rates ranging from 2.1% to 4.7% and are
subject to repayment in varying amounts through 2025.

Senior Secured Credit Facilities

General. On June 30, 2014, Jason Incorporated, as the borrower, entered into (i) the First Lien Credit Agreement, with
Jason Partners Holdings Inc., Jason Holdings, Inc. I, a wholly-owned subsidiary of Jason Partners Holdings Inc. (“Intermediate
Holdings”), the subsidiary guarantors party thereto and the several banks and other financial institutions or entities from time to
time party thereto (the “First Lien Credit Agreement”) and (ii) the Second Lien Credit Agreement, dated as of June 30, 2014,
with Jason Partners Holdings Inc., Intermediate Holdings, the subsidiary guarantors party thereto and the several banks and
other financial institutions or entities from time to time party thereto (the “Second Lien Credit Agreement” and, together with
the First Lien Credit Agreement, the “Credit Agreements”).

The First Lien Credit Agreement, as amended, provides for (i) term loans in the principal amount of $310.0 million

(the “First Lien Term Facility” and the loans thereunder the “First Lien Term Loans”), of which $292.5 million is outstanding
as of December 31, 2018, and (ii) a revolving loan of up to $34.3 million (including revolving loans, a $10.0 million swingline
loan sublimit, and a $12.5 million letter of credit sublimit) (the “Revolving Credit Facility”), in each case under the first lien
senior secured loan facilities (the “First Lien Credit Facilities”). The Second Lien Credit Agreement provides for term loans in
an aggregate principal amount of $110.0 million, of which $89.9 million is outstanding as of December 31, 2018, under the
second lien senior secured term loan facility (the “Second Lien Term Facility” and the loans thereunder the “Second Lien Term
Loans” and, the Second Lien Term Facility together with the First Lien Credit Facilities, the “Senior Secured Credit

Facilities”). During 2018, the Company amended its Revolving Credit Facility to extend the maturity date to June 30, 2020.
The amendment reduced the borrowing capacity from $40.0 million to $34.3 million until June 30, 2019, and thereafter, $30.0
million until June 30, 2020. In connection with the amendment, the Company paid deferred financing costs of $0.6 million
which have been recorded within other assets-net within the consolidated balance sheets.

The Revolving Credit Facility matures June 30, 2020, the First Lien Term Loans mature June 30, 2021 and the Second
Lien Term Loans mature June 30, 2022. The principal amount of the First Lien Term Loans amortizes in quarterly installments
equal to $0.8 million, with the balance payable at maturity. Neither the Revolving Credit Facility nor the Second Lien Term
Loans amortize, however each is repayable in full at maturity.

Security Interests. In connection with the Senior Secured Credit Facilities, Jason Partners Holdings Inc., Intermediate

Holdings, Jason Incorporated and certain of Jason Incorporated’s subsidiaries (the “Subsidiary Guarantors”), entered into a
(i) First Lien Security Agreement (the “First Lien Security Agreement”), dated as of June 30, 2014, and (ii) a Second Lien
Security Agreement (the “Second Lien Security Agreement”, together with the First Lien Security Agreement, the “Security
Agreements”), dated as of June 30, 2014. Pursuant to the Security Agreements, amounts borrowed under the Senior Secured
Credit Facilities and any swap agreements and cash management arrangements provided by any lender party to the Senior
Secured Credit Facilities or any of its affiliates are secured (i) with respect to the First Lien Credit Facilities, on a first priority
basis and (ii) with respect to the Second Lien Term Facility, on a second priority basis, by a perfected security interest in
substantially all of Jason Incorporated’s, Jason Partners Holdings Inc.’s, Intermediate Holdings’ and each Subsidiary
Guarantor’s tangible and intangible assets (subject to certain exceptions), including U.S. registered intellectual property and all
of the capital stock of each of Jason Incorporated’s direct and indirect wholly-owned material Restricted Subsidiaries (as
defined in the Credit Agreements) (limited, in the case of foreign subsidiaries, to 65% of the capital stock of first tier foreign
subsidiaries). In addition, pursuant to the Credit Agreements, Jason Partners Holdings Inc., Intermediate Holdings and the
Subsidiary Guarantors guaranteed amounts borrowed under the Senior Secured Credit Facilities.

Interest Rate and Fees. At our election, the interest rate per annum applicable to the loans under the Senior Secured

Credit Facilities is based on a fluctuating rate of interest determined by reference to either (i) a base rate determined by
reference to the higher of (a) the “administrative agent’s prime rate”, (b) the federal funds effective rate plus 0.50% or (c) the
Eurocurrency rate applicable for an interest period of one month plus 1.00%, plus an applicable margin equal to (x) 3.50% in
the case of the First Lien Term Loans, (y) 2.25% in the case of the Revolving Credit Facility or (z) 7.00% in the case of the
Second Lien Term Loans or (ii) a Eurocurrency rate determined by reference to the London Interbank Offered Rate (“LIBOR”),
adjusted for statutory reserve requirements, plus an applicable margin equal to (x) 4.50% in the case of the First Lien Term
Loans, (y) 3.25% in the case of the Revolving Credit Facility or (z) 8.00% in the case of the Second Lien Term Loans.
Borrowings under the First Lien Term Facility and Second Lien Term Facility are subject to a floor of 1.00% in the case of
Eurocurrency loans. The applicable margin for loans under the Revolving Credit Facility may be subject to adjustment based
upon Jason Incorporated’s consolidated first lien net leverage ratio.

Interest Rate Hedge Contracts. To manage exposure to fluctuations in interest rates, the Company entered into forward

interest rate swap agreements (“Swaps”) in 2015 with notional values totaling $210.0 million at December 31, 2018 and
December 31, 2017. The Swaps have been designated by the Company as cash flow hedges, and effectively fix the variable
portion of interest rates on variable rate term loan borrowings at a rate of approximately 2.08% prior to financing spreads and
related fees. The Swaps had a forward start date of December 30, 2016 and have an expiration date of June 30, 2020. As such,
the Company began recognizing interest expense related to the interest rate hedge contracts in the first quarter of 2017. For the
year ended December 31, 2018, the Company recognized $0.2 million of interest income related to the Swaps. There was $1.9
million interest expense recognized in 2017 and no interest expense recognized in 2016. Based on current interest rates, the
Company expects to recognize interest income of $1.5 million related to the Swaps in 2019.

The fair values of the Company’s Swaps are recorded on the consolidated balance sheets with the corresponding offset

recorded as a component of accumulated other comprehensive loss. The net fair value of the Swaps was a net asset of $1.9
million at December 31, 2018 and a net asset of $0.1 million at December 31, 2017, respectively. See the amounts recorded on
the consolidated balance sheets within the table below:

Interest rate swaps:

Recorded in other current assets

Recorded in other assets - net

Recorded in other current liabilities

Total net asset derivatives designated as hedging instruments

December 31, 2018

December 31, 2017

1,325

542

—

1,867

—

537

(458)

Mandatory Prepayment. Subject to certain exceptions, the Senior Secured Credit Facilities are subject to mandatory

prepayments in amounts equal to: (1) a percentage of the net cash proceeds from any non-ordinary course sale or other

disposition of assets (including as a result of casualty or condemnation) by Jason Incorporated or any of its Restricted
Subsidiaries in excess of a certain amount and subject to customary reinvestment provisions and certain other exceptions;
(2) 100% of the net cash proceeds from the issuance or incurrence of debt by Jason Incorporated or any of its Restricted
Subsidiaries (other than indebtedness permitted by the Senior Secured Credit Facilities); and (3) 75% (with step-downs to 50%,
25% and 0% based upon achievement of specified consolidated first lien net leverage ratios under the First Lien Credit
Facilities and specified consolidated total net leverage ratios under the Second Lien Term Facility) of annual excess cash flow,
as defined, of Jason Incorporated and its Restricted Subsidiaries. Other than the payment of customary “breakage” costs, Jason
Incorporated may voluntarily prepay outstanding loans at any time. For the year ended December 31, 2018, there is no required
mandatory excess cash flow prepayment under the Senior Secured Credit Facilities. At December 31, 2017, a mandatory
excess cash flow prepayment of $2.5 million under the Senior Secured Credit Facilities was included within the current portion
of long-term debt in the consolidated balance sheets. The mandatory prepayment of $2.5 million was paid on April 6, 2018.

During 2017, the Company repurchased $20.0 million of Second Lien Term Loans for $16.8 million. In connection

with the repurchase, the Company wrote off $0.4 million of previously unamortized debt discount and $0.4 million of
previously unamortized deferred financing costs, which were recorded as a reduction to the gain on extinguishment of debt.
The transactions resulted in a net gain of $2.4 million, which has been recorded within the consolidated statements of
operations.

In the fourth quarter of 2017, the Company utilized $2.4 million of cash received during the third quarter from the sale

of Acoustics Europe to retire foreign debt in Germany and incurred a $0.2 million prepayment fee, which was recorded as an
offset to the gain on extinguishment of debt.

Covenants. The Senior Secured Credit Facilities contain a number of customary affirmative and negative covenants
that, among other things, limit or restrict the ability of Jason Incorporated and its Restricted Subsidiaries to: incur additional
indebtedness (including guarantee obligations); incur liens; engage in mergers, consolidations, liquidations and dissolutions;
sell assets; pay dividends and make other payments in respect of capital stock; make acquisitions, investments, loans and
advances; pay and modify the terms of certain indebtedness; engage in certain transactions with affiliates; enter into negative
pledge clauses and clauses restricting subsidiary distributions; and change its line of business, in each case, subject to certain
limited exceptions.

In addition, under the Revolving Credit Facility, if the aggregate outstanding amount of all revolving loans, swingline

loans and certain letter of credit obligations exceed $10.0 million at the end of any fiscal quarter, Jason Incorporated and its
Restricted Subsidiaries will be required to not exceed a consolidated first lien net leverage ratio, currently specified at 4.50 to
1.00, with a decrease to 4.25 to 1.00 on December 31, 2019 and remaining at that level thereafter. If such outstanding amounts
do not exceed $10.0 million at the end of any fiscal quarter, no financial covenants are applicable. As of December 31, 2018 the
consolidated first lien net leverage ratio was 3.64 to 1.00 on a pro forma trailing twelve-month basis calculated in accordance
with the respective provisions of the Credit Agreements which exclude the Second Lien Term Loans from the calculation of net
debt (numerator) and allow the inclusion of certain pro forma adjustments and exclusion of certain specified or nonrecurring
costs and expenses in calculating Adjusted EBITDA (denominator). The aggregate outstanding amount of all revolving loans,
swingline loans and certain letters of credit was less than $10.0 million at December 31, 2018. As of December 31, 2018, the
Company was in compliance with the financial covenants contained in its credit agreements.

Events of Default. The Senior Secured Credit Facilities contain customary events of default, including nonpayment of

principal, interest, fees or other amounts; material inaccuracy of a representation or warranty when made; violation of a
covenant; cross-default to material indebtedness; bankruptcy events; inability to pay debts or attachment; material unsatisfied
judgments; actual or asserted invalidity of any security document; and a change of control. Failure to comply with these
provisions of the Senior Secured Credit Facilities (subject to certain grace periods) could, absent a waiver or an amendment
from the lenders under such agreement, restrict the availability of the Revolving Credit Facility and permit the acceleration of
all outstanding borrowings under the Credit Agreements.

Series A Preferred Stock

Holders of the 40,612 shares of Series A Preferred Stock are entitled to receive, when, as and if declared by the

Company’s Board of Directors, cumulative dividends at the rate of 8.0% per annum (the dividend rate) on the $1,000
liquidation preference per share of the Series A Preferred Stock, payable quarterly in arrears on each dividend payment date.
Dividends shall be paid in cash or, at the Company’s option, in additional shares of Series A Preferred Stock or a combination
thereof, and are payable on January 1, April 1, July 1, and October 1 of each year, commencing on the first such date after the
date of the first issuance of the Series A Preferred Stock.

The Company paid the following dividends on the Series A Preferred Stock in additional shares of Series A Preferred

Stock during the year ended December 31, 2018:

(in thousands, except share and per share amounts)

Record Date

Amount Per Share

Total Dividends Paid

Preferred Shares Issued

Payment Date

January 1, 2018

April 1, 2018

July 1, 2018

November 15, 2017

February 15, 2018

May 15, 2018

October 1, 2018

August 15, 2018

$20.00

$974

$751

$766

$781

968

748

763

778

On November 1, 2018, the Company announced a $20.00 per share dividend on its Series A Preferred Stock to be paid

in additional shares of Series A Preferred Stock on January 1, 2019 to holders of record on November 15, 2018. As of
December 31, 2018, the Company has recorded the 794 additional Series A Preferred Stock shares declared for the dividend of
$0.8 million within preferred stock in the consolidated balance sheets.

Seasonality and Working Capital

The Company uses net operating working capital (“NOWC”), a non-GAAP measure, as a percentage of the previous
twelve months of net sales as a key indicator of working capital management. The Company defines this metric as the sum of
trade accounts receivable and inventories less trade accounts payable as a percentage of net sales. NOWC as a percentage of
trailing twelve month net sales was 12.5% as of December 31, 2018 and 13.7% as of December 31, 2017. The calculation of
NOWC as a percentage of sales for December 31, 2017 excludes $22.9 million of trailing twelve month net sales relating to
Acoustics Europe, which was sold on August 30, 2017. Set forth below is a table summarizing NOWC as of December 31,
2018 and December 31, 2017. NOWC as a percentage of trailing twelve month net sales was favorably impacted by
approximately 0.5% as of December 31, 2018, related to the exit of the non-core smart utility meter subassemblies product line.

(in thousands)

Accounts receivable—net

Inventories

Accounts payable

NOWC

December 31, 2018

December 31, 2017

60,559

63,747

(47,497)

76,809

68,626

70,819

(53,668)

85,777

In overall dollar terms, the Company’s NOWC is generally lower at the end of the calendar year due to reduced sales

activity around the holiday season. NOWC generally peaks at the end of the first quarter as the Company experiences high
seasonal demand from certain customers, particularly those serving the motorcycle and turf care markets to fill the supply chain
for the spring season. There are, however, variations in the seasonal demands from year to year depending on weather,
customer inventory levels, customer planning, and model year changes. The Company historically generates approximately
51%-55% of its annual net sales in the first half of the year.

Short-Term and Long-Term Liquidity Requirements

The Company’s ability to make principal and interest payments on borrowings under its U.S. and foreign credit
facilities and its ability to fund planned capital expenditures will depend on its ability to generate cash in the future, which, to a
certain extent, is subject to general economic, financial, competitive, regulatory and other conditions. Based on its current level
of operations, the Company believes that its existing cash balances and expected cash flows from operations will be sufficient
to meet its operating requirements for at least the next 12 months. However, the Company may require borrowings under its
credit facilities and alternative forms of financings or investments to achieve its longer-term strategic plans.

Capital expenditures during the year ended December 31, 2018 were $13.8 million, or 2.2% of net sales. Capital
expenditures for 2019 are expected to be approximately 2.0% to 2.5% of net sales, but could vary from that depending on
business performance, growth opportunities, project activity and the amount of assets we lease instead of purchase. The
Company finances its annual capital requirements with funds generated from operations.

Warrant Repurchase

As of December 31, 2018, the Company had 13,993,773 warrants outstanding. Each outstanding warrant entitles the
registered holder to purchase one share of the Company’s common stock at a price of $12.00 per share, subject to adjustment,
at any time. The warrants will expire on June 30, 2019, or earlier upon redemption.

In February 2015, our Board of Directors authorized the purchase of up to $5.0 million of our outstanding warrants.

Management is authorized to effect purchases from time to time in the open market or through privately negotiated
transactions. There is no expiration date to this authority. No warrants were repurchased during the years ended December 31,
2018 and December 31, 2017.

Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, December 31, 2017, and December 31,
2016

(in thousands)

Cash flows provided by operating activities

Cash flows (used in) provided by investing activities

Cash flows used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Depreciation and amortization

Capital expenditures

Cash paid during the year for interest

Cash paid during the year for income taxes, net of refunds

Year Ended
December 31, 2018

Year Ended
December 31, 2017

Year Ended
December 31, 2016

29,757

30,091

(10,374)

(9,266)

(835)

9,282

48,887

58,169

42,604

13,753

30,687

6,480

715

(24,278)

1,498

8,026

40,861

48,887

38,934

15,873

30,242

6,843

35,117

(16,453)

(12,843)

(904)

4,917

35,944

40,861

44,041

19,780

28,717

7,163

Year Ended December 31, 2018 and Year Ended December 31, 2017

Cash Flows Provided by Operating Activities

For the year ended December 31, 2018, cash flows provided by operating activities were $29.8 million compared to
$30.1 million for the year ended December 31, 2017, a decrease of $0.3 million. For the year ended December 31, 2018, net
income exclusive of non cash items, net operating working capital and dividends from joint ventures provided $24.9 million,
$7.2 million and $0.8 million of operating cash flow, respectively, and changes in other assets and liability balances used $3.2
million of operating cash flow. For the year ended December 31, 2017, net income exclusive of non cash items, changes in
other assets and liability balances and net operating working capital provided $26.0 million, $2.1 million and $2.9 million of
operating cash flow, respectively, and transaction fees on divestiture used $0.9 million of operating cash flows.

Cash Flows (Used in) Provided by Investing Activities

Cash flows used in investing activities was $10.4 million for the year ended December 31, 2018 compared to cash

flows provided by investing activities of $0.7 million for the year ended December 31, 2017. The increase in cash flows used in
investing activities was primarily the result of lower proceeds from disposals of property, plant and equipment of $5.3 million
and lower proceeds from divestitures of $7.9 million. The proceeds from disposals of property, plant and equipment for the year
ended December 31, 2018 were primarily due to the proceeds received from the building sale related to the closure of the
seating segment’s U.K. facility in December 2018 and for the year ended December 31, 2017 were primarily due to the
proceeds received from the building sale executed in connection with the sale leaseback of our Libertyville, Illinois facility in
April 2017 and the sale of a building related to the closure of the finishing segment’s Richmond, Virginia facility in August
2017. Lower capital expenditures of $2.1 million partially offset the increase in cash used in investing activities.

Cash Flows Used in Financing Activities

Cash flows used in financing activities were $9.3 million for the year ended December 31, 2018 compared with $24.3

million for the year ended December 31, 2017. The decrease in cash flows used in financing activities was driven by lower
payments of $16.2 million on First and Second Lien term loans. This was offset by net payments of other long-term debt of
$3.7 million for the year ended December 31, 2018 as compared to $2.2 million for the year ended December 31, 2017, a net
increase of $1.5 million. In addition, cash flows used in financing activities decreased for value added taxes received on the
U.K. building sale of $0.7 million, which will be paid out in 2019, offset by an increase from deferred financing costs of $0.6
million incurred in connection with the amendment to the Company’s Revolving Credit Facility.

Depreciation and Amortization

Depreciation and amortization totaled $42.6 million for the year ended December 31, 2018, compared with $38.9

million for the year ended December 31, 2017. Depreciation and amortization for the year ended December 31, 2018 is higher
than incurred by the Company in the prior period primarily due to $2.3 million of accelerated intangible amortization expense
recorded for a customer relationship intangible asset related to non-core smart utility meter product lines in the components
segment and $1.4 million of accelerated depreciation expense related to the closure of the Richmond, Indiana facility in the
acoustics segment.

Capital Expenditures

Capital expenditures totaled $13.8 million for the year ended December 31, 2018, compared with $15.9 million for the
year ended December 31, 2017. The lower capital expenditures are primarily driven by a lower level of project activity in 2018
compared with 2017.

Cash Paid for Interest

Cash paid for interest totaled $30.7 million for the year ended December 31, 2018 and $30.2 million for the year

ended December 31, 2017. The increase in cash paid for interest primarily relates to higher interest rates for 2018 as compared
to 2017, partially offset by a decrease in outstanding long-term debt balances.

Cash Paid for Income Taxes

Cash paid for income taxes net of refunds totaled $6.5 million for the year ended December 31, 2018 and $6.8 million

for the year ended December 31, 2017.

Year Ended December 31, 2017 and Year Ended December 31, 2016

Cash Flows Provided by Operating Activities

Cash flows provided by operating activities totaled $30.1 million for the year ended December 31, 2017 compared to

$35.1 million for the year ended December 31, 2016, a decrease of $5.0 million. Changes in net operating working capital
decreased operating cash flow by $8.8 million, driven primarily by a higher level of cash generated from a reduction in
working capital in 2016 as compared to 2017, partially offset by higher income exclusive of non cash items in 2017. Higher
working capital reductions in 2016 resulted from the billing and collection of prepaid customer tooling on new acoustics
segment platforms along with higher inventory decreases and accounts payable increases, partially offset by higher accounts
receivable reductions and accrued compensation increases in 2017.

Cash Flows Provided by (Used in) Investing Activities

Cash flows provided by investing activities was $0.7 million for the year ended December 31, 2017 compared to cash
flows used in investing activities of $16.5 million for the year ended December 31, 2016. The change in cash flows provided by
(used in) investing activities was primarily the result of proceeds on divestitures in 2017 of $7.9 million, lower capital
expenditures of $3.9 million and increased proceeds from the sale of property, plant and equipment of $5.4 million. The
increase in proceeds from the disposal of property, plant and equipment resulted from the building sale executed in connection
with the sale leaseback of our Libertyville, Illinois facility and the sale of a building related to the closure of the finishing
segment’s Richmond, Virginia facility in 2017.

Cash Flows Used in Financing Activities

Cash flows used in financing activities were $24.3 million for the year ended December 31, 2017 compared to cash
flows used in financing activities of $12.8 million for the year ended December 31, 2016. The increase in cash flows used in
financing activities was due to higher payments of $18.7 million on First and Second Lien term loans for the buyback of
Second Lien debt during 2017 and $1.6 million lower proceeds from other long-term debt borrowings. This was offset by lower
preferred stock dividend payments of $3.6 million due to all dividends in 2017 being paid in additional shares of Series A
Preferred Stock and $5.3 million lower payments of other long-term debt.

Depreciation and Amortization

Depreciation and amortization totaled $38.9 million for the year ended December 31, 2017, compared with $44.0

million for the year ended December 31, 2016. Depreciation and amortization for the year ended December 31, 2017 is lower
than incurred by the Company in the prior period primarily as a result of asset disposals from certain restructuring activities
such as the closure of the Buffalo Grove, Ill. facility in the components segment in 2016, the wind down of the finishing
segment’s facility in Brazil and the August 2017 divestiture of Acoustics Europe, in addition to the impact of lower capital
expenditures in 2017 compared to prior periods.

Capital Expenditures

Capital expenditures for property, plant, and equipment totaled $15.9 million for the year ended December 31, 2017,
compared with $19.8 million for the year ended December 31, 2016. The lower capital expenditures are primarily driven by a
lower level of project activity in 2017 compared with 2016.

Cash Paid for Interest

Cash paid for interest totaled $30.2 million for the year ended December 31, 2017 and $28.7 million for the year

ended December 31, 2016. The increase in cash paid for interest for the year ended December 31, 2017 primarily relates to $1.9
million paid in 2017 related to the Company’s interest rate swaps which were effective December 30, 2016.

Cash Paid for Income Taxes

Cash paid for income taxes net of refunds totaled $6.8 million for the year ended December 31, 2017 and $7.2 million

for the year ended December 31, 2016.

Commitments and Contractual Obligations

The following table presents the Company’s commitments and contractual obligations as of December 31, 2018, as

well as its long-term obligations (in thousands):

Total

2019

2020-2021

2022-2023

Thereafter

Payments Due by Period

Long-term debt obligations under U.S. credit agreement

382,427

3,100

289,440

89,887

Other long-term debt obligations
Interest payments on long-term debt obligations(1)
Capital lease obligations(2)
Operating lease obligations(3)
Purchase obligations(4)
Multiemployer and UK pension obligations(5)

Total before other long-term liabilities
Other long-term liabilities(6)

17,469

85,599

613

59,189

535

2,874

3,176

30,326

268

10,654

429

373

5,868

50,014

319

16,145

747

5,969

5,228

10,699

747

548,706

48,326

362,610

112,585

17,674

566,380

—

2,456

—

21,691

—

1,007

25,185

Amounts represent the expected cash payments of interest expense on all long-term debt obligations and were
calculated using interest rates in place as of December 31, 2018 and assuming that the underlying debt obligations
will be repaid in accordance with their terms.

Amounts represent the expected cash payments of capital lease obligations.

Operating leases represent the minimum rental commitments under non-cancelable operating leases, including
renewal options which are deemed reasonably certain to be exercised.

The Company routinely issues purchase orders to numerous vendors for inventory and other supplies. These
purchase orders are generally cancelable with reasonable notice to the vendor, and as such, are excluded from the
obligations table.

Represents contributions required with respect to the former Morton multiemployer pension plan as a result of the
withdrawal from the plan and required contributions to the pension plan in the UK.

Other long-term liabilities primarily consist of obligations for uncertain tax positions, pension obligations,
postretirement health and other benefits, insurance accruals and other accruals. Other than payments required with
respect to the former Morton multiemployer pension plan and a pension plan in the UK, the Company is unable to
determine the ultimate timing of these liabilities and, therefore, no payment amounts were included in the
“payments due by period” portion of the contractual obligations table.

Total

(1)

(2)

(3)

(4)

(5)

(6)

Off-Balance Sheet Arrangements

The Company leases certain machinery, transportation equipment and office, warehouse and manufacturing facilities

under various operating lease agreements. Under most arrangements, the Company pays the property taxes, insurance,
maintenance and expenses related to the leased property. See Note 10, “Leases”, in the notes to the consolidated financial
statements and the “Contractual Obligations” table above for further information.

The Company had outstanding letters of credit totaling $4.9 million, $6.1 million, and $5.0 million as of December 31,

2018, 2017 and 2016, respectively, the majority of which secure self-insured workers compensation liabilities.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and

assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. The Company evaluates its estimates on an ongoing basis, based
on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The
following policies are considered by management to be the most critical in understanding the judgments that are involved in the
preparation of our consolidated financial statements and the uncertainties that could impact our results of operations, financial
position and cash flows. Application of these accounting policies involves the exercise of judgment and use of assumptions as
to future uncertainties and, as a result, actual results could differ from these estimates. Although the Company has listed a
number of accounting policies below which it believes to be the most critical, the Company also believes that all of its
accounting policies are important to the reader. Therefore, see Note 1, “Summary of Significant Accounting Policies”, of the
accompanying consolidated financial statements of the Company appearing elsewhere in this Annual Report.

Goodwill, Other Intangible Assets and Other Long-Lived Assets: The Company’s goodwill, other intangible assets

and tangible fixed assets are held at historical cost, net of depreciation and amortization, less any provision for impairment.
Intangible and tangible assets with determinable lives are amortized or depreciated on a straight line basis over estimated useful
lives as follows:

Intangible Assets

Goodwill

Patents

Customer relationships

Trademarks and other intangible assets

Tangible Assets

Land

Buildings and improvements

Machinery and equipment

No amortization

Amortized over 7 years

Amortized over 10 to 15 years

Amortized over 5 to 18 years

No depreciation

Depreciated over 2 to 40 years

Depreciated over 2 to 10 years

Goodwill reflects the cost of an acquisition in excess of the aggregate fair value assigned to identifiable net assets

acquired. Goodwill is assessed for impairment at least annually and as triggering events or indicators of potential impairment
occur. The Company performs its annual impairment test in the fourth quarter of its fiscal year. Goodwill has been assigned to
reporting units for purposes of impairment testing based upon the relative fair value of the asset to each reporting unit.

Impairment of goodwill is measured by comparing the fair value of a reporting unit to the carrying value of the
reporting unit, including goodwill. The estimated fair value represents the amount at which a reporting unit could be bought or
sold in a current transaction between willing parties on an arms-length basis. In estimating the fair value, the Company uses a
discounted cash flow model, which is dependent on a number of assumptions including estimated future revenues and
expenses, weighted average cost of capital, capital expenditures and other variables. The Company also uses a market
approach, in which the fair values of comparable public companies are used in determining an estimated fair value for each
reporting unit.

If the carrying amount of the reporting unit exceeds the estimated fair value of the reporting unit, an impairment loss is

recognized in an amount equal to that excess, not to exceed the carrying amount of the goodwill.

The Company performed its annual goodwill impairment test in the fourth quarter of 2018 and determined that the fair

value of the finishing reporting unit, the only reporting unit with a recorded goodwill balance, exceeded the carrying value of
the reporting unit by over 15%. In connection with the goodwill impairment test, the Company engaged a third-party valuation
firm to assist management with determining the fair value estimate for the reporting unit. The fair value of the reporting unit is
determined using a weighted average of an income approach primarily based on the Company’s three year strategic plan and a
market approach based on implied valuation multiples of public company peer groups for the reporting unit. Both approaches
are generally deemed equally relevant in determining reporting unit enterprise value, and as a result, weightings of 50 percent
were used for each. This fair value determination was categorized as Level 3 in the fair value hierarchy.

of these assumptions, individually or in the aggregate, or future financial performance that is below management expectations
may result in the carrying value of this reporting unit exceeding its fair value, and goodwill and amortizable intangible assets
could be impaired. See Note 8, “Goodwill and Other Intangible Assets”, of the accompanying consolidated financial
statements for further discussion.

The Company also reviews other intangible assets and tangible fixed assets for impairment when events or changes in

business circumstances indicate that the carrying amount of the assets may not be fully recoverable. If such indicators are
present, the Company performs undiscounted cash flow analyses to determine if an impairment exists. If an impairment is
determined to exist, any related impairment loss is calculated based on fair value.

A considerable amount of management judgment and assumptions is required in performing the impairment tests,

principally in determining the fair value of each reporting unit and the specifically identifiable intangible and tangible assets.
While the Company believes its judgments and assumptions are reasonable, different assumptions could change the estimated
fair values and, therefore, additional impairment charges could be required.

Employee Benefit Plans: The Company provides a range of benefits to employees and certain former employees,

including in some cases pensions and postretirement health care, although the majority of these plans are frozen to new
participation. The Company recognizes pension and post-retirement benefit income and expense and assets and obligations that
are based on actuarial valuations using a December 31 measurement date and that include key assumptions regarding discount
rates, expected returns on plan assets, retirement and mortality rates, future compensation increases, and health care cost trend
rates. The approach the Company uses to determine the annual assumptions is as follows:

• Discount Rate: The Company’s discount rate assumptions are based on the interest rate of high-quality corporate

bonds, with appropriate consideration of our plans’ participants’ demographics and benefit payment terms.

• Expected Return on Plan Assets: The Company’s expected return on plan assets assumptions are based on our

expectation of the long-term average rate of return on assets in the pension funds, which is reflective of the current and
projected asset mix of the funds and considers the historical returns earned on the funds.

• Compensation Increase: The Company’s compensation increase assumptions reflect our long-term actual experience,

the near-term outlook and assumed inflation.

• Retirement and Mortality Rates: The Company’s retirement and mortality rate assumptions are based primarily on

actual plan experience and mortality tables.

• Health Care Cost Trend Rates: The Company’s health care cost trend rate assumptions are based primarily on actual

plan experience and mortality inflation.

The Company reviews actuarial assumptions on an annual basis and makes modifications based on current rates and

trends when appropriate. As required by GAAP, the effects of the modifications are recorded currently or amortized over future
periods. Based on information provided by independent actuaries and other relevant sources, the Company believes that the
assumptions used are reasonable; however, changes in these assumptions could impact our financial position, results of
operations or cash flows. See Note 15, “Employee Benefit Plans”, of the accompanying consolidated financial statements for
further discussion.

Income Taxes: The Company is subject to income taxes in the United States and numerous foreign jurisdictions.

Significant judgment is required in determining our worldwide provision for income taxes and recording the related deferred
tax assets and liabilities. The Company assesses its income tax positions and records tax liabilities for all years subject to
examination based upon management’s evaluation of the facts and circumstances and information available at the reporting
dates. For those income tax positions where it is more-likely-than-not that a tax benefit will be sustained upon the conclusion of
an examination, the Company has recorded the largest amount of tax benefit having a cumulatively greater than 50% likelihood
of being realized upon ultimate settlement with the applicable taxing authority assuming that it has full knowledge of all
relevant information. For those tax positions that do not meet the more-likely-than-not threshold regarding the ultimate
realization of the related tax benefit, no tax benefit has been recorded in the financial statements. The Company recognizes
deferred tax assets and liabilities for the future tax consequences attributable to differences between financial statement
carrying amounts of existing assets and liabilities and their respective tax bases, net operating losses, tax credits and other
carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered or settled. The Company regularly reviews its
deferred tax assets for recoverability and establishes a valuation allowance based on historical losses, projected future taxable
income and the expected timing of the reversals of existing temporary differences. As a result of this review, the Company has
established valuation allowances against certain of our deferred tax assets relating to foreign and state net operating loss and
credit carryforwards. Future tax authority rulings and changes in tax laws, changes in projected levels of taxable income and
future tax planning strategies could affect the actual effective tax rate and tax balances recorded.

On December 22, 2017, the President of the United States signed into law the Tax Reform Act. The legislation

significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax
system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The Tax Reform Act also added
many new provisions including changes to bonus depreciation and the deductions for executive compensation and interest
expense, and the requirement to include in the Company’s U.S. federal income tax return foreign subsidiary earnings in excess
of an allowable return of the foreign subsidiary’s tangible assets, among others. The Tax Reform Act permanently reduced the
U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. See further discussion of
the Tax Reform Act within “Consolidated Results of Operations” above and Note 14, “Income Taxes”, of the accompanying
consolidated financial statements for further discussion.

Revenue Recognition: Net sales are recognized when control of a performance obligation is transferred to the

customer in an amount that reflects the consideration expected to be received in exchange for the transferred good or service.
The Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods or
delivery of the services. Amounts invoiced to customers related to shipping and handling are classified as net sales, while
expenses for transportation of products to customers are recorded as a component of cost of goods sold on the consolidated
statement of operations. Sales, value add, and other taxes collected concurrent with revenue-producing activities are excluded
from net sales. As of the contract inception date, the expected time between the completion of the performance obligation and
the payment from the customer is less than a year, and as such there are no significant financing components in the
consideration recognized and disclosures around unsatisfied performance obligations have been omitted.

The Company estimates whether it will be subject to variable consideration under the terms of the contract and

includes its estimate of variable consideration in the transaction price based on the expected value method when it is deemed
probable of being realized based on historical experience and trends. Types of variable consideration may include rebates,
discounts, and product returns, among others, which are recorded as a deduction to net sales at the time when control of a
performance obligation is transferred to the customer.

The majority of the Company’s contracts are for the sale of goods that qualify as separate performance obligations that

are distinct from other goods or services provided in the same contract. Transaction price inclusive of estimated variable
consideration is allocated to separate performance obligations based on their relative standalone selling prices using observable
inputs. When observable inputs are not available, the Company estimates stand alone selling price using cost plus a reasonable
margin approach. Contracts entered into with the same customer at or near the same time are combined into a single contract if
they represent a single commercial objective, if payment of consideration in one contract is dependent on performance of the
other contract, or if promises in different contracts constitute a single performance obligation. For the limited contracts with
multiple performance obligations, the contract’s transaction price is allocated to each performance obligation using the best
estimate of the standalone selling price of each distinct good or service in the contract.

Performance obligations are satisfied at a point in time or over time as work progresses. Revenue from products

transferred to customers at a point in time accounted for more than 99% of net sales for the year ended December 31, 2018.
The Company recognizes revenue over time for certain production parts with minimum stocking agreements in the finishing
business that are highly customized with no alternative use and for which the Company has an enforceable right to payment
with a reasonable margin under the terms of the contract based on the output method of goods produced. Revenue from
products transferred to customers over time accounted for less than 1% of net sales for the year ended December 31, 2018.

The Company provides industry standard assurance-type warranties which ensure that the manufactured products
comply with agreed upon specifications with the customers and do not represent a separate performance obligation with the
customer. Warranty based accruals are established under Accounting Standards Codification 460, “Guarantees”, based on an
evaluation of historical warranty experience and management’s estimate of the level of future claims.

Use of Estimates: The Company records reserves or allowances for returns and variable consideration in contracts,

doubtful accounts, inventory, incurred but not reported medical claims, environmental matters, warranty claims, workers
compensation claims, product and non-product litigation and incentive compensation. These reserves require the use of
estimates and judgment. The Company bases its estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances. The Company believes that such estimates are made on a consistent basis
and with appropriate assumptions and methods. However, actual results may differ from these estimates.

New Accounting Pronouncements

See Note 1, “Summary of Significant Accounting Policies,” under the heading “Recently issued accounting

standards,” of the accompanying consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk from changes in foreign currency exchange rates and interest rates and, to a

lesser extent, commodities. To reduce such risks, the Company selectively uses financial instruments and other proactive
management techniques. All hedging transactions are authorized and executed pursuant to clearly defined policies and
procedures, which strictly prohibit the use of financial instruments for trading or speculative purposes.

Currency Risk: The Company has manufacturing, sales and distribution operations around the world; therefore,

exchange rates impact the U.S. Dollar (“USD”) value of our reported earnings, our investments in our foreign subsidiaries and
the intercompany transactions with these subsidiaries. Approximately $183.9 million, or 30%, of our sales originated in a
currency other than the U.S. dollar for the year ended December 31, 2018. As a result, fluctuations in the value of foreign
currencies against the USD, particularly the Euro, may have a material impact on our reported results. Revenues and expenses
denominated in foreign currencies are translated into USD using average exchange rates in effect during the period.
Consequently, as the value of the USD changes relative to the currencies of our major markets, our reported results vary. For
the year ended December 31, 2018, sales denominated in Euros approximated $108 million. Therefore, with a 10% increase or
decrease in the value of the Euro in relation to the USD, our translated net sales (assuming all other factors are unchanged)
would increase or decrease by $10.8 million, respectively, and the change in our net (loss) income would increase or decrease
by approximately $0.2 million. The net assets and liabilities of our non-U.S. dollar denominated subsidiaries, which totaled
approximately $163.2 million as of December 31, 2018, are translated into USD at the exchange rates in effect at the end of the
period. The resulting translation adjustments are recorded in shareholders’ equity as cumulative translation adjustments. The
cumulative translation adjustments recorded in accumulated other comprehensive loss at December 31, 2018 resulted in a
decrease to shareholders’ equity of $23.2 million. Transactional foreign currency exchange exposure results primarily from the
purchase of products, services or equipment from affiliates or third party suppliers where the purchase value is significant,
denominated in another currency and to be settled following the initial transaction date, and from the repayment of
intercompany loans between subsidiaries using different currencies. The Company periodically identifies areas where it does
not have naturally offsetting currency positions and then may purchase hedging instruments to protect against potential
currency exposures. As of December 31, 2018, the Company did not have any significant foreign currency hedging instruments
in place nor did it have any significant sales or purchase commitments in currencies outside of the functional currencies of the
operations responsible for satisfying such commitments. All long-term debt is held in the functional currencies of the
operations that are responsible for the repayment of such obligations. As of December 31, 2018, long-term debt denominated in
currencies other than the USD totaled approximately $16.1 million.

Interest Rate Risk: The Company utilizes a combination of short-term and long-term debt to finance our operations
and is exposed to interest rate risk on our outstanding floating rate debt instruments, which bear interest at rates that fluctuate
with changes in certain short-term prevailing interest rates. Borrowings under U.S. credit facilities bear interest at rates tied to
either the “administrative agent’s prime rate,” the federal funds effective rate, the Eurocurrency rate, or a Eurocurrency rate
determined by reference to LIBOR, subject to an established floor. Until recently, applicable interest rates have been lower than
the designated floor in our Senior Secured Credit Facilities; therefore, interest rates have not been subject to change. However,
now that interest rates exceed the established floor, a 25 basis point increase or decrease in the applicable interest rates on our
variable rate debt would increase or decrease annual interest expense by approximately $1.0 million, including the impact of
interest rate swaps discussed in the paragraph below.

As of December 31, 2018, the Company has entered into various interest rate swaps in order to mitigate a portion of
the variable rate interest exposure. The Company is counterparty to certain interest rate swaps with a total notional amount of
$210.0 million entered into in November 2015. These swaps are scheduled to mature in June 2020. Under the terms of the
agreement, the Company swapped three month LIBOR rates for a fixed interest rate, resulting in the payment of a fixed LIBOR

rate of 2.08% on a notional amount of $210.0 million. As of December 31, 2018, LIBOR exceeded 2.08%; therefore, assuming
interest rates remain above 2.08%, a 25 basis point increase or decrease in interest rates would increase or decrease annual
interest expense by $0.4 million.

Commodity risk: The Company sources a wide variety of materials and components from a network of global

suppliers. While such materials are generally available from numerous suppliers, commodity raw materials, such as steel,
aluminum, copper, fiber, foam chemicals, plastic resin, vinyl and cotton sheeting are subject to price fluctuations, which could
have a negative impact on our results. The Company strives to pass along such commodity price increases to customers to
avoid profit margin erosion and utilizes value analysis and value engineering (“VAVE”) initiatives to further mitigate the
impact of commodity raw material price fluctuations as improved efficiencies across all locations are achieved. As of
December 31, 2018, the Company did not have any commodity hedging instruments in place.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Quarterly Results of Operations (unaudited)

The following tables presenting our quarterly results of operations should be read in conjunction with the consolidated

financial statements and related notes included in this Annual Report on Form 10-K/A. We have prepared the unaudited
information on the same basis as our audited consolidated financial statements. Our operating results for any quarter are not
necessarily indicative of results for any future quarters or for a full year.

During the first quarter of 2019, we identified an error in the income tax provision presented within the consolidated
financial statements for the year ended December 31, 2018 which also impacted the quarterly unaudited financial information
for periods within 2018. The Quarterly Results of Operations for the three months ended March 30, 2018, the three months
ended June 29, 2018, and the three months ended September 28, 2018 have been revised below. The three months ended
December 31, 2018 have been restated. See the Explanatory Note to this Form 10-K/A and Note 2, “Restatement of Previously
Reported Financial Information” in the notes to the consolidated financial statements for further information. The revision of
the Company's previously issued unaudited consolidated financial statements for the three months ended March 30, 2018, the
three and six months ended June 29, 2018 and the three and nine months ended September 28, 2018 will be included in the
Company's future Quarterly Reports on Form 10-Q for the quarterly periods ended March 29, 2019, June 28, 2019 and
September 27, 2019, respectively.

The following table presents our unaudited quarterly results of operations for the eight quarters in fiscal 2018 and

fiscal 2017. This table includes all adjustments, consisting only of normal recurring adjustments, that we consider necessary
for fair statement of our consolidated financial position and operating results for the quarters presented.

(in thousands, except percentages)

Net sales

Gross profit
Net loss (1)
Net loss attributable to Jason Industries (1)

Accretion of preferred stock dividends and redemption premium
Net loss available to common shareholders of Jason Industries (1)

Net loss per share available to common shareholders of Jason Industries:

Basic and diluted (1)

Weighted average number of common shares outstanding:

2018

Full Year

2018

(Revised)

(Restated)

167,254

168,424

145,295

131,975

612,948

35,672

37,122

(638)

1,727

(355)

765

28,477

(4,458)

782

25,009

(7,709)

796

126,280

(13,160)

4,070

(2,365) $

(1,120) $

(5,240) $

(8,505) $

(17,230)

(0.09) $

(0.04) $

(0.19) $

(0.31) $

(0.62)

Basic and diluted

27,329

27,677

27,683

27,595

(in thousands, except percentages)

Net sales

Gross profit

Loss on divestiture

Net loss

Less net loss attributable to noncontrolling interests

Net loss attributable to Jason Industries

Accretion of preferred stock dividends and redemption premium

Net loss available to common shareholders of Jason Industries

Net loss per share available to common shareholders of Jason Industries:

Basic

Diluted

Weighted average number of common shares outstanding:

Basic

Diluted

2017

Full Year

2017

175,193

172,477

155,430

145,516

648,616

34,609

—

(493)

(498)

918

35,644

(7,888)

(4,737)

—

(4,737)

936

31,973

(842)

(1,601)

—

(1,601)

955

(1,416) $

(5,673) $

(2,556) $

(0.05) $

(0.22) $

(0.10) $

28,626

130,852

—

2,358

—

2,358

974

1,384

0.05

(8,730)

(4,473)

(4,478)

3,783

(8,261)

(0.32)

25,784

26,042

26,241

26,255

26,785

26,082

(1)

The following table presents the effect of the restatement of the error on the quarterly period for the three months
ended December 31, 2018.

The effect of the correction of the error on revised periods for the three months ended March 30, 2018, the three
months ended June 29, 2018, and the three months ended September 28, 2018, respectively, was to decrease net loss,
net loss attributable to Jason Industries, and net loss available to common shareholders of Jason Industries by $0.2
million, $0.2 million, and $1.1 million, respectively.

Net loss

Net loss attributable to Jason Industries

Net loss available to common shareholders of Jason Industries

For the Quarter Ended December 31, 2018

As Reported

Adjustments

As Restated

(12,399)

4,690

(12,399)

(13,195)

4,690

(7,709)

(8,505)

Net loss per share available to common shareholders of Jason Industries:

Basic and diluted

(0.48)

0.17

(0.31)

Index to Consolidated Financial Statements

As of December 31, 2018 and 2017, for the years ended December 31, 2018, December 31, 2017, and December 31, 2016
Report of Independent Registered Public Accounting Firm

Consolidated Statements of Operations

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Balance Sheets

Consolidated Statements of Shareholders’ (Deficit) Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Index to Financial Statement Schedules

Schedule II - Valuation and Qualifying Accounts

Page
67

112

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Jason Industries, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Jason Industries, Inc. and its subsidiaries (the

“Company”) as of December 31, 2018 and 2017, and the related consolidated statements of operations, comprehensive (loss)
income, shareholders’ (deficit) equity and cash flows for each of the three years in the period ended December 31, 2018,
including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (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 Company as of December 31, 2018 and 2017, and the results of its operations
and its cash flows for each of the three years in the period ended December 31, 2018 in conformity with accounting principles
generally accepted in the United States of America.

Restatement of Previously Issued Financial Statements

As discussed in Note 2 to the consolidated financial statements and Note 2 to the financial statement schedule, the

Company has restated its 2018 financial statements and financial statement schedule to correct an error.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to

express an opinion on the Company’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 Company 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 of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company 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 Company'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.

/s/ PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
March 5, 2019, except for the effects of the restatement discussed in Note 2 to the consolidated financial statements and Note 2
to the financial statement schedule, as to which the date is May 13, 2019

We served as the Company’s or its predecessors’ auditor from 1985 to 2019.

Jason Industries, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)

Year Ended
December 31, 2018

Year Ended
December 31, 2017

Year Ended
December 31, 2016

(Restated)

612,948

648,616

Net sales

Cost of goods sold

Gross profit

Selling and administrative expenses

Impairment charges

(Gain) loss on disposals of property, plant and equipment - net

Restructuring

Operating income (loss)

Interest expense

Gain on extinguishment of debt

Equity income

Loss on divestiture

Other income - net

Loss before income taxes

Tax benefit

Net loss

Less net gain (loss) attributable to noncontrolling interests

Net loss attributable to Jason Industries

Accretion of preferred stock dividends and redemption premium

Net loss available to common shareholders of Jason Industries

Net loss per share available to common shareholders of Jason Industries:

Basic and diluted

Weighted average number of common shares outstanding:

Basic and diluted

486,668

126,280

106,470

—

(1,142)

4,458

16,494

(33,437)

—

1,024

—

654

(15,265)

(2,105)

517,764

130,852

103,855

—

(759)

4,266

23,490

(33,089)

2,201

952

(8,730)

319

(14,857)

(10,384)

(13,160) $

(4,473) $

—

(13,160) $

4,070

(17,230) $

(4,478) $

3,783

(8,261) $

705,519

574,412

131,107

113,797

63,285

880

7,232

(54,087)

(31,843)

—

681

—

900

(84,349)

(6,296)

(78,053)

(10,818)

(67,235)

3,600

(70,835)

(0.62) $

(0.32) $

(3.15)

27,595

26,082

22,507

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

Jason Industries, Inc.
Consolidated Statements of Comprehensive (Loss) Income
(In thousands)

Net loss

Other comprehensive (loss) income:

Employee retirement plan adjustments, net of tax (benefit) expense of ($66), $73,
and ($95), respectively

Foreign currency translation adjustments

Net change in unrealized gains (losses) on cash flow hedges, net of tax expense
(benefit) of $436, $814, and ($659), respectively

Total other comprehensive (loss) income

Comprehensive (loss) income

Less: Comprehensive income (loss) attributable to noncontrolling interests

Year Ended
December 31, 2018

Year Ended
December 31, 2017

Year Ended
December 31, 2016

(Restated)

(13,160) $

(4,473) $

(78,053)

(177)

(4,555)

1,349

(3,383)

(16,543)

—

373

10,542

1,317

12,232

7,759

(624)

(4,787)

(1,064)

(6,475)

(84,528)

(11,870)

(72,658)

Comprehensive (loss) income attributable to Jason Industries

(16,543) $

7,716

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

Jason Industries, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share amounts)

Assets

Current assets

Cash and cash equivalents

Accounts receivable - net of allowances for doubtful accounts of $1,812 and $2,959 at 2018 and 2017,
respectively

Inventories - net

Other current assets

Total current assets

Property, plant and equipment - net

Goodwill

Other intangible assets - net

Other assets - net

Total assets

Liabilities and Shareholders’ (Deficit) Equity

Current liabilities

Current portion of long-term debt

Accounts payable

Accrued compensation and employee benefits

Accrued interest

Other current liabilities

Total current liabilities

Long-term debt

Deferred income taxes

Other long-term liabilities

Total liabilities

Commitments and Contingencies (Note 17)

Shareholders’ (Deficit) Equity

Preferred stock, $0.0001 par value (5,000,000 shares authorized, 40,612 shares issued and outstanding at
December 31, 2018, including 794 shares declared on November 1, 2018 and issued on January 1, 2019, and
49,665 shares issued and outstanding at December 31, 2017, including 968 shares declared on November 28,
2017 and issued on January 1, 2018)

Jason Industries common stock, $0.0001 par value (120,000,000 shares authorized, 27,394,978 shares issued and
outstanding at December 31, 2018 and 25,966,381 shares issued and outstanding at December 31, 2017)

Additional paid-in capital

Retained deficit

Accumulated other comprehensive loss

Total shareholders’ (deficit) equity

December 31, 2018

December 31, 2017

(Restated)

58,169

48,887

60,559

63,747

13,664

196,139

134,869

44,065

116,529

11,995

503,597

6,544

47,497

14,452

17,281

85,863

387,244

17,725

20,548

511,380

68,626

70,819

15,655

203,987

154,196

45,142

131,499

11,499

546,323

9,704

53,668

17,433

276

19,806

100,887

391,768

25,699

22,285

540,639

40,612

49,665

155,533

(180,360)

(23,571)

(7,783)

143,788

(167,710)

(20,062)

5,684

546,323

Total liabilities and shareholders’ (deficit) equity

503,597

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

2
1
9
,
3
1

2
8
0
,
1
7

)
6
5
4
,
1
2
(

)
7
9
9
,
5
9
(

3
3
5
,
3
4
1

l
a
t
o
T

’
s
r
e
d
l
o
h
e
r
a
h
S

)
t
i
c
i
f
e
D

(

y
t
i
u
q
E

g
n
i
l
l
o
r
t
n
o
c
n
o
N

s
t
s
e
r
e
t
n
I

'
s
r
e
d
l
o
h
e
r
a
h
S

y
t
i
u
q
E

)
t
i
c
i
f
e
D

(

o
t

e
l
b
a
t
u
b
i
r
t
t

n
o
s
a
J

.
c
n
I

,
s
e
i
r
t
s
u
d
n
I

d
e
t
a
l
u
m
u
c
c
A

r
e
h
t
O

e
v
i
s
n
e
h
e
r
p
m
o
C

s
s
o
L

d
e
n
i
a
t
e
R

t
i
c
i
f
e
D

l
a
n
o
i
t
i
d
d
A

n
I
-
d
i
a
P

l
a
t
i
p
a
C

k
c
o
t
S
n
o
m
m
o
C

k
c
o
t
S
d
e
r
r
e
f
e
r
P

t
n
u
o
m
A

s
e
r
a
h
S

t
n
u
o
m
A

s
e
r
a
h
S

.
c
n
I

,
s
e
i
r
t
s
u
d
n
I
n
o
s
a
J

y
t
i
u
q
E

)
t
i
c
i
f
e
D

(

’
s
r
e
d
l
o
h
e
r
a
h
S
f
o

s
t
n
e
m
e
t
a
t
S
d
e
t
a
d
i
l
o
s
n
o
C

)
s
d
n
a
s
u
o
h
t

n
I
(

4
9
9
,
4
8

)
1
0
7
,
2
(

)
2
5
7
(

)
5
5
1
(

)
3
5
0
,
8
7
(

)
4
2
6
(

)
7
8
7
,
4
(

)
4
6
0
,
1
(

—

)
2
4
1
,
3
(

)
7
1
(

)
5
3
(

9
1
1
,
1

)
3
7
4
,
4
(

3
7
3

2
4
5
,
0
1

7
1
3
,
1

—

4
8
6
,
5

4
8
3

)
0
1
(

)
7
(

9
0
7
,
2

)
0
6
1
,
3
1
(

)
7
7
1
(

)
5
5
5
,
4
(

9
4
3
,
1

—

)
3
8
7
,
7
(

—

)
4
8
(

)
4
7
7
(

)
4
9
1
(

)
8
1
8
,
0
1
(

)
5
0
1
(

)
7
4
1
,
2
(

—

6
3

2
6

—

)
2
5
7
(

)
5
5
1
(

)
1
0
7
,
2
(

)
5
3
2
,
7
6
(

)
0
4
5
(

)
3
1
0
,
4
(

)
0
7
8
(

7
4
1
,
2

)
7
3
0
,
3
(

)
7
1
(

)
5
3
(

9
1
1
,
1

)
8
7
4
,
4
(

3
7
3

6
0
5
,
0
1

5
1
3
,
1

)
2
6
(

4
8
6
,
5

4
8
3

)
0
1
(

)
7
(

9
0
7
,
2

)
0
6
1
,
3
1
(

)
7
7
1
(

)
5
5
5
,
4
(

9
4
3
,
1

—

)
0
4
5
(

)
3
1
0
,
4
(

)
0
7
8
(

)
3
9
4
,
3
(

)
2
7
3
,
0
3
(

—

3
7
3

6
0
5
,
0
1

5
1
3
,
1

)
6
2
1
(

)
4
8
8
,
1
(

)
2
6
0
,
0
2
(

—

)
7
7
1
(

)
5
5
5
,
4
(

9
4
3
,
1

—

)
5
3
2
,
7
6
(

—

)
2
5
7
(

)
5
5
1
(

)
0
0
6
,
3
(

—

0
4
6
,
5

)
2
3
2
,
3
6
1
(

6
6
6
,
4
4
1

—

)
8
7
4
,
4
(

—

)
5
3
(

)
3
8
7
,
3
(

9
1
1
,
1

—

1
2
8
,
1

)
0
1
7
,
7
6
1
(

8
8
7
,
3
4
1

0
1
5

—

)
0
6
1
,
3
1
(

—

)
3
9
0
,
3
(

9
0
7
,
2

)
7
(

—

6
3
1
,
2
1

)
3
8
7
,
7
(

)
1
7
5
,
3
2
(

)
0
6
3
,
0
8
1
(

3
3
5
,
5
5
1

—

5
9
2
,
2
2

0
0
0
,
5
4

—

9
4
1

)
4
4
(

—

6
0
1

)
6
2
(

—

2
0
4
,
2

2
0
8
,
4
2

4
8
0
,
1

6
6
9
,
5
2

—

6
3

)
3
(

—

9
9
8

—

9
9
8
,
5
4

6
6
7
,
3

—

5
6
6
,
9
4

—

3
8
0
,
3

5
4

—

6
4

—

0
5

—

5
9
3
,
7
2

2
1
6
,
0
4

1
4

6
9
3
,
1

)
6
3
1
,
2
1
(

)
2
1
(

x
a
t

f
o

t
e
n

,
s
e
g
d
e
h
w
o
l
f

h
s
a
c

n
o

s
e
s
s
o
l

d
e
z
i
l
a
e
r
n
u
n
i

s
e
g
n
a
h
c

t
e
N

n
o
m
m
o
c

r
o
f

.
c
n
I

,
s
g
n
i
d
l
o
H

H
P
J

f
o

k
c
o
t
s
n
o
m
m
o
c

f
o

e
g
n
a
h
c
x
E

s
t
i
n
u

k
c
o
t
s

d
e
t
c
i
r
t
s
e
r

f
o

g
n
i
t
s
e
v

o
t

d
e
t
a
l
e
r
g
n
i
d
l
o
h
h
t
i

w
x
a
T

x
a
t

f
o

t
e
n

,
s
t
n
e
m

t
s
u
j
d
a

n
a
l
p
t
n
e
m
e
r
i
t
e
r

e
e
y
o
l
p
m
E

s
t
n
e
m

t
s
u
j
d
a

n
o
i
t
a
l
s
n
a
r
t

y
c
n
e
r
r
u
c
n
g
i
e
r
o
F

s
s
o
l

t
e
N

5
1
0
2

,
1
3
r
e
b
m
e
c
e
D

t
a

e
c
n
a
l
a
B

n
o
i
t
a
s
n
e
p
m
o
c
d
e
s
a
b
-
e
r
a
h
S

d
e
r
a
l
c
e
d

s
d
n
e
d
i
v
i
D

6
1
0
2

,
1
3
r
e
b
m
e
c
e
D

t
a

e
c
n
a
l
a
B

.
c
n
I

,
s
e
i
r
t
s
u
d
n
I

n
o
s
a
J

f
o
k
c
o
t
s

n
o
i
t
a
s
n
e
p
m
o
c
d
e
s
a
b
-
e
r
a
h
S

d
e
r
a
l
c
e
d

s
d
n
e
d
i
v
i
D

s
t
i
n
u

k
c
o
t
s

d
e
t
c
i
r
t
s
e
r

f
o

g
n
i
t
s
e
v

o
t

d
e
t
a
l
e
r
g
n
i
d
l
o
h
h
t
i

w
x
a
T

x
a
t

f
o

t
e
n

,
s
t
n
e
m

t
s
u
j
d
a

n
a
l
p
t
n
e
m
e
r
i
t
e
r

e
e
y
o
l
p
m
E

s
t
n
e
m

t
s
u
j
d
a

n
o
i
t
a
l
s
n
a
r
t

y
c
n
e
r
r
u
c
n
g
i
e
r
o
F

)
d
e
t
a
t
s
e
R

(

s
s
o
l

t
e
N

x
a
t

f
o

t
e
n

,
s
e
g
d
e
h
w
o
l
f

h
s
a
c

n
o

s
n
i
a
g

d
e
z
i
l
a
e
r
n
u
n
i

s
e
g
n
a
h
c

t
e
N

n
o
s
a
J

f
o

k
c
o
t
s

n
o
m
m
o
c

r
o
f

k
c
o
t
s

d
e
r
r
e
f
e
r
p

f
o

e
g
n
a
h
c
x
E

.
c
n
I

,
s
e
i
r
t
s
u
d
n
I

)
d
e
t
a
t
s
e
R

(

8
1
0
2

,
1
3
r
e
b
m
e
c
e
D

t
a

e
c
n
a
l
a
B

s
e
g
n
a
h
c

g
n
i
t
n
u
o
c
c
a

f
o
t
c
a
p
m

e
v
i
t
a
l
u
m
u
C

7
1
0
2

,
1
3
r
e
b
m
e
c
e
D

t
a

e
c
n
a
l
a
B

.
c
n
I

,
s
e
i
r
t
s
u
d
n
I

n
o
s
a
J

f
o
k
c
o
t
s

n
o
i
t
a
s
n
e
p
m
o
c
d
e
s
a
b
-
e
r
a
h
S

d
e
r
a
l
c
e
d

s
d
n
e
d
i
v
i
D

s
t
i
n
u

k
c
o
t
s

d
e
t
c
i
r
t
s
e
r

f
o

g
n
i
t
s
e
v

o
t

d
e
t
a
l
e
r
g
n
i
d
l
o
h
h
t
i

w
x
a
T

x
a
t

f
o

t
e
n

,
s
t
n
e
m

t
s
u
j
d
a

n
a
l
p
t
n
e
m
e
r
i
t
e
r

e
e
y
o
l
p
m
E

s
t
n
e
m

t
s
u
j
d
a

n
o
i
t
a
l
s
n
a
r
t

y
c
n
e
r
r
u
c
n
g
i
e
r
o
F

s
s
o
l

t
e
N

x
a
t

f
o

t
e
n

,
s
e
g
d
e
h
w
o
l
f

h
s
a
c

n
o

s
n
i
a
g

d
e
z
i
l
a
e
r
n
u
n
i

s
e
g
n
a
h
c

t
e
N

n
o
m
m
o
c

r
o
f

.
c
n
I

,
s
g
n
i
d
l
o
H

H
P
J

f
o

k
c
o
t
s
n
o
m
m
o
c

f
o

e
g
n
a
h
c
x
E

.
s
t
n
e
m
e
t
a
t
s

l
a
i
c
n
a
n
i
f

d
e
t
a
d
i
l
o
s
n
o
c

e
s
e
h
t

f
o

t
r
a
p

l
a
r
g
e
t
n
i

n
a

e
r
a

s
e
t
o
n

g
n
i
y
n
a
p
m
o
c
c
a

e
h
T

Jason Industries, Inc.
Consolidated Statements of Cash Flows
(In thousands)

Cash flows from operating activities

Net loss

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation

Amortization of intangible assets

Amortization of deferred financing costs and debt discount

Impairment charges

Equity income

Deferred income taxes

(Gain) loss on disposals of property, plant and equipment - net

Gain on extinguishment of debt

Loss on divestiture

Transaction fees on divestiture

Dividends from joint ventures

Share-based compensation

Net increase (decrease) in cash due to changes in:

Accounts receivable

Inventories

Other current assets

Accounts payable

Accrued compensation and employee benefits

Accrued interest

Accrued income taxes

Other - net

Total adjustments

Net cash provided by operating activities

Cash flows from investing activities

Proceeds from disposals of property, plant and equipment

Payments for property, plant and equipment

Proceeds from divestitures, net of cash divested and debt assumed by buyer

Acquisitions of patents

Net cash (used in) provided by investing activities

Year Ended
December 31, 2018

Year Ended
December 31, 2017

Year Ended
December 31, 2016

(Restated)

(13,160) $

(4,473) $

(78,053)

28,356

14,248

2,937

—

(1,024)

(7,995)

(1,142)

—

833

2,709

7,454

5,750

2,819

(6,015)

(2,710)

(187)

(1,221)

(1,895)

42,917

29,757

3,531

(13,753)

—

(152)

(10,374)

26,260

12,674

2,943

—

(952)

(17,345)

(759)

(2,201)

8,730

(932)

—

1,119

6,997

3,804

1,464

(7,897)

5,946

473

(5,858)

34,564

30,091

8,809

(15,873)

7,883

(104)

715

31,120

12,921

3,008

63,285

(681)

(14,112)

880

—

2,068

(752)

(85)

5,862

7,346

5,886

(5,449)

117

2,263

(507)

113,170

35,117

3,413

(19,780)

—

(86)

(16,453)

Jason Industries, Inc.
Consolidated Statements of Cash Flows
(In thousands)

Cash flows from financing activities

Payments of deferred financing costs

Payments of First and Second Lien term loans

Proceeds from other long-term debt

Payments of other long-term debt

Value added tax collected on building sale

Payments of preferred stock dividends

Other financing activities - net

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental disclosure of cash flow information

Cash paid during the year for:

Interest

Income taxes, net of refunds

Non-cash investing activities

Property, plant and equipment acquired through additional liabilities

Non-cash financing activities:

Accretion of preferred stock dividends

Non-cash preferred stock created from dividends declared

Exchange of common stock of JPHI Holdings, Inc. for common stock of Jason
Industries, Inc.

Exchange of preferred stock for common stock of Jason Industries, Inc.

Buyer assumption of debt from divestiture

Year Ended
December 31, 2018

Year Ended
December 31, 2017

Year Ended
December 31, 2016

(Restated)

(649)

(5,600)

3,387

(7,076)

694

(15)

(7)

(9,266)

(835)

9,282

—

(21,826)

8,596

(10,816)

—

(12)

(220)

(24,278)

1,498

8,026

48,887

58,169

40,861

48,887

30,687

6,480

1,451

3,083

— $

12,136

— $

30,242

6,843

1,179

3,766

— $

2,950

—

(3,100)

10,150

(16,138)

—

(3,600)

(155)

(12,843)

(904)

4,917

35,944

40,861

28,717

7,163

1,891

899

(2,147)

—

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

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

Summary of Significant Accounting Policies

Description of business: Jason Industries, Inc. and its subsidiaries (collectively, the “Company”) is a global industrial

manufacturing company with four reportable segments: finishing, components, seating and acoustics. The segments have
operations within the United States and 13 foreign countries. The Company’s finishing segment focuses on the production of
industrial brushes, polishing buffs and compounds, and abrasives that are used in a broad range of industrial and infrastructure
applications. The components segment is a diversified manufacturer of expanded and perforated metal components and slip
resistant surfaces. The seating segment supplies seating solutions to equipment manufacturers in the motorcycle, lawn and turf
care, industrial, agricultural, construction and power sports end markets. The acoustics segment manufactures engineered non-
woven, fiber-based acoustical products primarily for the automotive industry.

Basis of presentation: The Company’s fiscal year ends on December 31. Throughout the year, the Company reports its

results using a fiscal calendar whereby each three month quarterly reporting period is approximately thirteen weeks in length
and ends on a Friday. The exceptions are the first quarter, which begins on January 1, and the fourth quarter, which ends on
December 31. For 2018, the Company’s fiscal quarters were comprised of the three months ended March 30, June 29,
September 28, and December 31. In 2017, the Company’s fiscal quarters were comprised of the three months ended March
31, June 30, September 29, and December 31.

Principles of consolidation: The consolidated financial statements included herein have been prepared in accordance
with accounting principles generally accepted in the United States of America (“GAAP”) pursuant to the rules and regulations
of the Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of all wholly-
owned subsidiaries. All significant intercompany transactions and balances have been eliminated. Investments in partially
owned affiliates are accounted for using the equity method when the Company’s interest is between 20% and 50% and the
Company does not have a controlling interest, yet maintains significant influence.

Cash and cash equivalents: The Company considers all highly liquid investments with an original maturity of three

months or less at the date of purchase to be cash equivalents. At December 31, 2018 and 2017, book overdrafts of
approximately $0.2 million and $4.7 million, respectively, are included in accounts payable within the accompanying
consolidated balance sheets. These amounts are held in accounts in which the Company has no right of offset with other cash
balances.

Accounts receivable: The Company evaluates collectability of its receivables and establishes the allowance for

doubtful accounts based on a combination of specific customer circumstances and historical write-off experience. Credit is
extended to customers based upon an evaluation of their financial position. Generally, advance payment is not required. Credit
losses are provided for in the consolidated financial statements and consistently have been within management’s expectations.

Inventories: Inventories are comprised of material, direct labor and manufacturing overhead, and are valued at the

lower of cost or net realizable value and adjusted for the value of inventory that is estimated to be excess, obsolete or otherwise
unmarketable. The estimation of excess, obsolete and unmarketable inventory is based on a variety of factors, including
material or product age, estimated usage and estimated market demand. The first-in, first-out (“FIFO”) method is used to
determine cost for all of the Company’s inventories.

Property, plant and equipment: Property, plant and equipment are stated at cost. Depreciation generally occurs using

the straight-line method over 2 to 40 years for buildings and improvements and 2 to 10 years for machinery and equipment.

Leasehold improvements are amortized over the lesser of the term of the respective leases and the useful life of the

related improvement using the straight-line method. The Company uses accelerated depreciation methods for income tax
purposes. Expenditures which substantially increase value or extend useful lives are capitalized. Expenditures for maintenance
and repairs are charged to operations as incurred. The Company records gains and losses on the disposition or retirement of
property, plant and equipment based on the net book value and any proceeds received.

Long-lived assets: Long-lived assets to be held and used are reviewed for impairment whenever events or changes in

circumstances indicate that the carrying amount may not be recoverable based upon an estimate of the related future
undiscounted cash flows. When required, impairment losses on assets to be held and used are recognized based on the fair value
of the asset as compared to its carrying value. Long-lived assets to be disposed of by sale are reported at the lower of carrying
amount or fair value less cost to sell. The Company conducts its long-lived asset impairment reviews at the lowest level in
which identifiable cash flows are largely independent of cash flows of other assets and liabilities.

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

Amortization is recorded for other intangible assets with determinable lives. Patents, customer relationships, and

trademarks and other intangible assets are amortized on a straight-line basis over their estimated useful lives of 7 years, 10 to 15
years, and 5 to 18 years, respectively.

Goodwill: Goodwill reflects the cost of an acquisition in excess of the aggregate fair value assigned to identifiable net

assets acquired. Goodwill is assessed for impairment at least annually and as triggering events or indicators of potential
impairment occur. The Company performs its annual impairment test in the fourth quarter of its fiscal year. Goodwill has been
assigned to reporting units for purposes of impairment testing based upon the relative fair value of the asset to each reporting
unit.

Impairment of goodwill is measured by comparing the fair value of a reporting unit to the carrying value of the
reporting unit, including goodwill. The estimated fair value represents the amount at which a reporting unit could be bought or
sold in a current transaction between willing parties on an arms-length basis. In estimating the fair value, the Company uses a
discounted cash flow model, which is dependent on a number of assumptions including estimated future revenues and expenses,
weighted average cost of capital, capital expenditures and other variables. The Company also uses a market approach, in which
the fair values of comparable public companies are used in determining an estimated fair value for each reporting unit.

If the carrying amount of the reporting unit exceeds the estimated fair value of the reporting unit, an impairment loss is

recognized in an amount equal to that excess, not to exceed the carrying amount of the goodwill. The Company is subject to
financial statement risk in the event that goodwill becomes impaired. See Note 8, “Goodwill and Other Intangible Assets” for
further discussion regarding the results of the Company’s goodwill impairment testing.

Investments in partially-owned affiliates: The Company has investments in joint ventures located in Asia. These joint

ventures are part of the finishing segment and are accounted for using the equity method of accounting. As of December 31,
2018 and 2017, the Company’s investment in these joint ventures was $6.3 million and $6.1 million, respectively, and is
included in other assets-net in the consolidated balance sheets. Equity income is presented separately on the consolidated
statements of operations.

Income taxes: The provision for income taxes includes federal, state, local and foreign taxes on income. Deferred

taxes are recorded for the expected future tax consequences of temporary differences between the financial statement carrying
amounts and the tax bases of assets and liabilities, and net operating loss and credit carryforwards available to offset future
taxable income. Future tax benefits are recognized to the extent that realization of those benefits is considered to be more likely
than not. A valuation allowance is provided for net deferred tax assets when it is more likely than not that the Company will not
realize the benefit of such net assets. The Company recognizes interest and penalties related to unrecognized tax benefits in
income tax expense.

Share-based payments: The Company recognizes expense related to share-based payment transactions in which it

receives employee services in exchange for equity instruments of the Company that may be settled by the issuance of such
equity instruments. Share-based compensation cost for restricted stock units (“RSUs”) is measured based on the closing fair
market value of the Company’s common stock on the date of grant. The Company recognizes share-based compensation cost
over the award’s requisite service period on a straight-line basis for time-based RSUs and on a graded basis for RSUs that are
contingent on the achievement of performance conditions. Forfeitures are recognized within compensation expense in the
period the forfeitures are incurred. The Company recognizes a tax (provision)/benefit from share-based compensation
(income)/expense in the consolidated statements of operations in the period the share-based compensation (income)/expense is
incurred. See Note 12, “Share-Based Compensation” for further information regarding share-based compensation.

Fair value of financial instruments: Current accounting guidance defines fair value as the exchange price that would
be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants. It also specifies a fair value hierarchy based upon the
observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from
independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. In accordance
with the guidance, fair value measurements are classified under the following hierarchy:

•

Level 1 — Quoted prices for identical instruments in active markets.

Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar
instruments in markets that are not active; and model-derived valuations in which all significant inputs or
significant value-drivers are observable in active markets.

Level 3 — Model-derived valuations in which one or more significant inputs or significant value-drivers are
unobservable.

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

Fair value measurements are classified according to the lowest level input or value-driver that is significant to the
valuation. A measurement may therefore be classified within Level 3 even though there may be significant inputs that are
readily observable.

The carrying amounts within the accompanying consolidated balance sheets for cash and cash equivalents, accounts

receivable and accounts payable approximate fair value due to the short-term maturity of these instruments. The Company
assessed the amounts recorded under revolving loans, if any, and long-term debt and determined that the fair value of total debt
was approximately $387.4 million and $398.4 million as of December 31, 2018 and 2017, respectively. The Company
considers the inputs related to these estimations to be Level 2 fair value measurements as they are primarily based on quoted
prices for the Company’s Senior Secured Credit Facility.

The valuation of the Company’s derivative financial instruments is determined using widely accepted valuation

techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the
contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including
interest rate curves. The Company has determined that the lowest level of the inputs used to value its derivatives fall within
Level 2 of the fair value hierarchy and therefore the Company’s derivatives are classified within Level 2. See Note 9, “Debt
and Hedging Instruments” for further information regarding derivatives held by the Company.

Employee Benefit Plans: The Company recognizes pension and post-retirement benefit income and expense and

assets and obligations that are based on actuarial valuations using a December 31 measurement date and that include key
assumptions regarding discount rates, expected returns on plan assets, retirement and mortality rates, future compensation
increases, and health care cost trend rates. The Company reviews actuarial assumptions on an annual basis and makes
modifications based on current rates and trends when appropriate. As required by GAAP, the effects of the modifications are
recorded currently or amortized over future periods.

Derivative financial instruments: The Company recognizes all derivative financial instruments in the consolidated

financial statements at fair value regardless of the purpose or intent for holding the instrument. Changes in the fair value of
derivative financial instruments are either recognized periodically in income or in equity as a component of comprehensive
income (loss) depending on whether the derivative financial instrument qualifies for hedge accounting, and if so, whether it
qualifies as a fair value hedge or cash flow hedge. Generally, changes in fair values of derivatives accounted for as fair value
hedges are recorded in income along with the portions of the changes in the fair values of the hedged items that relate to the
hedged risks. Changes in fair values of derivatives accounted for as cash flow hedges, to the extent they are effective as hedges,
are recorded in other comprehensive (loss) income, net of deferred income taxes. Changes in fair value of derivatives not
qualifying as hedges are reported in income. Cash flows from derivatives that are accounted for as cash flow or fair value
hedges are included in the consolidated statements of cash flows in the same category as the item being hedged. The
Company’s policy is to enter into derivatives with creditworthy institutions and not to enter into such derivatives for speculative
purposes. See Note 9, “Debt and Hedging Instruments” for further information regarding derivatives held by the Company.

Foreign currency translation: Assets and liabilities of the Company’s foreign subsidiaries, whose respective
functional currencies are other than the U.S. dollar, are translated at year-end exchange rates while revenues and expenses are
translated at average exchange rates. Resultant gains and losses are reflected within accumulated other comprehensive loss
within the accompanying consolidated statements of shareholders’ (deficit) equity.

Other comprehensive (loss) income: Other comprehensive (loss) income includes disclosure of financial information

that historically has not been recognized in the calculation of net (loss) income. The Company’s other comprehensive income
(loss) includes the change in unrecognized prior service costs on pension and other postretirement obligations, foreign currency
translation, and fair value adjustments related to derivative instruments.

Pre-production costs related to long-term supply arrangements: The Company’s policy for engineering, research and
development, and other design and development costs related to products that will be sold under long-term supply arrangements
requires such costs to be expensed as incurred. Costs for molds, dies, and other tools used to manufacture products that will be
sold under long-term supply arrangements are capitalized if the Company has title to the assets or when customer
reimbursement is assured.

Revenue recognition: Net sales are recognized when control of a performance obligation is transferred to the customer

in an amount that reflects the consideration expected to be received in exchange for the transferred good or service. The
Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods or delivery of
the services. Amounts invoiced to customers related to shipping and handling are classified as net sales, while expenses for
transportation of products to customers are recorded as a component of cost of goods sold on the consolidated statement of
operations. Sales, value add, and other taxes collected concurrent with revenue-producing activities are excluded from net sales.

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

As of the contract inception date, the expected time between the completion of the performance obligation and the payment
from the customer is less than a year, and as such there are no significant financing components in the consideration recognized
and disclosures around unsatisfied performance obligations have been omitted.

The Company estimates whether it will be subject to variable consideration under the terms of the contract and

The majority of the Company’s contracts are for the sale of goods that qualify as separate performance obligations that

Performance obligations are satisfied at a point in time or over time as work progresses. Revenue from products

The Company provides industry standard assurance-type warranties which ensure that the manufactured products
comply with agreed upon specifications with the customers and do not represent a separate performance obligation with the
customer. Warranty based accruals are established under Accounting Standards Codification (“ASC”) 460, “Guarantees”, based
on an evaluation of historical warranty experience and management’s estimate of the level of future claims.

Insurance proceeds: The Company maintains property and business interruption insurance coverage to mitigate the
risk of incremental costs and/or lost revenues or profit margins resulting from disruption of business activities, whether at our
own facility or that of a supplier. The Company records the incremental costs associated with such events as incurred and the
related insurance recovery proceeds when deemed probable and collectible in the case of claims for direct cost recovery and
when earned and realizable in the case of claims for business interruption related to lost revenues or profit margins. The
incremental costs incurred as well as any associated insurance recoveries for covered events are recorded within operating
income in the consolidated statements of operations.

During 2018, the Company experienced a force majeure incident at a supplier in the seating segment that resulted in

incremental costs to maintain production and lost revenues during the disruption period. As a result of this event, the Company
received $2.2 million of insurance claims proceeds which were recorded as a component of cost of goods sold within the
consolidated statement of operations.

Research and development costs: Research and development costs consist of engineering and development resources

and are expensed as incurred. Such costs incurred in the development of new products or significant improvements to existing
products were $3.2 million in the year ended December 31, 2018, $3.6 million in the year ended December 31, 2017, and $4.2
million in the year ended December 31, 2016.

Advertising costs: Advertising costs are charged to selling and administrative expenses as incurred and were $1.6

million in the year ended December 31, 2018, $1.8 million in the year ended December 31, 2017, and $1.9 million in the year
ended December 31, 2016.

Use of estimates: The preparation of financial statements in conformity with GAAP requires management to make

estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Concentration risks: The Company’s operations are geographically dispersed and it has a diverse customer base.
Management believes bad debt losses resulting from default by a single customer, or defaults by customers in any depressed

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

region or business sector, would not have a material effect on the Company’s financial position, results of operations or cash
flows.

During the years ended December 31, 2018, 2017, and 2016 the Company had no individual customers at or above

10% of consolidated net sales. At December 31, 2018, one customer accounted for greater than 10% of the Company’s
consolidated accounts receivable balance; this customer accounted for 10% of the consolidated balance and is served by the
acoustics segment. At December 31, 2017, one customer accounted for greater than 10% of the Company’s consolidated
accounts receivable balance; this customer accounted for 13% of the consolidated balance and is served by the acoustics
segment.

Recently issued accounting standards

Accounting standards adopted in the current fiscal year

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2014-09, “Revenue From Contracts With Customers” (“ASU 2014-09”). ASU 2014-09 outlined a single comprehensive model
for entities to use in accounting for revenue arising from contracts with customers and superseded most previous revenue
recognition guidance, including industry-specific guidance. See above for discussion on our revenue recognition accounting
policy and Note 3, “Net Sales” for further discussion regarding the adoption of this standard.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition

and Measurement of Financial Assets and Financial Liabilities.” The updated guidance enhanced the reporting model for
financial instruments, which includes amendments to address aspects of recognition, measurement, presentation and disclosure.
The amendment to the standard was effective for interim and annual periods beginning after December 15, 2017. In February
2018, the FASB issued ASU 2018-03, “Technical Corrections and Improvements to Financial Instruments-Overall (Subtopic
825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2018-03”). ASU 2018-03
clarifies certain aspects of the guidance issued in ASU 2016-01 and was effective for interim periods beginning after June 15,
2018. The Company adopted both standards effective January 1, 2018 and determined that there was no impact on its
consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other

Than Inventory” (“ASU 2016-16”). ASU 2016-16 requires companies to recognize the income tax effects of intercompany sales
and transfers of assets other than inventory in the period in which the transfer occurs. The guidance was effective for annual
periods beginning after December 15, 2017 and required companies to apply a modified retrospective approach with a
cumulative catch-up adjustment to opening retained earnings in the period of adoption. The Company adopted ASU 2016-16
effective January 1, 2018 on a modified retrospective basis. As a result of the adoption, the Company recorded a decrease to the
opening retained deficit of $0.3 million.

In March 2017, the FASB issued ASU 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the

Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU 2017-07”). This standard
requires the presentation of the service cost component of net periodic pension and postretirement benefit costs (“Pension
Costs”) within operations and all other components of Pension Costs outside of income from operations within the Company’s
consolidated statements of operations. In addition, only the service cost component of Pension Costs will be allowed for
capitalization as an asset within the Company’s consolidated balance sheets. ASU 2017-07 is effective for annual reporting
periods beginning after December 15, 2017, including interim periods within those annual reporting periods. The standard is
required to be applied on a retrospective basis for the presentation of the service cost component and the other components of
Pension Costs and on a prospective basis for the capitalization of the service cost component of Pension Costs. The Company
adopted ASU 2017-07 effective January 1, 2018. The adoption of ASU 2017-07 did not have a significant impact on the
Company’s consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”). ASU 2018-02
allows for an optional reclassification from accumulated other comprehensive income to retained earnings for stranded tax
effects resulting from the comprehensive tax legislation signed into law on December 22, 2017 by the President of the United
States, which is commonly referred to as the Tax Cuts and Jobs Act (the “Tax Reform Act”). The updated guidance eliminates
the stranded tax effects resulting from the Tax Reform Act for those entities that elect the optional reclassification and also
requires certain disclosures about the stranded tax effects. ASU 2018-02 is effective for annual reporting periods beginning after
December 15, 2018, including interim periods within those annual reporting periods, with early adoption permitted. The
amendments in this update are effective either in the period of adoption or retrospectively to each period (or periods) in which
the effect of the change in the U.S. federal corporate income tax rate in the Tax Reform Act is recognized. The Company

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

adopted ASU 2018-02 effective January 1, 2018. As a result of the adoption, the Company has recorded a decrease to the
opening retained deficit of $0.1 million and an increase to the opening accumulated other comprehensive loss of $0.1 million.

In March 2018, the FASB issued ASU 2018-05, “Income Taxes (Topic 740) - Amendments to SEC Paragraphs
Pursuant to SEC Staff Accounting Bulletin No. 118” (“ASU 2018-05”). ASU 2018-05 provides guidance for the recognition of
provisional amounts in the consolidated financial statements as a result of the Tax Reform Act. The guidance allows for a
measurement period of up to one year from the December 22, 2017 enactment date to finalize the accounting related to the Tax
Reform Act. ASU 2018-05 was effective upon issuance and accordingly, the Company has applied the guidance from this
update within its consolidated financial statements. See Note 14, “Income Taxes” for further discussion regarding the
Company’s application of this standard.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-
Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies certain
disclosures on fair value measurements, such as eliminating disclosure requirements for transfers between Level 1 and Level 2
of the fair value hierarchy and an explanation for the transfer between levels and adding new disclosure requirements for Level
3 measurements. The standard is effective for interim and annual reporting periods beginning after December 15, 2019, with
early adoption permitted. The Company adopted ASU 2018-13 effective June 30, 2018. The adoption of this guidance did not
have an impact on the Company’s consolidated financial statements or the related fair value disclosures within the
accompanying notes.

In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic

350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service
Contract” (“ASU 2018-15”). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting
arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain
internal-use software. The standard is effective for interim and annual reporting periods beginning after December 15, 2019,
with early adoption permitted. The Company early adopted this standard effective September 29, 2018 on a prospective basis,
and there was no impact to the consolidated financial statements as of and for the year ended December 31, 2018 as a result of
the adoption of this standard.

Accounting standards to be adopted in future fiscal periods

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 establishes

new accounting and disclosure requirements for leases. This standard requires lessees to classify most leases as either finance or
operating leases and to initially recognize a lease liability and right-of-use asset. Entities may elect to account for certain short-
term leases (with a term of 12 months or less) using a method similar to the current operating lease model. The statements of
operations will include, for finance leases, separate recognition of interest on the lease liability and amortization of the right-of
use asset and for operating leases, a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a
straight-line basis. In 2018, the FASB issued additional ASUs related to ASU 2016-02, which simplify and provide additional
guidance to companies for implementation of the standard. ASU 2016-02 and related guidance are effective for annual reporting
periods beginning after December 15, 2018, including interim periods within those annual reporting periods, with early
adoption permitted. This standard must be applied using a modified retrospective approach, which requires recognition and
measurement of leases at either the beginning of the earliest period presented or the date of adoption, with certain practical
expedients available. During the fourth quarter of 2018, the Company finalized the inventory of lease contracts, implemented a
lease contract accounting system, drafted lease accounting policies and procedures and concluded on certain technical
accounting implications of the new standard, including the election of practical expedients related to the adoption of the new
standard, discount rates and embedded lease contracts. The Company estimates that the impact of adopting ASU 2016-02 will
result in recording of a right-of-use asset of approximately $42 million and a lease liability of approximately $46 million within
the consolidated balance sheet on January 1, 2019, the date of adoption. The difference between the right-of-use asset and lease
liability on the date of adoption relates to the reclassification of certain previously recorded deferred rent balances to the right-
of-use asset. In addition, in accordance with the implementation guidance of ASU 2016-02, the Company will reclassify an
incremental $1.1 million of intangible assets in the acoustics segment related to below market rents that resulted from the June
30, 2014 go public business combination to the right-of use asset and will write off a deferred gain of $1.0 million to retained
earnings related to a previous sale leaseback of its Libertyville, Illinois facility utilized by the components segment. See Note
10, “Leases” for further discussion regarding the previous sale leaseback transaction.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements for
Hedging Activities” (“ASU 2017-12”). ASU 2017-12 broadens the scope of financial and nonfinancial strategies eligible for
hedge accounting and makes certain targeted improvements to simplify the application of hedge accounting guidance. In
addition, the standard amends the presentation and disclosure requirements for hedges and is intended to more closely align the

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

hedge accounting guidance with a company’s risk management strategies. The standard is effective for interim and annual
reporting periods beginning after December 15, 2018; however, early adoption is permitted. The Company anticipates an
insignificant impact to the consolidated financial statements and disclosure as a result of adoption of this standard, however, the
impact in future periods will depend on the level of future hedging activities.

In August 2018, the FASB issued ASU 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—

General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans” (“ASU
2018-14”). ASU 2018-14 modifies certain disclosure requirements for pension and other postretirement plans, such as
eliminating disclosure requirements to disclose the amounts in accumulated other comprehensive loss expected to be
recognized as a component of net periodic benefit cost over the next fiscal year and the impact that a 1% increase or decrease in
the medical trend rate would have on the accumulated postretirement benefit obligation. The standard is effective for interim
and annual reporting periods beginning after December 15, 2020, with early adoption permitted. As the scope of ASU 2018-14
is limited to only financial disclosure requirements, the standard will not have an impact on the Company’s consolidated
financial statements. The Company is currently assessing the impact that this standard will have on the employee benefit plan
disclosures within the notes to consolidated financial statements, as well as the planned timing of adoption.

2. Restatement of Previously Reported Financial Information

During the first quarter of 2019, the Company identified an error in the income tax provision presented within the
consolidated financial statement of operations for the year ended December 31, 2018 and deferred income taxes presented
within the consolidated balance sheet as of December 31, 2018. The Company recorded a valuation allowance in 2018 for
deferred tax assets related to disallowed interest expense deduction carryforwards under Internal Revenue Code Section
163(j) which was not appropriate in accordance with ASC 740, Income Taxes, as management has determined that the
deferred tax assets were more likely than not to be realized. As a result of this error, the tax provision and deferred income
tax liabilities were overstated by $6.2 million within the consolidated statement of operations and consolidated balance
sheet. As a result of this income tax error, which materially misstated the previously issued 2018 financial statements, the
consolidated financial statements of the Company as of and for the year ended December 31, 2018 have been restated.

Amounts throughout the consolidated financial statements and notes thereto have been adjusted to incorporate the

restated amounts, where applicable.

The impact of the required correction to the consolidated statement of operations and comprehensive loss were as

follows:

Tax provision (benefit)

Net loss

Net loss attributable to Jason Industries

Net loss available to common shareholders of Jason Industries

For the Year Ended December 31, 2018

As Reported

Adjustments

As Restated

4,052

(6,157)

(19,317)

(23,387)

6,157

(2,105)

(13,160)

(17,230)

Net loss per share available to common shareholders of Jason Industries:

Basic and diluted

Comprehensive loss

Comprehensive loss attributable to Jason Industries

(0.85)

0.23

(0.62)

(22,700)

6,157

(16,543)

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

The impact of the required correction to the consolidated balance sheet was as follows:

Deferred income taxes

Total liabilities

Retained deficit

Total shareholders' deficit

December 31, 2018

As Reported

Adjustments

As Restated

23,882

(6,157)

517,537

(186,517)

(13,940)

(6,157)

6,157

17,725

511,380

(180,360)

(7,783)

The above restatement did not impact total net cash provided by (used in) operating, investing or financing

activities within the consolidated statements of cash flows for any previous period. Other than the adjustments to net loss
for the year ended December 31, 2018, which impacted recorded retained deficit and total shareholders' deficit, there were
no other impacts to the consolidated statements of shareholders' (deficit) equity. There was no impact to the Company's
previously reported segment Adjusted EBITDA for the year ended December 31, 2018.

3. Net Sales

Adoption of ASU 2014-09, “Revenue From Contracts With Customers”

On January 1, 2018, the Company adopted ASU 2014-09, “Revenue From Contracts With Customers” and all related
amendments using the modified retrospective method. Subsequent to the date of adoption, the Company recognizes its revenue
in accordance with ASC 606, “Revenue From Contracts With Customers” (“ASC 606”). Prior to January 1, 2018, the Company
recognized revenue in accordance with ASC 605, “Revenue Recognition” and prior period results continue to be reported under
the accounting standards in effect for those periods. The cumulative impact of adopting the new standard on the consolidated
financial statements was recorded as a decrease to the opening retained deficit of $0.1 million as of January 1, 2018. Refer to
Note 1, “Summary of Significant Accounting Policies” for description of our revenue recognition accounting policy.

Revenue Disaggregation

The finishing segment operates principally as a provider of industrial brushes, polishing buffs and compounds, and

abrasive products that are used in a broad range of industrial and infrastructure applications.The components segment operates
principally as a component Original Equipment Manufacturer (“OEM”) within the rail and general industrial markets. The
Company typically sells products within these businesses under purchase orders through both direct to customer and
distribution sales channels. The Company generally transfers control and recognizes net sales when the product is shipped to
the customer. Within the finishing business, there are certain custom products for customers with minimum stocking
agreements for which the Company recognizes net sales over time. Revenue from products transferred to customers over time
accounted for less than 1% of finishing net sales for the year ended December 31, 2018.

The seating segment operates principally as a seating OEM within the motorcycle, lawn and turf care, industrial,

agriculture, construction, and power sports markets. The acoustics segment operates principally as an automotive OEM and
Tier-1 supplier. The products in these businesses are generally custom products sold direct to customers that are awarded by
platform to a sole supplier for the life of the platform which can span several years. The Company transfers control and
recognizes net sales at a point in time upon shipment to the customer for these contracts.

The Company disaggregates net sales by geography based on the country of origin of the final sale with the external

customer, which in certain cases may be manufactured in other countries at facilities within the Company’s global network. The
following table summarizes net sales disaggregated by geography and reportable segment:

United States

Europe

Mexico

Other

Total

Finishing

For the Year Ended December 31, 2018
Acoustics
Seating

Components

Total

68,384

83,028

154,223

123,422

429,057

126,564

8,762

3,927

—

6,099

—

38,539

—

132,663

47,301

3,927

207,637

83,028

160,322

161,961

612,948

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

The Company disaggregates net sales by sales channel as either direct or distribution net sales. Direct net sales are
defined as net sales ordered by and sold directly to the end customer without the involvement of a third party. For our OEM
customers, direct sales include certain spare parts and accessories which are intended for resale to end consumers. Distribution
net sales are defined as net sales ordered by and sold to a third party that intends to resell the products to the end consumer. The
following table summarizes net sales disaggregated by sales channel and reportable segment:

Direct

Distribution

Total

4. Divestiture

Finishing

For the Year Ended December 31, 2018
Acoustics
Seating

Components

Total

112,047

80,198

156,311

161,961

510,517

95,590

2,830

4,011

—

102,431

207,637

83,028

160,322

161,961

612,948

On August 30, 2017, the Company completed the divestiture of its European operations within the acoustics segment

located in Germany (“Acoustics Europe”) for a net purchase price of $8.1 million, which included cash of $0.2 million, long-
term debt assumed by the buyer of $3.0 million and other purchase price adjustments. The divestiture resulted in an $8.7
million pre-tax loss.

Acoustics Europe had net sales of $32.9 million for the year ended December 31, 2016 and $22.9 million for the eight
months ended August 30, 2017, the date of closing. The Company determined that the divestiture did not represent a strategic
shift that would have a major effect on the Company’s operations and financial results and as such, has continued to report the
results of Acoustics Europe within continuing operations in the consolidated statements of operations.

5. Restructuring Costs

On March 1, 2016, as part of a strategic review of organizational structure and operations, the Company announced a

global cost reduction and restructuring program (the “2016 program”). The 2016 program, as used herein, refers to costs related
to various restructuring activities across business segments. This includes entering into severance and termination agreements
with employees and footprint rationalization activities, including exit and relocation costs for the consolidation and closure of
plant facilities and lease termination costs. These activities were ongoing throughout the years ended December 31, 2016, 2017
and 2018 and are expected to be completed by the end of 2019.

The following table presents the restructuring costs recognized by the Company under the 2016 program by reportable

segment. The other costs incurred under the 2016 program for the year ended December 31, 2018 primarily include charges
related to the consolidation of two U.S. plants within the components segment, the consolidation of two U.S. plants within the
acoustics segment, and the closure of the U.K. plant within the seating segment, partially offset by a reduction in expense as a
result of the statute of limitations expiring on unasserted employment matter claims in Brazil within the finishing segment. The
other costs incurred under the 2016 program for the year ended December 31, 2017 primarily include charges related to the
consolidation of two U.S. plants within the components segment, exit costs related to the wind down of the finishing segment’s
facility in Brazil and the consolidation of two U.S. plants within the finishing segment. The other costs incurred under the 2016
program for the year ended December 31, 2016 primarily include charges related to the closure of a facility within the
components segment and a loss contingency for certain employment matters claims associated with the wind down of the
finishing segment’s Brazil facility. Based on the announced restructuring actions to date, the Company expects to incur a total
of approximately $16.3 million under the 2016 program. Restructuring costs are presented separately on the consolidated
statements of operations.

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

2016 Program

Finishing

Components

Seating

Acoustics

Corporate

Total

Restructuring charges - year ended
December 31, 2018:

Severance costs

Lease termination costs

Other costs

Total

Restructuring charges - year ended
December 31, 2017:

Severance costs

Lease termination costs

Other costs

Total

Restructuring charges - year ended
December 31, 2016:

Severance costs

Lease termination costs

Other costs

Total

314

212

235

138

— $

(4)

165

—

710

—

167

—

2,521

—

475

922

402

2,659

— $

1,178

1,235

—

1,276

(17) $

(38) $

(9) $

—

172

323

—

2,501

1,334

(17) $

457

(9) $

3,287

378

344

1,003

—

514

4,634

892

—

977

597

—

1,033

597

899

(4)

3,563

4,458

1,172

260

2,834

4,266

5,315

344

1,573

7,232

The following table presents the cumulative restructuring costs recognized by the Company under the 2016 program
by reportable segment. The 2016 program began in the first quarter of 2016 and as such, the cumulative restructuring charges
represent the cumulative charges incurred since the inception of the 2016 program through December 31, 2018.

Finishing

Components

Seating

Acoustics

Corporate

Total

Cumulative restructuring charges - 2016
Program:

Severance costs

Lease termination costs

Other costs

Total

4,779

648

294

1,077

588

428

2,403

—

2,500

—

167

172

2,900

—

7,386

600

7,970

7,610

3,148

461

4,149

588

15,956

In addition to the restructuring costs described above, the Company incurred for the year ended December 31, 2018,
approximately $1.4 million of accelerated depreciation expense related to the closure of the Richmond, Indiana facility in the
acoustics segment. For the year ended December 31, 2016, the Company incurred approximately $1.4 million of additional
charges related to the wind down of the finishing segment’s Brazil location, which included $0.7 million of accelerated
depreciation of property, plant and equipment - net and $0.7 million of charges to reduce inventory balances, respectively, to
decrease such balances to their estimated net realizable values. In both periods, these costs were presented within cost of goods
sold within the consolidated statements of operations.

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

The following table represents the restructuring liabilities for the 2016 program:

Balance - December 31, 2016

Current period restructuring charges

Cash payments

Foreign currency impact

Balance - December 31, 2017

Current period restructuring charges

Cash payments

Foreign currency impact

Balance - December 31, 2018

Severance
costs

Lease
termination
costs

Other costs

Total

1,281

1,172

(1,589)

907

899

(1,310)

(39)

333

260

(528)

(4)

(70)

(2)

1,085

2,834

(2,830)

(10)

1,079

3,563

(4,277)

(40)

457

— $

325

2,699

4,266

(4,947)

2,062

4,458

(5,657)

(81)
782

At December 31, 2018 and December 31, 2017, the restructuring liabilities were classified as other current liabilities
on the consolidated balance sheets. At December 31, 2018, the accrual for other costs primarily relates to the consolidation of
two U.S. plants within the acoustics segment. At December 31, 2017, the accrual for other costs primarily related to certain
employment matter claims within the finishing segment.

Inventories

Inventories at December 31, 2018 and December 31, 2017 consisted of the following:

Raw material

Work-in-process

Finished goods

Total inventories

7. Property, Plant and Equipment

December 31, 2018

December 31, 2017

31,501

3,672

28,574

63,747

35,925

4,375

30,519

70,819

Property, plant and equipment at December 31, 2018 and December 31, 2017 consisted of the following:

Land and improvements

Buildings and improvements

Machinery and equipment

Construction-in-progress

Less: Accumulated depreciation

Property, plant and equipment, net

December 31, 2018

December 31, 2017

5,457

32,384

203,237

6,197

247,275

(112,406)

134,869

6,556

33,161

191,903

10,710

242,330

(88,134)

154,196

For the year ended December 31, 2018, the Company recorded a $1.3 million gain on disposal of property, plant and
equipment - net for the sale of a building related to the closure of the seating segment’s U.K. facility. In connection with the
sale, the Company collected $0.7 million of value-added tax which is to be remitted to the relevant tax authorities in the first
quarter of 2019 and is included within cash flows provided by financing activities within the consolidated statement of cash
flows.

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

8. Goodwill and Other Intangible Assets

Goodwill

Changes in the carrying amount of goodwill, all of which is within the Company’s finishing segment, were as follows:

Balance as of December 31, 2016

Foreign currency impact

Balance as of December 31, 2017

Foreign currency impact

Balance as of December 31, 2018

42,157

2,985

45,142

(1,077)

44,065

At December 31, 2018 and December 31, 2017, accumulated goodwill impairment losses were $122.1 million,

primarily due to $58.8 million related to the seating reporting unit, $29.8 million related to the acoustics reporting unit, and
$33.2 million related to the components reporting unit.

Fiscal 2018 and 2017 Impairment Assessment

The Company performed its annual goodwill impairment tests in the fourth quarters of 2018 and 2017 and determined

that the fair value of the finishing reporting unit, the only reporting unit with a recorded goodwill balance, exceeded the
carrying value of the reporting unit by over 15% in each year. In connection with the goodwill impairment test, the Company
engaged a third-party valuation firm to assist management with determining the fair value estimate for the reporting unit. The
fair value of the reporting unit is determined using a weighted average of an income approach primarily based on the
Company’s three year strategic plan and a market approach based on implied valuation multiples of public company peer
groups for the reporting unit. Both approaches are generally deemed equally relevant in determining reporting unit enterprise
value, and as a result, weightings of 50 percent were used for each. This fair value determination was categorized as Level 3 in
the fair value hierarchy.

In connection with obtaining an independent third-party valuation, management provided certain information and
assumptions that were utilized in the fair value calculation. Significant assumptions used in determining reporting unit fair
value include forecasted cash flows, revenue growth rates, adjusted EBITDA margins, weighted average cost of capital
(discount rate), assumed tax treatment of a future sale of the reporting unit, terminal growth rates, capital expenditures, sales
and EBITDA multiples used in the market approach, and the weighting of the income and market approaches. A change in any
of these assumptions, individually or in the aggregate, or future financial performance that is below management expectations
may result in the carrying value of this reporting unit exceeding its fair value, and goodwill and amortizable intangible assets
could be impaired.

Fiscal 2016 Impairment Assessment

In performing the first step of the annual goodwill impairment test in the fourth quarter of 2016 (performed prior to the

adoption of ASU 2017-04 “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”), the
Company determined that the estimated fair values of the acoustics and components reporting units were lower than the
carrying values of the respective reporting units, requiring further analysis under the second step of the impairment test. The
decline in the estimated fair value of the acoustics reporting unit was primarily due to lower long-term revenue growth
expectations resulting from the strategic review of capital allocation and investment priorities as compared to the Company’s
prior growth plan for the business. The fair value of the acoustics reporting unit was also negatively impacted by a projected
cyclical decline in the North American automotive industry end-market. The decline in the estimated fair value of the
components reporting unit was primarily due to lower long-term revenue expectations resulting from the annual budgeting and
strategic planning process as compared to the Company’s prior plan for the business, primarily due to projected longer-term
weakness in the rail end-market.

In performing the second step of the impairment testing, the Company performed a theoretical purchase price

In connection with the goodwill impairment tests in 2016, the Company engaged a third-party valuation firm to assist

management with determining fair value estimates for the reporting units in the goodwill impairment test. In 2016, the third-
party valuation firm was also involved in assisting management in estimating fair values of tangible and intangible assets used

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

in the second step of the goodwill impairment test. In connection with obtaining an independent third-party valuation,
management provided certain information and assumptions that were utilized in the fair value calculation. Significant
assumptions used in determining reporting unit fair value included forecasted cash flows, revenue growth rates, adjusted
EBITDA margins, weighted average cost of capital (discount rate), assumed tax treatment of a future sale of the reporting unit,
terminal growth rates, capital expenditures, sales and EBITDA multiples used in the market approach, and the weighting of the
income and market approaches. The fair values of the reporting units were determined using a weighted average of an income
approach primarily based on the Company’s three year strategic plan and a market approach based on implied valuation
multiples of public company peer groups for each reporting unit. Both approaches were deemed equally relevant in
determining reporting unit enterprise value, and as a result, weightings of 50 percent were used for each. This fair value
determination was categorized as Level 3 in the fair value hierarchy.

Other Intangible Assets

The Company’s other amortizable intangible assets consisted of the following:

Patents

Customer relationships

Trademarks and other intangibles

Total amortized other intangible assets

December 31, 2018

Gross
Carrying
Amount

Accumulated
Amortization

Net

December 31, 2017

Gross
Carrying
Amount

Accumulated
Amortization

2,038

(1,018) $

1,020

1,985

(671) $

105,539

56,405

(30,634)

(15,801)

74,905

40,604

110,210

57,373

(24,775)

(12,623)

Net

1,314

85,435

44,750

163,982

(47,453) $

116,529

169,568

(38,069) $

131,499

Other amortizable intangible assets are evaluated for potential impairment whenever events or circumstances indicate

that the carrying value may not be recoverable. There were no impairment charges recorded related to tangible or intangible
assets during 2018 and 2017.

In connection with the evaluation of the goodwill impairment in the acoustics and components reporting units in 2016,

the Company assessed tangible and intangible assets for impairment prior to performing the second step of the goodwill
impairment test. As a result of this analysis, it was determined that there were no impairment charges to record related to these
assets.

The approximate weighted average remaining useful lives of the Company’s intangible assets at December 31, 2018

are as follows: patents - 4.8 years; customer relationships - 10.1 years; and trademarks and other intangibles - 10.8 years.

Amortization of intangible assets approximated $14.2 million, $12.7 million, and $12.9 million for the years ended

December 31, 2018, 2017 and 2016, respectively. Included within amortization expense for the year ended December 31, 2018,
was $2.3 million of accelerated amortization expense in the components segment related to the exit from non-core product lines
for smart utility meter subassemblies in 2018. Excluding the impact of any future acquisitions, the Company anticipates the
annual amortization for each of the next five years and thereafter to be the following:

2019

2020

2021

2022

2023

Thereafter

11,707

11,706

11,564

11,391

11,382

58,779

116,529

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

9. Debt and Hedging Instruments

The Company’s debt consisted of the following:

First Lien Term Loans

Second Lien Term Loans

Debt discount on Term Loans

Deferred issuance costs on Term Loans

Foreign debt

Capital lease obligations

Total debt

Less: Current portion

Total long-term debt

December 31, 2018

December 31, 2017

292,540

89,887

(2,669)

(4,052)

17,469

613

393,788

(6,544)

387,244

298,018

90,007

(3,602)

(5,586)

21,795

840

401,472

(9,704)

391,768

6,544

6,619

289,008

92,199

3,683

2,456

400,509

(2,669)

(4,052)

393,788

Future annual maturities of long-term debt outstanding at December 31, 2018 are as follows:

2019

2020

2021

2022

2023

Thereafter

Total future annual maturities of long term debt outstanding

Less: Debt discounts on Term Loans

Less: Deferred issuance costs on Term Loans

Total debt

Senior Secured Credit Facilities

As of December 31, 2018, the Company’s U.S. credit facility included (i) term loans in an aggregate principal amount
of $310.0 million (“First Lien Term Loans”) maturing June 30, 2021, of which $292.5 million is outstanding, (ii) term loans in
an aggregate principal amount of $110.0 million (“Second Lien Term Loans”) maturing June 30, 2022, of which $89.9 million
is outstanding, and (iii) a revolving loan of up to $34.3 million (“Revolving Credit Facility”) maturing June 30, 2020. During
the second quarter of 2018, the Company amended its Revolving Credit Facility to extend the maturity date to June 30, 2020.
The amendment reduced the borrowing capacity from $40.0 million to $34.3 million until June 30, 2019, and thereafter, $30.0
million until June 30, 2020. In connection with the amendment, the Company paid deferred financing costs of $0.6 million
which have been recorded within other assets - net within the consolidated balance sheets. The unamortized amount of debt
issuance costs as of December 31, 2018 were $4.1 million related to the First Lien Term Loans and Second Lien Term Loans
and $0.8 million related to the Revolving Credit Facility. Debt issuance costs related to the First Lien Term Loans and Second
Lien Term Loans are recorded in total long-term debt, and debt issuance costs related to the Revolving Credit Facility are
recorded in other assets - net. These costs are amortized into interest expense over the life of the respective borrowings on a
straight-line basis.

The principal amount of the First Lien Term Loans amortizes in quarterly installments equal to $0.8 million, with the

balance payable at maturity. At the Company’s election, the interest rate per annum applicable to the loans under the Senior
Secured Credit Facilities is based on a fluctuating rate of interest determined by reference to either (i) a base rate determined by
reference to the higher of (a) the administrative agent’s prime rate, (b) the federal funds effective rate plus 0.50% or (c) the
Eurocurrency rate applicable for an interest period of one month plus 1.00%, plus an applicable margin equal to (x) 3.50% in
the case of the First Lien Term Loans, (y) 2.25% in the case of the Revolving Credit Facility or (z) 7.00% in the case of the
Second Lien Term Loans or (ii) a Eurocurrency rate determined by reference to London Interbank Offered Rate (“LIBOR”),
adjusted for statutory reserve requirements, plus an applicable margin equal to (x) 4.50% in the case of the First Lien Term
Loans, (y) 3.25% in the case of the Revolving Credit Facility or (z) 8.00% in the case of the Second Lien Term Loans.
Borrowings are subject to a floor of 1.00% in the case of Eurocurrency loans. The applicable margin for loans under the
Revolving Credit Facility may be subject to adjustment based upon Jason Incorporated’s (an indirect wholly-owned subsidiary
of the Company) consolidated first lien net leverage ratio.

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

Under the Revolving Credit Facility, if the aggregate outstanding amount of all Revolving Loans, swingline loans and

certain letter of credit obligations exceeds $10.0 million at the end of any fiscal quarter, Jason Incorporated and its restricted
subsidiaries will be required to not exceed a consolidated first lien net leverage ratio, currently specified at 4.50 to 1.00, with a
decrease to 4.25 to 1.00 on December 31, 2019 and remaining at that level thereafter. If such outstanding amounts do not
exceed $10.0 million at the end of any fiscal quarter, no financial covenants are applicable. The Company did not borrow on its
Revolving Credit Facility during 2018.

At December 31, 2018, the interest rates on the outstanding balances of the First Lien Term Loans and Second Lien

Term Loans were 7.3% and 10.8%, respectively. At December 31, 2018, the Company had a total of $29.4 million of
availability for additional borrowings under the Revolving Credit Facility since the Company had no outstanding borrowings
and letters of credit outstanding of $4.9 million, which reduce availability under the facility.

Under the Senior Secured Credit Facilities, the Company is subject to mandatory prepayments if certain requirements
are met. The mandatory prepayment is in excess of regular current installments due. For the year ended December 31, 2018,
there is no required mandatory excess cash flow prepayment under the Senior Secured Credit Facilities. At December 31, 2017,
a mandatory excess cash flow prepayment of $2.5 million under the Senior Secured Credit Facilities was included within the
current portion of long-term debt in the consolidated balance sheets and was paid in April 2018.

During 2017, the Company repurchased $20.0 million of Second Lien Term Loans for $16.8 million. In connection

In the fourth quarter of 2017, the Company utilized $2.4 million of cash received during the third quarter from the sale

of Acoustics Europe to retire foreign debt in Germany and incurred a $0.2 million prepayment fee, which was recorded as an
offset to the gain on extinguishment of debt.

Foreign debt

The Company has the following foreign debt obligations, including various overdraft facilities and term loans:

Germany

Mexico

India

Other

Total foreign debt

December 31, 2018

December 31, 2017

15,002

2,000

467

—

17,469

18,003

3,179

599

21,795

These various foreign loans are comprised of individual outstanding obligations ranging from approximately
$0.1 million to $9.3 million and $0.1 million to $11.2 million as of December 31, 2018 and December 31, 2017, respectively.
Certain of the Company’s foreign borrowings contain financial covenants requiring maintenance of a minimum equity ratio
and/or maximum leverage ratio, among others. The Company was in compliance with these covenants as of December 31,
2018.

The foreign debt obligations in Germany primarily relate to term loans of $15.0 million at December 31, 2018 and
$18.0 million at December 31, 2017. The German borrowings bear interest at fixed and variable rates ranging from 2.1% to
4.7% and are subject to repayment in varying amounts through 2025.

Interest Rate Hedge Contracts

The Company is exposed to certain financial risks relating to fluctuations in interest rates. To manage exposure to such

fluctuations, the Company entered into forward starting interest rate swap agreements (“Swaps”) in 2015 with notional values
totaling $210.0 million at both December 31, 2018 and December 31, 2017. The Swaps have been designated by the Company
as cash flow hedges, and effectively fix the variable portion of interest rates on variable rate term loan borrowings at a rate of
approximately 2.08% prior to financing spreads and related fees. The Swaps had a forward start date of December 30, 2016 and
have an expiration date of June 30, 2020. As such, the Company began recognizing interest expense related to the interest rate
hedge contracts in the first quarter of 2017. For the years ended December 31, 2018 and 2017, the Company recognized $0.2
million of interest income and $1.9 million of interest expense, respectively, related to the Swaps. There was no interest
expense recognized in 2016. Based on current interest rates, the Company expects to recognize interest income of $1.5 million
related to the Swaps in 2019.

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

The fair values of the Company’s Swaps are recorded on the consolidated balance sheets with the corresponding offset
recorded as a component of accumulated other comprehensive loss. The fair value of the Swaps is $1.9 million at December 31,
2018 and $0.1 million at December 31, 2017, respectively. See the amounts recorded on the consolidated balance sheets within
the table below:

Interest rate swaps:

Recorded in other current assets

Recorded in other assets - net

Recorded in other current liabilities

Total net asset derivatives designated as hedging instruments

10. Leases

Lease Obligations

December 31, 2018

December 31, 2017

1,325

542

—

1,867

—

537

(458)

The Company leases machinery, transportation equipment and office, warehouse and manufacturing facilities under

agreements which are accounted for as operating leases. Many of the leases include provisions that enable the Company to
renew the lease, and certain leases are subject to various escalation clauses.

Future minimum lease payments required under long-term operating leases in effect at December 31, 2018 are as follows:

2019

2020

2021

2022

2023

Thereafter

10,654

8,849

7,296

6,045

4,654

21,691

59,189

Total rental expense under operating leases was $11.9 million, $12.2 million, $13.1 million for the years end

December 31, 2018, December 31, 2017, and December 31, 2016, respectively.

Sale Leaseback

In April 2017, the Company completed a sale leaseback of its Libertyville, Illinois facility consisting of land and

production facilities utilized by its components segment. In connection with the sale, the Company received proceeds, net of
fees and closing costs, of $5.6 million and recorded a deferred gain of $1.1 million which is being recognized over the term of
the lease as a reduction of rent expense. The lease commenced in April 2017 and expires in March 2032. The Company has
classified the lease as an operating lease and will pay approximately $10.1 million in minimum lease payments over the life of
the lease.

11. Shareholders’ (Deficit) Equity

At December 31, 2018, the Company has authorized for issuance 120,000,000 shares of $0.0001 par value common
stock, of which 27,394,978 shares were issued and outstanding, and has authorized for issuance 5,000,000 shares of $0.0001
par value preferred stock, of which 40,612 shares were issued and outstanding, including 794 shares declared as a dividend on
November 1, 2018 and issued on January 1, 2019.

Series A Preferred Stock

On June 30, 2014, the Company issued 45,000 shares of Series A Preferred Stock with offering proceeds of $45.0

million and offering costs of $2.5 million. Holders of the Series A Preferred Stock are entitled to cumulative dividends at an
8.0% dividend rate per annum payable quarterly on January 1, April 1, July 1, and October 1 of each year in cash or by delivery
of Series A Preferred Stock shares. Holders of the Series A Preferred Stock have the option to convert each share of Series A
Preferred Stock into approximately 81.18 shares of the Company’s common stock, subject to certain adjustments in the
conversion rate.

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

The Company paid the following dividends on the Series A Preferred Stock in additional shares of Series A Preferred

Stock during the years ended December 31, 2018, 2017 and 2016.

Record Date

Amount Per Share

Total Dividends Paid

Preferred Shares Issued

Payment Date

January 1, 2016

April 1, 2016

July 1, 2016

October 1, 2016

January 1, 2017

April 1, 2017

July 1, 2017

October 1, 2017

January 1, 2018

April 1, 2018

July 1, 2018

November 15, 2015

February 15, 2016

May 15, 2016

August 15, 2016

November 15, 2016

February 15, 2017

May 15, 2017

August 15, 2017

November 15, 2017

February 15, 2018

May 15, 2018

October 1, 2018

August 15, 2018

$20.00

$900

$918

$936

$955

$974

$751

$766

$781

—

899

915

931

952

968

748

763

778

On November 1, 2018, the Company declared a $20.00 per share dividend on its Series A Preferred Stock to be paid in

additional shares of Series A Preferred Stock on January 1, 2019 to holders of record on November 15, 2018. As of
December 31, 2018, the Company has recorded the 794 additional Series A Preferred Stock shares declared for the dividend of
$0.8 million within preferred stock in the consolidated balance sheets.

Exchange of preferred stock for common stock of Jason Industries, Inc.

On January 22, 2018, certain holders of the Company’s Series A Preferred Stock exchanged 12,136 shares of Series A

Preferred Stock for 1,395,640 shares of the Company’s common stock, a conversion rate of 115 shares of common stock for
each share of Series A Preferred Stock. Under the terms of the Series A Preferred Stock agreements, holders of the Series A
Preferred Stock have the option to convert each share of Series A Preferred Stock into approximately 81.18 shares of the
Company’s common stock, subject to certain adjustments in the conversion rate. The excess of the book value of the Series A
Preferred Stock over the par value of the Company’s common stock issued in the exchange was recorded as an increase to
additional paid-in capital on the consolidated balance sheets. The fair value of the redemption premium, represented by the
excess of the exchange conversion rate over the agreement conversion rate, was recorded as a reduction to net loss available to
common shareholders of Jason Industries within the consolidated statements of operations.

Warrants

As of December 31, 2018, the Company had 13,993,773 warrants outstanding. Each outstanding warrant entitles the

registered holder to purchase one share of the Company’s common stock at a price of $12.00 per share, subject to adjustment, at
any time. The warrants will expire on June 30, 2019, or earlier upon redemption.

In February 2015, the Company’s Board of Directors authorized the purchase of up to $5.0 million of the Company’s
outstanding warrants. Management is authorized to make purchases from time to time in the open market or through privately
negotiated transactions. There is no expiration date to this authority. No warrants were repurchased during the years ended
December 31, 2018, 2017 and 2016.

Exchange of common stock of JPHI Holdings, Inc. for common stock of Jason Industries, Inc.

Following the consummation of the June 30, 2014 go public business combination, Jason became an indirect majority-

owned subsidiary of the Company, with the Company then owning approximately 83.1% of JPHI Holdings Inc. (“JPHI”) and
the rollover participants then owning a noncontrolling interest of approximately 16.9% of JPHI. The rollover participants
received 3,485,623 shares of JPHI, which were exchangeable on a one-for-one basis for shares of common stock of the
Company.

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

In 2016, certain rollover participants exchanged 2,401,616 shares of JPHI stock for Company common stock, which

decreased the noncontrolling interest to 6.0 percent. In the first quarter of 2017, certain rollover participants exchanged the
remaining 1,084,007 shares of JPHI stock for Company common stock, which decreased the noncontrolling interest to 0%, and
no shares of JPHI stock remain outstanding as of December 31, 2018. The decreases to the noncontrolling interest as a result
of the exchange resulted in an increase in both accumulated other comprehensive loss and additional paid-in capital to reflect
the Company’s increased ownership in JPHI.

Accumulated Other Comprehensive Loss

The changes in the components of accumulated other comprehensive loss, net of taxes, were as follows:

Employee
retirement plan
adjustments

Foreign currency
translation
adjustments

Net unrealized
gains (losses) on
cash flow hedges

Total

Balance at December 31, 2015

(1,051) $

(20,237) $

(168) $

Other comprehensive loss before reclassifications

Amount reclassified from accumulated other comprehensive loss

Exchange of common stock of JPHI Holdings, Inc. for common stock
of Jason Industries, Inc.
Balance at December 31, 2016

Other comprehensive loss before reclassifications

Amount reclassified from accumulated other comprehensive loss

Exchange of common stock of JPHI Holdings, Inc. for common stock
of Jason Industries, Inc.

Balance at December 31, 2017

Cumulative impact of accounting changes

Other comprehensive income before reclassifications

Amount reclassified from accumulated other comprehensive loss

(545)

(186)

(1,777)

365

(113)

(1,517)

(137)

(223)

(4,013)

—

(3,154)

(27,404)

11,394

(888)

(1,698)

(18,596)

—

(4,555)

—

(870)

—

(153)

(1,191)

156

1,159

(73)

1,467

(118)

(21,456)

(5,428)

(3,493)

(30,372)

11,915

279

(1,884)

(20,062)

(126)

(3,311)

(72)

Balance at December 31, 2018

(1,831) $

(23,151) $

1,411

(23,571)

12. Share-Based Compensation

The Company recognizes compensation expense based on estimated grant date fair values for all share-based awards
issued to employees and directors, including restricted stock units and performance share units, which are restricted stock units
with vesting conditions contingent upon achieving certain performance goals. The Company estimates the fair value of share-
based awards based on assumptions as of the grant date. The Company recognizes these compensation costs for only those
awards expected to vest, on a straight-line basis over the requisite service period of the award, which is generally the vesting
term of three years for restricted stock awards and the performance period for performance share units. Forfeitures are
recognized within compensation expense in the period the forfeitures are incurred. Share based compensation expense is
reported in selling and administrative expenses in the Company’s consolidated statements of operations.

2014 Omnibus Incentive Plan

In 2014, the Company’s Board of Directors and shareholders approved 3,473,435 shares of common stock to be

reserved and authorized for issuance under the 2014 Omnibus Incentive Plan (the “2014 Plan”) to certain executive officers,
senior management employees, and members of the Board of Directors. On February 27, 2018, the Company’s Board of
Directors unanimously approved an amendment to the 2014 Plan to increase the number of authorized shares of common stock
by 4,000,000 shares, which the Company’s shareholders approved on May 16, 2018. Awards under the 2014 Plan are generally
not restricted to any specific form or structure and could include, without limitation, stock options, stock appreciation rights,
restricted stock awards and RSUs, performance awards, other stock-based awards, and other cash-based awards. At
December 31, 2018, there were 2,609,316 shares of common stock that remained authorized and available for future grants.

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

Share-Based Compensation Expense

The Company recognized the following share-based compensation expense (income):

Restricted Stock Units

Adjusted EBITDA Vesting Awards

Stock Price Vesting Awards

ROIC Vesting Awards

Subtotal

Impact of accelerated vesting

Total share-based compensation expense (income)

Total income tax benefit (provision)

Year Ended
December 31, 2018

Year Ended
December 31, 2017

Year Ended
December 31, 2016

2,270

439

—

2,709

—

913

197

—

1,119

—

2,709

1,119

667

276

1,300

(2,399)

101

—

(998)

246

(752)

(294)

As of December 31, 2018, $5.6 million of total unrecognized compensation expense related to share-based
compensation plans is expected to be recognized over a weighted-average period of 2.0 years. The total unrecognized share-
based compensation expense to be recognized in future periods as of December 31, 2018 does not consider the effect of share-
based awards that may be issued in subsequent periods.

General Terms of Awards

The Compensation Committee of the Board of Directors has discretion to establish the terms and conditions for grants,

including the number of shares, vesting and required service or other performance criteria. RSU and performance share unit
awards are subject to forfeiture upon termination of employment prior to vesting, subject in some cases to early vesting, or
continued eligibility for vesting, upon specified events, including death or permanent disability of the grantee, termination of
the grantee’s employment under certain circumstances or a change in control of the Company. Dividend equivalents on
common stock, if any, are accrued for RSUs and performance share units granted to employees and paid in the form of cash or
stock depending on the form of the dividend, at the same time that the shares of common stock underlying the unit are delivered
to the employee. All RSUs and performance share units granted to employees are payable in shares of common stock and are
classified as equity awards.

The rights granted to the recipient of employee RSU awards generally vest annually in equal installments on the

anniversary of the grant date or in two equal installments over the restriction or vesting period, which is generally three years.
Vested RSUs are payable in common stock within a thirty day period following the vesting date. The Company records
compensation expense of RSU awards based on the fair value of the awards at the date of grant ratably over the period during
which the restrictions lapse.

Performance share unit awards based on cumulative and average performance metrics (i.e. average return on invested
capital (“ROIC”) and Adjusted EBITDA) are payable at the end of their respective performance period in common stock. The
number of share units awarded can range from zero to 150% for those awards granted from 2014 through 2016 and from zero to
100% for those awards granted in 2017, depending on achievement of a targeted performance metric, and are payable in
common stock within a thirty day period following the end of the performance period. The Company expenses the cost of the
performance-based share unit awards based on the fair value of the awards at the date of grant and the estimated achievement of
the performance metric, ratably over the performance period of three years.

Performance share unit awards based on achievement of certain established stock price targets are payable in common

stock if the last sales price of the Company’s common stock equals or exceeds established stock price targets in any twenty
trading days within a thirty trading day period during the performance period. The Company expenses the cost of the stock
price-based performance share unit awards based on the fair value of the awards at the date of grant ratably over the derived
service period of the award.

The Company also issues RSUs as share-based compensation for members of the Board of Directors. Director RSUs

vest one year from the date of grant. In the event of termination of a member’s service on the Board of Directors prior to a
vesting date, all unvested RSUs of such holder will be forfeited. Vested RSUs are deferred and then delivered to members of the
Board of Directors within six months following the termination of their directorship. All awards granted are payable in shares
of common stock or cash payment equal to the fair market value of the shares at the discretion of our Compensation

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

Committee, and are classified as equity awards due to their expected settlement in common stock. Compensation expense for
these awards is measured based upon the fair value of the awards at the date of grant. Dividend equivalents on common stock
are accrued for RSUs awarded to the Board of Directors and paid in the form of cash or stock depending on the form of the
dividend, at the same time that the shares of common stock underlying the RSU are delivered to a member of the Board of
Directors following the termination of their directorship.

Restricted Stock Units

The following table summarizes RSU activity:

For the Year Ended
December 31, 2018

For the Year Ended
December 31, 2017

For the Year Ended
December 31, 2016

Shares
(thousands)

Weighted-
Average Grant
Date Fair Value

Shares
(thousands)

Weighted-
Average Grant
Date Fair Value

Shares
(thousands)

Weighted-
Average Grant
Date Fair Value

Outstanding at beginning of period

Granted

Issued

Deferred

Forfeited

1,033

2,166

(36)

—

(13)

Outstanding at end of period

3,150

2.84

2.94

3.72

—

3.02

2.89

554 $

745

(265)

159

(160)

1,033 $

5.22

1.32

4.84

3.69

1.53

2.84

401

375

(211)

(73)

554

8.70

3.75

7.62

4.24

9.04

5.22

As of December 31, 2018, there was $5.0 million of unrecognized share-based compensation expense related to
2,862,044 RSU awards, with a weighted-average grant date fair value of $2.64, that are expected to vest over a weighted-
average period of 2.1 years. Included within the total 3,150,498 RSU awards outstanding as of December 31, 2018 are 288,454
RSU awards for members of our Board of Directors which have vested and issuance of the shares has been deferred, with a
weighted-average grant date fair value of $5.41. The total fair values of shares vested during the years ended December 31,
2018, 2017 and 2016 were $0.1 million, $0.3 million and $0.7 million, respectively. The fair values of these awards were
determined based on the Company’s stock price on the grant date.

In connection with the vesting of RSUs previously issued by the Company, a number of shares sufficient to fund
statutory minimum tax withholding requirements was withheld from the total shares issued or released to the award holder
(under the terms of the 2014 Plan, the shares are considered to have been issued and are not added back to the pool of shares
available for grant). During the years ended December 31, 2018, 2017 and 2016, 2,837, 25,532 and 43,806 shares, respectively,
were withheld to satisfy the requirement. The withholding is treated as a reduction in additional paid-in capital in the
accompanying consolidated statements of shareholders’ (deficit) equity.

Performance Share Units

Adjusted EBITDA Vesting Awards

The following table summarizes Adjusted EBITDA vesting awards activity:

For the Year Ended
December 31, 2018

For the Year Ended
December 31, 2017

For the Year Ended
December 31, 2016

Outstanding at beginning of period

Granted

Adjustment for performance results
achieved (1)

Vested

Forfeited

Shares
(thousands)

908

—

1,058

(708)

—

(165)

Weighted-
Average Grant
Date Fair Value
1.30
$

Shares
(thousands)

Weighted-
Average Grant
Date Fair Value
9.67

723 $

Weighted-
Average Grant
Date Fair Value
9.81
$

Shares
(thousands)

871

—

(148)

723

1.30

9.65

—

2.11

1.30

—

10.49

9.67

Outstanding at end of period

908

1.30

908 $

(1)

Adjustment for Adjusted EBITDA awards originally granted in 2014 and 2015 was due to the number of shares vested
at the end of the three-year performance period ended June 30, 2017 being lower than the maximum achievement of
the targeted Adjusted EBITDA performance metric.

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

Adjusted EBITDA Vesting Awards - 2014 and 2015 Grant

During 2014 and 2015, 1,357,942 performance share unit awards were granted to certain executive officers and senior
management employees. The awards were payable upon the achievement of certain established cumulative Adjusted EBITDA
performance targets over a three year performance period of July 1, 2014 through June 30, 2017. During 2016, the Company
lowered its estimated vesting of the 2014 and 2015 performance share unit awards to an estimated vesting payout of 0%, or 0
shares, resulting in $2.4 million of share-based compensation income due to declines in profitability. The award period expired
on June 30, 2017 with no awards vesting.

Adjusted EBITDA Vesting Awards - 2017 Grant

During the year ended December 31, 2017, the Company granted 1,057,505 performance share unit awards to certain

executive officers and senior management employees, which are payable based on achievement of a cumulative Adjusted
EBITDA performance target over a three year performance period ending on March 30, 2020. Distributions under these awards
are payable at the end of the performance period in common stock. The total potential payouts for awards granted during the
year ended December 31, 2017 ranged from zero to 907,505 shares, should certain performance targets be achieved.

Compensation expense for the Adjusted EBITDA based performance share unit awards is currently being recognized

based on an estimated payout of 100% of target, or 907,505 shares. As of December 31, 2018, there was $0.6 million of
unrecognized compensation expense related to Adjusted EBITDA based vesting performance share unit awards, which is
expected to be recognized over a weighted average period of 1.3 years.

Stock Price Vesting Awards

As of December 31, 2018, the stock price vesting awards are no longer outstanding as the award period expired on

June 30, 2017 with no awards vesting.

ROIC Vesting Awards

The following table summarizes ROIC vesting awards activity:

For the Year Ended
December 31, 2018

For the Year Ended
December 31, 2017

For the Year Ended
December 31, 2016

Weighted-
Average Grant
Date Fair Value
3.70
$

Weighted-
Average Grant
Date Fair Value
3.65
$

Shares
(Thousands)

Weighted-
Average Grant
Date Fair Value
—

— $

Outstanding at beginning of period

Granted

Adjustment for performance results
achieved (1)

Vested

Forfeited

Shares
(Thousands)

410

—

(398)

—

(12)

Outstanding at end of period

— $

Shares
(Thousands)

513

—

(103)

410

—

3.71

—

3.46

—

3.46

3.70

599

—

(86)

513

3.62

—

3.46

3.65

(1)

Adjustment for ROIC awards originally granted in 2016 was due to the number of shares vested at the end of the three-
year performance period ended December 31, 2018 being lower than the minimum achievement of the targeted ROIC
performance metric.

During the year ended December 31, 2016, 599,336 performance share unit awards were granted to certain executive
officers and senior management employees, payable upon the achievement of an ROIC performance target during a three year
measurement period ending on December 31, 2018. There were no ROIC performance awards granted during the years ended
December 31, 2018 and December 31, 2017. Performance share unit awards based on ROIC performance metrics were payable
at the end of their respective performance period in common stock. The total potential payouts for awards granted during the
year ended December 31, 2016 ranged from zero to 410,336 shares, should certain performance targets be achieved.

Compensation expense for ROIC based performance share unit awards outstanding during the year ended December

31, 2018 was recognized based on an estimated payout of 0% of target, or 0 shares. During the fourth quarter of 2016, the
Company lowered its estimated vesting of the performance share unit awards from 100% of target, or 273,557 shares, to an
estimated vesting payout of 0%. As of December 31, 2018, there was no unrecognized compensation expense related to ROIC
based vesting performance share unit awards expected to be recognized in subsequent periods, and the awards are no longer
outstanding as the award period expired on December 31, 2018 with no awards vesting.

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

13. Earnings per Share

Basic income (loss) per share is calculated by dividing net income (loss) attributable to Jason Industries’ common
shareholders by the weighted average number of common shares outstanding for the period. In computing dilutive income
(loss) per share, basic income (loss) per share is adjusted for the assumed issuance of all potentially dilutive share-based
awards, including public warrants, RSUs, performance share units, convertible preferred stock, and certain “Rollover Shares”
of JPHI convertible into shares of Jason Industries. Such Rollover Shares were contributed by former owners and management
of Jason Partners Holdings Inc. prior to the Company’s acquisition of JPHI. Public warrants (“warrants”) consist of warrants to
purchase shares of Jason Industries common stock which are quoted on Nasdaq under the symbol “JASNW.”

The reconciliation of the numerator and denominator of the basic and diluted loss per share calculation and the anti-

dilutive shares is as follows:

Year Ended
December 31, 2018

Year Ended
December 31, 2017

Year Ended
December 31, 2016

Net loss per share attributable to Jason Industries common shareholders

Basic and diluted loss per share

Numerator:

Net loss available to common shareholders of Jason Industries

(0.62) $

(0.32) $

(3.15)

(17,230) $

(8,261) $

(70,835)

Denominator:

Basic and diluted weighted-average shares outstanding

27,595

26,082

22,507

Weighted average number of anti-dilutive shares excluded from denominator:

Warrants to purchase Jason Industries common stock (1)
Conversion of Series A 8% Perpetual Convertible Preferred (2)

Conversion of JPHI rollover shares convertible to Jason Industries common
stock (3)

Restricted stock units

Performance share units

Total

13,994

3,235

—

2,331

1,307

20,867

13,994

3,858

796

1,379

20,086

13,994

3,656

3,427

503

1,917

23,497

(1)

(2)

(3)

Each outstanding warrant entitles the holder to purchase one share of the Company’s common stock at a price of
$12.00 per share. The warrants expire on June 30, 2019.

Includes the impact of 794 additional Series A Preferred Stock shares from a stock dividend declared on November 1,
2018 to be paid in additional shares of Series A Preferred Stock on January 1, 2019. The Company included the
preferred stock within the consolidated balance sheets as of the declaration date. Conversion is presented at the
voluntary conversion ratio of approximately 81.18 common shares for each one preferred share.

Includes the impact of the exchange by certain Rollover Participants of their JPHI stock for Company common stock
in the fourth quarter of 2016 and first quarter of 2017.

Warrants are considered anti-dilutive and excluded when the exercise price exceeds the average market value of the

Company’s common stock price during the applicable period. Performance share units are considered anti-dilutive if the
performance targets upon which the issuance of the shares is contingent have not been achieved and the respective performance
period has not been completed as of the end of the current period. Due to losses available to the Company’s common
shareholders for each of the periods presented, potentially dilutive shares are excluded from the diluted net loss per share
calculation because they were anti-dilutive under the treasury stock method.

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

14. Income Taxes

On December 22, 2017, the President of the United States signed into law the Tax Reform Act. The legislation
significantly changed U.S. tax law by lowering corporate income tax rates, implementing a territorial tax system and imposing a
repatriation tax on deemed repatriated earnings of foreign subsidiaries, among others. The Tax Reform Act also added many
new provisions including changes to bonus depreciation and the deductions for executive compensation and interest expense.
The Tax Reform Act permanently reduces the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate,
effective January 1, 2018.

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax

The Tax Reform Act provided for a one-time deemed mandatory repatriation of post-1986 undistributed foreign

subsidiary earnings and profits through the year ended December 31, 2017. The Company had an estimated $54.5 million of
undistributed foreign earnings and profits subject to the deemed mandatory repatriation and recognized a provisional $5.3
million of income tax expense in the Company’s consolidated statements of operations for the year ended December 31, 2017.
After the utilization of existing net operating loss carryforwards, the Company did not incur any U.S. federal cash taxes
resulting from the deemed mandatory repatriation.

While the Tax Reform Act provides for a territorial tax system, beginning in 2018, it includes the global intangible
low-taxed income (“GILTI”) provisions that require the Company to include in its U.S. income tax return foreign subsidiary
earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. GAAP allows companies to make an
accounting election to either treat taxes due on future GILTI inclusions in U.S. taxable income as current period expense when
incurred (“period cost method”) or factor such amounts into the measurement of its deferred taxes (“deferred method”). The
Company has elected to use the period cost method.

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the
application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed
(including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act.
The Company recognized the provisional tax impacts related to deemed repatriated earnings and the revaluation of deferred tax
assets and liabilities and included those estimated amounts in its consolidated financial statements for the year ended
December 31, 2017. During the year ended December 31, 2018, the Company finalized the accounting for these items and
recorded an adjustment to reduce the amount of income tax expense attributable to the deemed mandatory repatriation of
foreign subsidiary earnings and profits by $0.5 million. The final adjustment required to revalue net deferred tax liabilities was
immaterial.

The consolidated loss before income taxes consisted of the following:

Domestic

Foreign

Loss before income taxes

Year Ended
December 31, 2018

Year Ended
December 31, 2017

Year Ended
December 31, 2016

(33,179) $

(27,919) $

17,914

13,062

(15,265) $

(14,857) $

(93,639)

9,290

(84,349)

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

The consolidated provision (benefit) for income taxes included within the consolidated statements of operations

consisted of the following:

Current

Federal

State

Foreign

Total current income tax provision

Deferred

Federal

State

Foreign

Total deferred income tax benefit

Total income tax benefit

Year Ended
December 31, 2018

Year Ended
December 31, 2017

Year Ended
December 31, 2016

5,784

5,890

(5,723)

(833)

(1,439)

(7,995)

208

(125)

6,878

6,961

(14,864)

(1,281)

(1,200)

(17,345)

(2,105) $

(10,384) $

—

7,759

7,816

(9,059)

(1,781)

(3,272)

(14,112)

(6,296)

The income tax benefit recognized in the accompanying consolidated statements of operations differs from the
amounts computed by applying the Federal income tax rate to loss before income taxes. A reconciliation of income taxes at the
Federal statutory rate to the effective tax rate is summarized as follows:

Tax at Federal statutory rate

State taxes - net of Federal benefit

Research and development incentives

Foreign rate differential

Valuation allowances

Change in foreign tax rates

Decrease (increase) in tax reserves

Stock compensation expense
U.S. taxation of foreign earnings(1)

Non-deductible meals and entertainment
Non-deductible impairment charges(2)
Change in U.S. tax rate(3)
Transition tax on unremitted foreign earnings(4)

Other

Effective tax rate

Year Ended
December 31, 2018

Year Ended
December 31, 2017

Year Ended
December 31, 2016

21.0%

35.0%

7.8

3.6

(7.4)

(0.2)

—

(1.6)

(2.1)

(13.1)

(0.3)

—

3.3

2.8

7.7

1.7

5.2

5.0

(1.2)

(0.4)

(6.7)

(10.2)

(0.3)

—

72.5

(35.7)

(2.7)

13.8%

69.9%

1.5

0.5

1.3

(1.8)

0.6

1.0

(0.6)

(3.6)

(0.1)

(25.7)

—

(0.6)

7.5%

(1) During the year ended December 31, 2018, the U.S. taxation of foreign earnings includes the recognition of GILTI and the
U.S. taxation of other foreign income. During the year ended December 31, 2017, the amount includes a deferred tax
liability for foreign earnings of the Company’s wholly-owned U.S. subsidiaries that are no longer considered permanently
reinvested. During the year ended December 31, 2016, the amount includes the recognition of a deferred tax liability for
the foreign earnings of the Company’s non-majority owned joint venture holding that are no longer considered permanently
reinvested.

(2) During the year ended December 31, 2016, the non-deductible impairment charges are related to the impairment of

goodwill and other intangible assets.

(3) During the year ended December 31, 2017, the change in U.S. tax rate represents the impact of the reduction in the U.S.

corporate income tax rate from 35% to 21% under the Tax Reform Act.

(4) During the years ended December 31, 2018 and 2017, the transition tax on unremitted foreign earnings represents the

impact of the deemed mandatory repatriation provisions under the Tax Reform Act.

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

The Company’s temporary differences which gave rise to deferred tax assets and liabilities were as follows:

December 31, 2018

December 31, 2017

Deferred tax assets

Accrued expenses and reserves

Postretirement and postemployment benefits

Employee benefits

Inventories

Other assets

Operating loss and credit carryforwards

Gross deferred tax assets

Less valuation allowance

Deferred tax assets

Deferred tax liabilities

Property, plant and equipment

Intangible assets and other liabilities

Foreign investments

Deferred tax liabilities

Net deferred tax liability

Amounts recognized in the statement of financial position consist of:

Other assets - net

Deferred income taxes

Net amount recognized

2,289

924

3,125

1,072

1,526

20,939

29,875

(3,828)

26,047

(14,969)

(25,804)

(1,261)

(42,034)

(15,987) $

1,738

(17,725)

(15,987) $

2,685

1,702

3,476

1,392

1,868

15,257

26,380

(4,220)

22,160

(15,670)

(28,912)

(1,688)

(46,270)

(24,110)

1,589

(25,699)

(24,110)

At December 31, 2018, the Company has U.S. federal and state net operating loss carryforwards, which expire at

various dates through 2037, approximating $23.3 million and $102.7 million, respectively. In addition, the Company has U.S.
state tax credit carryforwards of $1.0 million which expire between 2018 and 2032. The Company’s foreign net operating loss
carryforwards total approximately $15.7 million (at December 31, 2018 exchange rates). The majority of these foreign net
operating loss carryforwards are available for an indefinite period.

Valuation allowances totaling $3.8 million and $4.2 million as of December 31, 2018 and 2017, respectively, have

been established for deferred income tax assets primarily related to certain subsidiary losses that may not be realized.
Realization of the net deferred income tax assets is dependent on generating sufficient taxable income prior to their expiration.
Although realization is not assured, management believes it is more-likely-than-not that the net deferred income tax assets will
be realized. The amount of the net deferred income tax assets considered realizable, however, could change in the near term if
future taxable income during the carryforward period fluctuates.

Changes in the Company’s gross liability for unrecognized tax benefits, excluding interest and penalties, are as follows

for the years ended December 31, 2018, 2017 and 2016:

Balance at beginning of period

Additions (reductions) based on tax positions related to current year

Reductions related to lapses of statute of limitations

Balance at end of period

Year Ended
December 31,
2018

Year Ended
December 31,
2017

Year Ended
December 31,
2016

1,916

1,881

2,928

168

—

267

(232)

2,084

1,916

126

(1,173)

1,881

Of the $2.1 million, $1.9 million, and $1.9 million of unrecognized tax benefits as of December 31, 2018, 2017 and

2016, respectively, approximately $2.1 million, $1.9 million, and $1.6 million, respectively, would impact the effective income
tax rate if recognized. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as part of its
income tax provision. During the years ended December 31, 2018, 2017 and 2016, the Company had an immaterial amount of
interest and penalties that were recognized as a component of the income tax provision.

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

At December 31, 2018 and 2017, the Company has an immaterial amount of accrued interest and penalties related to
taxes included within the consolidated balance sheet. During the next twelve months, the Company believes it is reasonably
possible the total amount of unrecognized tax benefits will stay the same.

The Company, along with its subsidiaries, files returns in the U.S. Federal and various state and foreign jurisdictions.

With certain exceptions, the Company is subject to examination by U.S. Federal and state taxing authorities for the taxable
years in the following table. The Company does not expect the results of these examinations to have a material impact on the
Company.

Tax Jurisdiction

Open Tax Years

Brazil

France

Germany

Mexico

Sweden

United Kingdom

United States (federal)

United States (state and local)

2014 - 2018

2012 - 2018

2013 - 2018

2016 - 2018

2014 - 2018

During the fourth quarter of 2017, the Company changed its assertion regarding the permanent reinvestment of

earnings of its wholly-owned non U.S. subsidiaries. This change in assertion was triggered by the anticipated future impact of
changes arising from the enactment of the Tax Reform Act, including the interest expense deduction limitation and significant
reduction in the U.S. taxation of earnings repatriated from the Company’s foreign subsidiaries. As a result, during the year
ended December 31, 2017, the Company recognized a deferred tax liability of $1.7 million on the undistributed earnings of its
wholly-owned foreign subsidiaries. As of the year ended December 31, 2018, the Company has recognized a $1.3 million
deferred tax liability on the undistributed earnings of its wholly-owned foreign subsidiaries.

During the second quarter of 2016, the Company changed its assertion regarding the permanent reinvestment of

earnings of its non-majority owned joint venture holding. Such change in assertion was driven by several factors. Prior to the
second quarter of 2016, the Company had the ability and intent to block the payment of distributions; the Company changed its
stance in the second quarter of 2016 to be open to joint venture distributions. This change coincided with the re-evaluation of
the joint venture partners during that quarter of the willingness and ability of the entity to distribute excess cash balances given
the maturity, stability and revised growth expectations of the joint venture operations. The impact of this change in assertion
was to reduce the income tax benefit for the year ended December 31, 2016 by $2.9 million.

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

15. Employee Benefit Plans

Defined contribution plans

The Company maintains a 401(k) Plan for substantially all full time U.S. employees (the “401(k) Plan”). Company

contributions are allocated to accounts set aside for each employee’s retirement. Employees generally may contribute up to 50%
of their compensation to individual accounts within the 401(k) Plan subject to Internal Revenue Service limitations. Employer
contributions are equal to 50% of the first 6% of employee’s eligible annual cash compensation, also subject to Internal
Revenue Service limitations. Expense recognized related to the 401(k) Plan totaled approximately $2.1 million, $2.1 million
and $2.4 million, for the years ended December 31, 2018, 2017 and 2016, respectively.

Defined benefit pension plans

The Company maintains defined benefit pension plans covering union and certain other employees. These plans are

frozen to new participation.

The table that follows contains the accumulated benefit obligation and reconciliations of the changes in projected

benefit obligation, the changes in plan assets and funded status:

U.S. Plans

Non-U.S. Plans

Year Ended
December 31, 2018

Year Ended
December 31, 2017

Year Ended
December 31, 2018

Year Ended
December 31, 2017

Accumulated benefit obligation

Change in projected benefit obligation

Projected benefit obligation at beginning of year

Service cost

Interest cost

Actuarial (gain) loss

Benefits paid

Other

Currency translation adjustment

Projected benefit obligation at end of year

Change in plan assets

Fair value of plan assets at beginning of year

Actual return on plan assets

Employer and employee contributions

Benefits paid

Other

Currency translation adjustment

Fair value of plan assets at end of year

Funded status

Weighted-average assumptions

Discount rates

Rate of compensation increase

Amounts recognized in the statement of financial
position consist of:

Non-current assets

Other current liabilities

Other long-term liabilities

Net amount recognized

9,661

10,605

12,856

15,054

10,605

10,626

15,468

13,532

—

350

(602)

(692)

—

393

292

(706)

—

190

328

(483)

(1,617)

(680)

9,661

10,605

13,233

10,055

(452)

307

(692)

(39)

—

9,179

(482) $

9,282

1,110

410

(706)

(41)

—

10,055

(550) $

7,446

(184)

525

(1,621)

—

(349)

5,817

(7,416) $

177

312

388

(502)

1,553

15,468

6,316

536

485

(506)

—

615

7,446

(8,022)

4.02%-4.08%

3.33%-3.45%

N/A

2.00%-2.80%

2.00%-3.70%

1.80%-2.40%

2.00%-3.70%

1,830

—

(2,312)

(482) $

1,935

—

(2,485)

(550) $

— $

(83)

(7,333)

(7,416) $

—

(78)

(7,944)

(8,022)

100

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

The following table contains the components of net periodic benefit cost:

U.S. Plans

Non-U.S. Plans

Year Ended
December 31,
2018

Year Ended
December 31,
2017

Year Ended
December 31,
2016

Year Ended
December 31,
2018

Year Ended
December 31,
2017

Year Ended
December 31,
2016

Components of Net Periodic
Benefit Cost

Service cost

Interest cost

Expected return on plan assets

Amortization of actuarial loss

Net periodic (benefit) cost

Weighted-average assumptions

— $

350

(477)

393

(467)

425

(513)

190

328

(222)

177

312

(226)

(113) $

(60) $

(61)

375

304

155

391

(253)

300

Discount rates

3.33%-3.45%

3.71%-3.90%

3.87%-4.15%

1.80%-2.40%

1.70%-2.60%

2.20%-3.70%

Rate of compensation increase

N/A

2.00%-3.70%

2.00%-3.90%

2.00%-3.60%

Expected long-term rates or return

4.75%-6.50%

5.50%-7.00%

3.30%-4.00%

3.50%-4.00%

4.00%-4.20%

The expected return on plan assets is based on the Company’s expectation of the long-term average rate of return of

the capital markets in which the plans invest. The expected return reflects the target asset allocations and considers the
historical returns earned for each asset category. The Company determines the discount rate assumptions by referencing high-
quality long-term bond rates that are matched to the duration of our benefit obligations, with appropriate consideration of local
market factors, participant demographics and benefit payment terms.

The net amounts recognized in accumulated other comprehensive loss related to the Company’s defined benefit

pension plans consisted of the following:

Unrecognized loss

Year Ended
December 31,
2018

Year Ended
December 31,
2017

Year Ended
December 31,
2016

2,379

2,099

1,994

In the next fiscal year, $0.1 million of unrecognized loss within accumulated other comprehensive loss is expected to

be recognized as a component of net periodic benefit cost.

The Company’s investment policies employ an approach whereby a mix of equities and fixed income investments are
used to maximize the long-term return on plan assets for a prudent level of risk. The investment portfolio primarily contains a
diversified blend of equity and fixed income investments. Equity investments are diversified across domestic and non-domestic
stocks, and investment and market risk are measured and monitored on an ongoing basis. The Company’s actual asset
allocations are in line with target allocations and the Company does not have concentration within individual or similar
investments that would pose a significant concentration risk to the Company.

The Company’s pension plan asset allocations by asset category at December 31, 2018 and 2017 are as follows:

Equity securities

Debt securities

Other

U.S. Plans

Non-U.S. Plans

2018

2017

2018

2017

47.6%

42.3%

10.1%

58.7%

29.4%

11.9%

36.8%

58.9%

4.3%

47.1%

49.3%

3.6%

101

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

The fair values of pension plan assets by asset category at December 31, 2018 and 2017 are as follows:

Cash and cash equivalents

Accrued dividends

Global equities

Fixed income securities

Group annuity/insurance contracts

Total

Cash and cash equivalents

Accrued dividends

Global equities

Fixed income securities

Group annuity/insurance contracts

Total

Total as of
December 31, 2018
923
$

6,515

7,315

239

14,996

Total as of
December 31, 2017
1,202
$

9,413

6,630

253

17,501

Level 1

Level 2

Level 3

923

— $

6,515
—
—
7,442

—

7,315
—
7,315

Level 1

Level 2

Level 3

1,202

— $

9,413
—
—
10,618

—

6,630
—
6,630

—

239

—

253

The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2018 due to

the following:

Beginning balance, December 31, 2017

Actual return on assets related to assets still held

Purchases, sales and settlements

Ending balance, December 31, 2018

253

(18)

239

No assets were transferred between levels of the fair value hierarchy during the years ended December 31, 2018 and

December 31, 2017.

Quoted market prices are used to value investments when available. Investments in securities traded on exchanges are

valued at the last reported sale prices on the last business day of the year or, if not available, the last reported bid prices.

The Company’s cash contributions to its defined benefit pension plans in 2019 are estimated to be approximately

$0.8 million. Estimated projected benefit payments from the plans as of December 31, 2018 are as follows:

2019

2020

2021

2022

2023

2024-2028

Multiemployer plan

1,216

1,279

1,349

1,227

1,287

6,472

Hourly union employees of the Morton business within the components segment were covered under the National

Shopmen Pension Fund (EIN 52-6122274, plan number 001), a union-sponsored and trusteed multiemployer plan which
required the Company to contribute a negotiated amount per hour worked by the employees covered by the plan. The Company
made the decision to withdraw from this plan in August 2012. The withdrawal amount was finalized during 2013. As of
December 31, 2018, a liability of $1.3 million is recorded within other long-term liabilities and a liability of $0.2 million is
recorded within other current liabilities on the consolidated balance sheets. As of December 31, 2017, $1.5 million is recorded
within other long-term liabilities and $0.2 million is recorded within other current liabilities on the consolidated balance sheets.
The total liability will be paid in equal monthly installments through April 2026, and interest expense will be incurred
associated with the discounting of this liability through that date.

102

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

Postretirement health care and life insurance plans

The Company also provides postretirement health care benefits and life insurance coverage to certain eligible former

employees at one of its segments. The costs of retiree health care benefits and life insurance coverage are accrued over the
employee benefit period.

The table that follows contains the accumulated benefit obligation and reconciliations of the changes in projected

benefit obligation, the changes in plan assets and funded status:

Accumulated benefit obligation

Change in projected benefit obligation

Projected benefit obligation at beginning of year

Interest cost

Actuarial loss (gain)

Benefits paid

Projected benefit obligation at end of year

Change in plan assets

Employer contributions

Benefits paid

Fair value of plan assets at end of year

Funded status

Weighted-average assumptions

Discount rates

Amounts recognized in the statement of financial position consist of:

Other current liabilities

Other long-term liabilities

Net amount recognized

Year Ended
December 31, 2018

Year Ended
December 31, 2017

1,344

1,423

(160)

1,344

160

(160)

— $

(1,344)

1,972

(483)

(134)

1,423

134

(134)

—

(1,423)

3.96%

3.26%

(147)

(1,197)

(1,344)

(142)

(1,281)

(1,423)

The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation was a

blended rate of 6.40% and 8.40% at December 31, 2018 and December 31, 2017, respectively. It was assumed that these rates
will decline by 1% to 3% every 5 years for the next 15 years. An increase or decrease in the medical trend rate of 1% would
increase or decrease the accumulated postretirement benefit obligation by approximately $0.1 million and $0.1 million,
respectively.

103

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

The table that follows contains the components of net periodic benefit costs:

Components of net periodic benefit cost

Interest cost

Amortization of the net gain from earlier periods

Net periodic benefit cost

Weighted-average assumptions

Discount rates

Year Ended
December 31, 2018

Year Ended
December 31, 2017

Year Ended
December 31, 2016

(77)

(33)

(18)

(13)

3.26%

3.64%

3.82%

The net amounts recognized in accumulated other comprehensive loss related to the Company’s other postretirement

healthcare and life insurance plans consisted of the following:

Unrecognized gain

(548) $

(582) $

(217)

Year Ended
December 31, 2018

Year Ended
December 31, 2017

Year Ended
December 31, 2016

In the next fiscal year, $0.1 million of unrecognized gain within accumulated other comprehensive loss is expected to

be recognized as a component of net periodic benefit cost.

The Company’s cash contributions to its postretirement benefit plan in 2019 are not yet determined but are expected to

equal the projected benefits from the plan. Estimated projected benefit payments from the plan at December 31, 2018 are as
follows:

2019

2020

2021

2022

2023

2024-2028

150

141

132

124

116

475

16. Business Segments, Geographic and Customer Information

The Company’s business activities are organized into reportable segments based on their similar economic

characteristics, products, production processes, types of customers and distribution methods. The Company is a global
manufacturer of a broad range of industrial products and is organized into four reportable segments: finishing, components,
seating and acoustics.

Net sales relating to the Company’s reportable segments are as follows:

Finishing

Components

Seating

Acoustics

Net sales

Year Ended

December 31, 2018

December 31, 2017

December 31, 2016

207,637

200,284

83,028

160,322

161,961

82,621

159,129

206,582

612,948

648,616

196,883

97,667

161,050

249,919

705,519

The Company uses “Adjusted EBITDA” as the primary measure of profit or loss for the purposes of assessing the

operating performance of its segments. The Company defines EBITDA as net income (loss) before interest expense, tax
provision (benefit), depreciation and amortization. The Company defines Adjusted EBITDA as EBITDA, excluding the impact
of operational restructuring charges and non-cash or non-operational losses or gains, including goodwill and long-lived asset
impairment charges, gains or losses on disposal of property, plant and equipment, divestitures and extinguishment of debt,
integration and other operational restructuring charges, transactional legal fees, other professional fees, purchase accounting
adjustments, and non-cash share based compensation expense.

104

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

Management believes that Adjusted EBITDA provides a clear picture of the Company’s operating results by

eliminating expenses and income that are not reflective of the underlying business performance. Certain corporate-level
administrative expenses such as payroll and benefits, incentive compensation, travel, marketing, accounting, auditing and legal
fees and certain other expenses are kept within the corporate results and are not allocated to the business segments. Shared
expenses across the Company that directly relate to the performance of our four reportable segments are allocated to the
segments. Adjusted EBITDA is used to facilitate a comparison of the Company’s operating performance on a consistent basis
from period to period and to analyze the factors and trends affecting its segments. The Company’s internal plans, budgets and
forecasts use Adjusted EBITDA as a key metric. In addition, this measure is used to evaluate its operating performance and
segment operating performance and to determine the level of incentive compensation paid to its employees.

As the Company uses Adjusted EBITDA as its primary measure of segment performance, GAAP on segment reporting
requires the Company to include this measure in its discussion of segment operating results. The Company must also reconcile
Adjusted EBITDA to operating results presented on a GAAP basis.

Adjusted EBITDA information relating to the Company’s reportable segments is presented below followed by a

reconciliation of total segment Adjusted EBITDA to consolidated loss before taxes:

December 31, 2018

December 31, 2017

December 31, 2016

Year Ended

Segment Adjusted EBITDA

Finishing

Components

Seating

Acoustics

Interest expense

Loss on debt extinguishment

Depreciation and amortization

Impairment charges

Gain (loss) on disposal of property, plant and equipment - net

Loss on divestiture

Restructuring

Integration and other restructuring costs

Total segment income (loss) before income taxes

Corporate general and administrative expenses

Corporate interest expense

Corporate gain on debt extinguishment

Corporate depreciation

Corporate restructuring

Corporate integration and other restructuring

Corporate loss on disposal of property, plant and equipment

Corporate share based compensation

Loss before income taxes

28,979

27,661

9,746

19,747

20,868

9,888

16,348

27,341

79,340

81,238

(953)

—

(42,151)

—

1,142

—

(4,458)

(446)

32,474

(12,129)

(32,484)

—

(453)

—

(1,370)

(182)

(38,577)

—

759

(8,730)

(4,275)

—

28,863

(13,486)

(31,719)

2,383

(357)

569

—

(2,709)

(15,265) $

(1,119)

(14,857) $

24,200

14,249

16,122

27,202

81,773

(1,561)

—

(43,697)

(63,285)

(869)

—

(6,634)

(1,621)

(35,894)

(17,613)

(30,282)

—

(344)

(598)

(359)

(11)

752

(84,349)

105

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

Other financial information relating to the Company’s reportable segments is as follows at December 31, 2018 and

2017 and for the years ended December 31, 2018, 2017 and 2016:

Depreciation and amortization

Finishing

Components

Seating

Acoustics

Corporate

Capital expenditures

Finishing
Components
Seating

Acoustics

Corporate

Assets

Finishing

Components

Seating

Acoustics

Total segments

Corporate and eliminations

Consolidated

December 31, 2018

December 31, 2017

December 31, 2016

Year Ended

12,196

12,198

9,746

8,488

11,721

453

7,821

8,435

10,123

357

42,604

38,934

13,693

9,827

8,894

11,283

344

44,041

December 31, 2018

December 31, 2017

December 31, 2016

Year Ended

4,365
1,320
3,207

4,038

823

5,247
3,797
2,709

3,563

557

13,753

15,873

5,943
2,950
3,602

6,058

1,227

19,780

December 31, 2018

December 31, 2017

230,185

55,371

90,175

124,822

500,553

3,044

503,597

241,776

72,724

99,155

145,490

559,145

(12,822)

546,323

Net sales and long-lived asset information by geographic area are as follows at December 31, 2018 and 2017 and for

the years ended December 31, 2018, 2017 and 2016:

Net sales by region

United States
Europe

Mexico

Other

Long-lived assets

United States

Europe

Mexico

Other

December 31, 2018

December 31, 2017

December 31, 2016

Year Ended

429,057
132,663

47,301

3,927

441,691
151,628

50,080

5,217

612,948

648,616

492,667
154,307

49,594

8,951

705,519

December 31, 2018

December 31, 2017

176,688

60,140

11,084

3,486

251,398

197,174

70,797

13,484

4,240

285,695

Net sales attributed to geographic locations are based on the country of origin of the final sale with the external

customer, which in certain cases may be manufactured in other countries at facilities within the Company’s global network.

106

Jason Industries, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share and per share amounts)

Long-lived assets by geographic location consist of the net book values of property, plant and equipment and amortizable
intangible assets.

17. Commitments and Contingencies

Litigation Matters

In 2016, the Company received notification of certain employment matter claims filed in Brazil related to hiring

practices within the Company’s finishing division. As of December 31, 2018, the Company has successfully investigated and
defended all filed claims and has gathered additional information to assess the total potential exposure related to this matter,
including the potential of additional claims. In the opinion of management, the resolution of this contingency will not have a
material adverse effect on the Company’s financial condition, results of operations, or cash flows.

In addition to the matter noted above, the Company is a party to various legal proceedings that have arisen in the

normal course of its business. These legal proceedings typically include product liability, labor, and employment claims. The
Company has recorded reserves for loss contingencies based on the specific circumstances of each case. Such reserves are
recorded when it is probable that a loss has been incurred as of the balance sheet date, can be reasonably estimated and is not
covered by insurance. In the opinion of management, the resolution of these contingencies will not have a material adverse
effect on the Company’s financial condition, results of operations, or cash flows.

Environmental Matters

At December 31, 2018 and December 31, 2017, the Company held reserves of $1.0 million for environmental matters

at one location. The ultimate cost of any remediation required will depend on the results of future investigation. Based upon
available information, the Company believes that it has obtained and is in substantial compliance with those material
environmental permits and approvals necessary to conduct its business. Based on the facts presently known, the Company does
not expect environmental costs to have a material adverse effect on its financial condition, results of operations or cash flows.

18. Subsequent Events

In January 2019, as part of a review of the Company’s organizational structure, the Company made certain strategic

leadership changes which required a reassessment of reportable segments. Based on this evaluation, the Company determined
that a change in reportable segments had occurred. For 2019, reportable segments will include the former Finishing segment
renamed as the Industrial segment, the former Acoustics segment renamed as the Fiber Solutions segment, and the former
Seating and Components businesses combined into one Engineered Components segment.

107

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

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information

required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and
forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and
communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial

Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of
December 31, 2018. At the time our Annual Report on Form 10-K for the year ended December 31, 2018 was filed on March 5,
2019, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were
effective as of December 31, 2018. Subsequent to that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act)
were not effective at a reasonable level of assurance as of December 31, 2018, due to the material weakness in our internal
control over financial reporting discussed below.

Management’s Report on Internal Control Over Financial Reporting (Restated)

The Company’s management is responsible for establishing and maintaining adequate internal control over financial

reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. The Company’s internal control over financial
reporting is designed 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. A company’s internal
control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2018. In

making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”) in Internal Control – Integrated Framework (2013). We identified the following material weakness in
internal control over financial reporting.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such

that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be
prevented or detected on a timely basis.

We did not maintain effective internal controls over the accounting for the recoverability of deferred tax assets.

Specifically, the internal controls to assess the recoverability of a deferred tax asset for disallowed interest expense were not
performed at the appropriate level of precision. This control deficiency resulted in the overstatement of the tax provision and
net deferred tax liabilities as of and for the year ended December 31, 2018. As a result of this error, we have restated our
previously reported annual financial statements for the year and quarter ended December 31, 2018 and will revise the
Company’s previously issued unaudited consolidated financial statements as of and for the three months ended March 30, 2018,
as of and for the three and six months ended June 29, 2018 and as of and for the three and nine months ended September 28,
2018. Additionally, this control deficiency could result in additional misstatements of the aforementioned balances or
disclosures that would result in a material misstatement to the Company’s annual or interim consolidated financial statements
that would not be prevented or detected.

108

In Management’s Report on Internal Control over Financial Reporting included in our original Annual Report on Form
10-K for the year ended December 31, 2018 filed on March 5, 2019, our management previously concluded that we maintained
effective internal control over financial reporting as of December 31, 2018, based on the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework (2013).
Management subsequently concluded that the material weakness described above existed as of December 31, 2018. As a result,
we have concluded that we did not maintain effective control over financial reporting as of December 31, 2018.

Remediation Plan

During 2019, we intend to enhance the control activities related to the analysis of the recoverability of our deferred tax
assets. We believe this remediation plan will effectively remediate the material weakness, but the material weakness will not be
considered remediated until the control operates for a sufficient period of time and management has concluded through testing,
that this control is operating effectively.

Remediation of Previously Identified Material Weakness

In the third quarter of 2017, our management identified control deficiencies that when aggregated, resulted in a
material weakness in our internal control over financial reporting. A material weakness is a deficiency, or combination of
deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement
of our annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, we did not design
and maintain effective controls necessary to allow for a detailed review over non-routine transactions on a timely basis and did
not have the appropriate complement of resources at certain of our facilities in place for a sufficient period of time. As a result
of these control deficiencies, we inappropriately accounted for the divestiture of Acoustics Europe in the three and six month
periods ended June 30, 2017 and for depreciation expense in 2016 and the first six months of 2017. While the impact of these
errors was not material to the previously reported financial statements, we revised our previously issued annual financial
statements as of and for the year ended December 31, 2016 and the interim financial statements for the three month period
ended March 31, 2017 and for the three and six month periods ended June 30, 2017. These control deficiencies could result in
the misstatement of account balances or disclosures that would result in a material misstatement of the annual or interim
consolidated financial statements that would not be prevented or detected. Accordingly, our management determined that these
control deficiencies aggregated to a material weakness in the design and operation of control activities.

During the fourth quarter of 2017 and the nine months ended September 28, 2018, we enhanced the design of controls

around certain control activities, specifically, the review process for analyzing non-routine accounting transactions and also
added additional accounting resources in several businesses to improve the effectiveness of internal control over financial
reporting. We believe that these enhanced resources and processes have effectively remediated the material weakness, and the
revised controls have operated for a sufficient period of time in order for management to conclude, through testing, that these
controls are designed and operating effectively. As of September 28, 2018, we have remediated this previously reported
material weakness in our internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

During the most recent completed fiscal quarter, there has been no change in our internal control over financial

reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

109

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information regarding our executive officers is included in Part I of this Annual Report on Form 10-K/A as permitted

by SEC rules.

The information required by this Item is set forth under the headings “Questions and Answers about the Company,”
“Proposals to be Voted On–Proposal 1: Election of Directors,” “Corporate Governance Principles and Board Matters–Board
Committees” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the Company’s 2019 Proxy Statement to be
filed with the SEC within 120 days after December 31, 2018 in connection with the solicitation of proxies for the Company’s
2019 annual meeting of shareholders (“Proxy Statement”) and is incorporated herein by reference.

The Company has adopted a code of ethics that applies to its senior executive team, including but not limited to, the

Company’s Chief Executive Officer, Chief Financial Officer, General Counsel, Vice President of Finance and Treasurer,
Corporate Controller, and the Senior Vice Presidents and General Managers, Vice Presidents of Finance, and Controllers of the
Company’s business units, and other persons holdings positions with similar responsibilities at business units. The code of
ethics is posted on the Company’s website and is available free of charge at www.jasoninc.com. The Company intends to
satisfy the requirements under Item 5.05 of Form 8-K regarding disclosure of amendments to, or waivers from, previsions of its
code of ethics that apply to senior executives by posting such information on the Company’s website.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is set forth under the headings “Corporate Governance Principles and Board

Matters–Board Committees–Compensation Committee Interlocks and Insider Participation,” “Executive Compensation” and
“Compensation Committee Report” in the Proxy Statement and is incorporated herein by reference.

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

The information required by this Item is set forth under the heading “Security Ownership of Certain Beneficial

Owners and Management” in the Proxy Statement and is incorporated herein by reference.

Equity Compensation Plan Information

The following table gives information about the Company’s common stock authorized for issuance under the

Company’s equity compensation plans as of December 31, 2018.

Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights (1)

Weighted-average
exercise price of
outstanding options,
warrants and rights

Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column
(a))

Plan category

(a)

(b)

(c)

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

Total

4,058,003

— $

4,058,003

—

2,609,316 (2)

—

2,609,316

(1) Column (a) of the table above includes 4,058,003 unvested restricted stock units outstanding under the Jason Industries, Inc.
2014 Omnibus Incentive Plan.

(2) Represents shares available for future issuance under the Jason Industries, Inc. 2014 Omnibus Incentive Plan.

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

The information required by this Item is set forth under the headings “Questions and Answers about the Company,”

“Proposals to be Voted On–Proposal 1: Election of Directors,” “Corporate Governance Principles and Board Matters-
Independent Directors” and “Certain Relationships and Related Transactions” in the Proxy Statement and is incorporated herein
by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item is set forth under the heading “Proposals to be Voted On–Proposal 3:
Ratification of Selection of Independent Registered Public Accounting Firm–Principal Accountant Fees and Services” in the
Proxy Statement and is incorporated herein by reference.

110

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES

(a) Documents filed as part of this report

(1) All financial statements

Index to Consolidated Financial Statements

As of December 31, 2018 and 2017, for the years ended December 31, 2018, December 31, 2017 and December 31, 2016

Page

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Operations

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Balance Sheets

Consolidated Statements of Shareholders’ (Deficit) Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

(2) Financial Statement schedules

Index to Financial Statement schedules

For the years ended December 31, 2018, December 31, 2017 and December 31, 2016

Schedule II - Valuation and Qualifying Accounts

Page

112

All other financial statement schedules have been omitted, since the required information is not applicable or is not

present in amounts sufficient to require submission of the schedule, or because the information required is included in the
consolidated financial statements and notes thereto included in this Form 10-K.

(3) Exhibits required by Item 601 of Regulation S-K

The information required by this Section (a)(3) of Item 15 is set forth on the exhibit index that precedes the Signatures

page of this Form 10-K/A.

ITEM 16. FORM 10-K SUMMARY

None.

111

SCHEDULE II. CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
(in thousands)

During the first quarter of 2019, we identified an error in the income tax provision presented within the consolidated

financial statements for the year ended December 31, 2018. As a result of this income tax error, which materially misstated the
previously issued 2018 financial statements, the consolidated financial statements of the Company as of and for the year ended
December 31, 2018 have been restated. This Schedule II has been restated to reflect the restatement of the deferred tax
valuation allowances. See the Explanatory Note to this Form 10-K/A and Note 2, “Restatement of Previously Reported
Financial Information” in the notes to the consolidated financial statements for further information.

Year Ended December 31, 2018

Allowance for doubtful accounts
Deferred tax valuation allowances (Restated)(2)

Year Ended December 31, 2017

Allowance for doubtful accounts

Deferred tax valuation allowances

Year Ended December 31, 2016

Allowance for doubtful accounts

Deferred tax valuation allowances

Balance at
beginning of
year

Charge to
Costs and
Expenses

Utilization of
Reserves

Other (1)

Balance at end
of year

2,959

4,220

3,392

4,879

2,524

3,703

(197) $

561

(954) $

(602) $

(351) $

283

1,696

1,469

(634) $

(1,164) $

119

222

(783) $

— $

(45) $

(293) $

1,812

3,828

2,959

4,220

3,392

4,879

(1)

(2)

The amounts included in the “other” column primarily relate to the impact of foreign currency exchange rates.

The Company restated Deferred tax valuation allowances as discussed in Note 2, “Restatement of Previously Reported
Financial Information”, to the consolidated financial statements.

112

Exhibit
Number

Description

EXHIBIT INDEX

Second Amended and Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 4.2 to the
Registrant’s Registration Statement on Form S-8, filed with the Securities and Exchange Commission (“the Commission”) on July 3, 2014
(File No. 333-197250)).

Certificate of Designations, Preferences, Rights and Limitations of 8.0% Series A Convertible Perpetual Preferred Stock (incorporated
herein by reference to Exhibit A to Exhibit 10.11 to the Registrant’s Form 10-Q, filed with the Commission on May 15, 2014 (File No.
1-36051)).

Bylaws of the Company (incorporated herein by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-8, filed with
the Commission on July 3, 2014 (File No. 333-197250)).

Specimen Common Stock Certificate (incorporated herein by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form
S-1, filed with the Commission on August 1, 2013 (File No. 333-189432)).

Specimen Warrant Certificate (incorporated herein by reference to Exhibit A to Exhibit 4.4 to the Registrant’s Form 8-K, filed with the
Commission on August 14, 2013 (File No. 1-36051)).

Warrant Agreement between Continental Stock Transfer & Trust Company and the Company, dated as of August 8, 2013 (incorporated
herein by reference to Exhibit 4.4 to the Registrant’s Form 8-K, filed with the Commission on August 14, 2013 (File No. 1-36051)).

Registration Rights Agreement among the Company, Quinpario Partners I, LLC and the other security holders named therein, dated August
8, 2013 (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Form 8-K, filed with the Commission on August 14, 2013 (File
No. 1-36051)).

Amendment No.1 to Registration Rights Agreement among the Company, Quinpario Partners I, LLC and the other security holders named
therein, dated July 14, 2014 (incorporated herein by reference to Exhibit 4.6 to the Registrant’s Registration Statement on Form S-1, filed
with the Commission on July 15, 2014, as amended (File No. 333-197412)).

Form of Registration Rights Agreement by and between the Company and the persons named therein (incorporated herein by reference to
Exhibit 10.12 to the Registrant’s Form 10-Q, filed with the Commission on May 15, 2014 (File No. 1-36051)).

Jason Industries, Inc. 2014 Omnibus Incentive Plan, as amended (incorporated herein by reference to Appendix A to the Registrant’s Proxy
Statement for its 2018 Annual Meeting of Stockholders, filed with the Commission on April 12, 2018 (File No. 333-197250)).**

Employment Agreement between the Company and Srivas Prasad, dated as of June 30, 2014 (incorporated herein by reference to Exhibit
10.10 to the Registrant’s Form 8-K, filed with the Commission on July 7, 2014 (File No. 1-36051)).**

Amended and Restated Employment Agreement between the Company and John Hengel, dated as of June 30, 2014 (incorporated herein by
reference to Exhibit 10.12 to the Registrant’s Form 8-K, filed with the Commission on July 7, 2014 (File No. 1-36051)).**

Employment Agreement between the Company and Kevin Kuznicki, dated as of April 2, 2018 (incorporated herein by reference to Exhibit
10.1 to the Registrant’s Form 10-Q, filed with the Commission on May 3, 2018 (File No. 1-36051)).**

Employment Agreement between the Company and Brian K. Kobylinski, dated as of April 8, 2016 (incorporated herein by reference to
Exhibit 10.3 to the Registrant’s Form 10-Q, filed with the Commission on May 10, 2016 (File No. 1-36051)).**

Amendment to Employment Agreement between the Company and Brian K. Kobylinski, dated December 1, 2016 (incorporated herein by
reference to Exhibit 10.2 to the Registrant’s Form 8-K, filed with the Commission on December 2, 2016 (File No. 1-36051)).**

Employment Agreement between the Company and Chad M. Paris, effective as of August 25, 2017 (incorporated herein by reference to
Exhibit 10.1 to the Registrant’s Form 8-K, filed with the Commission on August 17, 2017 (File No. 1-36051)).**

First Lien Credit Agreement as amended, dated as of June 30, 2014, by and among Jason Incorporated, Jason Partners Holdings Inc., Jason
Holdings Inc. 1, The Bank of New York Mellon, as administrative agent, the subsidiary guarantors party thereto and the several banks and
other financial institutions or entities from time to time party thereto (incorporated herein by reference to Exhibit 10.2 to the Registrant’s
Form 10-Q, filed with the Commission on August 2, 2018 (File No. 1-36051)).

3.1

3.2

3.3

4.1

4.2

4.3

4.4

4.5

4.6

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

113

Exhibit
Number

Description

10.9

10.10

10.11

10.12

10.13

10.14

10.15

10.16

10.17

10.18

10.19

10.20

10.21

31.1

31.2

32.1

32.2

Second Lien Credit Agreement as amended, dated as of June 30, 2014, by and among Jason Incorporated, Jason Partners Holdings Inc.,
Jason Holdings, Inc. I, The Bank of New York Mellon, as administrative agent, the subsidiary guarantors party thereto and the several
banks and other financial institutions or entities from to time to time party thereto (incorporated herein by reference to Exhibit 10.3 to the
Registrant’s Form 10-Q, filed with the Commission on May 3, 2018 (File No. 1-36051)).

First Lien Security Agreement, dated as of June 30, 2014, by and among Jason Partners Holdings Inc., Jason Holdings, Inc. I, Jason
Incorporated and certain of its subsidiaries in favor of Deutsche Bank AG New York Branch (incorporated herein by reference to Exhibit
10.3 to the Registrant’s Form 8-K, filed with the Commission on July 7, 2014 (File No. 1-36051)).

Second Lien Security Agreement, dated as of June 30, 2014, by and among Jason Partners Holdings Inc., Jason Holdings, Inc. I, Jason
Incorporated and certain of its subsidiaries in favor of Deutsche Bank AG New York Branch (incorporated herein by reference to Exhibit
10.4 to the Registrant’s Form 8-K, filed with the Commission on July 7, 2014 (File No. 1-36051)).

Form of Indemnification Agreement (incorporated herein by reference to Exhibit 10.13 to the Registrant’s Form 8-K, filed with the
Commission on July 7, 2014 (File No. 1-36051)).

Form of Restricted Stock Unit Agreement pursuant to the Jason Industries, Inc. 2014 Omnibus Incentive Plan (incorporated herein by
reference to Exhibit 10.15 to the Registrant’s Form 10-Q, filed with the Commission on November 7, 2014 (File No. 1-36051)).*

Form of Restricted Stock Unit Agreement pursuant to the Jason Industries, Inc. 2014 Omnibus Incentive Plan (ROIC-Vesting)
(incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 8-K, filed with the Commission on February 3, 2016 (File No.
1-36051)).**

Form of Non-Employee Director Restricted Stock Unit Agreement pursuant to the Jason Industries, Inc. 2014 Omnibus Incentive Plan
(incorporated herein by reference to Exhibit 10.16 to the Registrant’s Form 10-Q, filed with the Commission on November 7, 2014 (File
No. 1-36051)).*

Form of Restricted Stock Unit Agreement pursuant to the Jason Industries, Inc. 2014 Omnibus Incentive Plan (Time-Vesting) (incorporated
herein by reference to Exhibit 10.18 to the Registrant’s Form 10-K, filed with the Commission on March 1, 2018 (File No. 1-36051)).**

Form of Restricted Stock Unit Agreement pursuant to the Jason Industries, Inc. 2014 Omnibus Incentive Plan (Cliff-Vesting) (incorporated
herein by reference to Exhibit 10.2 to the Registrant’s Form 10-Q, filed with the Commission on May 10, 2016 (File No. 1-36051)).**

Form of Restricted Stock Unit & Cash Bonus Award Agreement pursuant to the Jason Industries, Inc. 2014 Omnibus Incentive Plan (Time-
Vesting) (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 8-K, filed with the Commission on July 5, 2017 (File
No. 1-36051)).**

Form of Restricted Stock Unit & Cash Bonus Award Agreement pursuant to the Jason Industries, Inc. 2014 Omnibus Incentive Plan
(EBITDA-Vesting) (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Form 8-K, filed with the Commission on July 5,
2017 (File No. 1-36051)).**

Form of Preferred Stock Exchange Agreement (incorporated by reference to Exhibit 10 to the Registrant’s 8-K, filed with the Commission
on January 23, 2018 (File No. 1-36051)).

Employment Agreement between the Company and Keith A. Walz, dated as of February 27, 2018 (incorporated herein by reference to
Exhibit 10.25 to the Registrant’s Form 10-K, filed with the Commission on March 1, 2018 (File No. 1-36051)).**

Subsidiaries of Registrant.

Consent of PricewaterhouseCoopers LLP.

Certification of the Principal Executive Officer required by Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934,
as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

Certification of the Principal Financial Officer required by Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934,
as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

Certification of the Principal Executive Officer required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes
Oxley Act of 2002.

Certification of the Principal Financial Officer required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes
Oxley Act of 2002.

114

Exhibit
Number

Description

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Labels Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

Represents a management contract or compensatory plan, contract or arrangement.

115

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.

SIGNATURES

Dated: May 13, 2019

JASON INDUSTRIES, INC.

/s/ Brian K. Kobylinski

Brian K. Kobylinski
President, Chief Executive Officer and Chairman of the Board
of Directors
(Principal Executive Officer)

/s/ Chad M. Paris

Chad M. Paris
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the

following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature

Title

Date

/s/ Brian K. Kobylinski

President, Chief Executive Officer and Chairman of the Board of Directors

Dated: May 13, 2019

Brian K. Kobylinski

(Principal Executive Officer)

/s/ Chad M. Paris

Chad M. Paris

Senior Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

/s/ Jeffry N. Quinn

Director

Jeffry N. Quinn

/s/ James P. Heffernan

Director

James P. Heffernan

/s/ James E. Hyman

Director

James E. Hyman

/s/ Mitchell I. Quain

Director

Mitchell I. Quain

/s/ Dr. John Rutledge

Director

Dr. John Rutledge

/s/ James M. Sullivan

Director

James M. Sullivan

/s/ Nelson Obus

Nelson Obus

Director

Dated: May 13, 2019

116

LEADERSHIP & CORPORATE INFORMATION

BOARD OF DIRECTORS

EXECUTIVE OFFICERS

CORPORATE INFORMATION

Brian Kobylinski
Chairman

Jeffry N. Quinn
Member

James P. Heffernan
Member

James E. Hyman
Member

Mitchell I. Quain
Member

Dr. John Rutledge
Member

James M. Sullivan
Member

Brian Kobylinski
President and Chief
Executive Officer

Chad Paris
Senior Vice President and
Chief Financial Officer

Kevin Kuznicki
Senior Vice President, General
Counsel and Secretary

Keith Walz
Senior Vice President and
General Manager — Industrial

Timm Fields
Senior Vice President and
General Manager — Engineered
Components

Srivas Prasad
Senior Vice President and
General Manager — Fiber Solutions

John Hengel
Vice President of Finance —
Treasurer and Assistant
Secretary

Corporate Headquarters
833 E. Michigan St.,
Suite 900
Milwaukee, WI 53202
414.277.9300
www.jasoninc.com

Investor Relations
414.277.2007
investors@jasoninc.com

Transfer Agent
Continental Stock Transfer & Trust
17 Battery Place,
8th Floor
New York, NY 10004
212.509.4000
www.continentalstock.com

Independent Registered
Public Accounting Firm
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin

Stock Exchange
Jason Industries, Inc. common stock
and warrants are publicly traded on
NASDAQ under the ticker symbols
JASN and JASNW, respectively.

9
9

JASON INDUSTRIES, INC.  833 E. MICHIGAN ST., SUITE 900 MILWAUKEE, WI 53202  JASONINC.COM