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SEC Filings

10-Q
NN INC filed this Form 10-Q on 08/14/2017
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Table of Contents

We believe that we have substantial legal and factual defenses, and we plan to defend our interests in this matter vigorously. While we believe a loss is not probable, we estimate the range of possible losses related to this assessment is from $0 to $6.0 million. No amount was accrued at June 30, 2017, for this matter. There was no material change in the status of this matter from December 31, 2016 to June 30, 2017.

We are entitled to indemnification from the former shareholders of Autocam, subject to the limitations and procedures set forth in the agreement and plan of merger relating to our acquisition of Autocam. Management believes the indemnification would include amounts owed for the tax, interest, and penalties related to this matter.

All Other Legal Matters

All other legal proceedings are of an ordinary and routine nature and are incidental to our operations. Management believes that such proceedings should not, individually or in the aggregate, have a material adverse effect on our business, financial condition, results of operations or cash flows. In making that determination, we analyze the facts and circumstances of each case at least quarterly in consultation with our attorneys and determine a range of reasonably possible outcomes.

Note 11. Investment in Non-Consolidated Joint Venture

As part of the Autocam acquisition, we own a 49% investment in a joint venture with an unrelated entity called Wuxi Weifu Autocam Precision Machinery Company, Ltd. (the “JV”), a Chinese company located in Wuxi, China. The JV is jointly controlled and managed, and it is being accounted for under the equity method.

Below are the components of our JV investment balance and activity for the six months ended June 30, 2017:

 

Balance as of December 31, 2016

   $ 36,008  

Our share of earnings

     3,165  

Accretion of basis difference from purchase accounting

     (228

Foreign currency translation gain

     908  
  

 

 

 

Balance as of June 30, 2017

   $ 39,853  
  

 

 

 

The following table summarizes balance sheet information for the JV:

 

     June 30,      December 31,  
     2017      2016  

Current assets

   $ 40,712      $ 31,295  

Non-current assets

     24,386        22,522  
  

 

 

    

 

 

 

Total assets

   $ 65,098      $ 53,817  
  

 

 

    

 

 

 

Current liabilities

   $ 16,522      $ 13,549  

Non-current liabilities

     6        —    
  

 

 

    

 

 

 

Total liabilities

   $ 16,528      $ 13,549  
  

 

 

    

 

 

 

We had sales to the JV of approximately $0.1 and $0.1 million during the three and six months ended June 30, 2017. Amounts due to us from the JV were $0.1 million as of June 30, 2017.

Note 12. Fair Value Measurements

We present fair value measurements and disclosures applicable to both our financial and nonfinancial assets and liabilities that are measured and reported on a fair value basis. Fair value is an exit price representing the expected amount we would receive to sell an asset or pay to transfer a liability in an orderly transaction with market participants at the measurement date. We have followed consistent methods and assumptions to estimate the fair values as more fully described in the 2016 Annual Report.

Our financial instruments that are subject to fair value disclosure consist of cash and cash equivalents, accounts receivable, accounts payable, derivatives and long-term debt. At June 30, 2017, the carrying values of all of these financial instruments approximated fair value. The fair value of floating-rate debt approximates the carrying amount because the interest rates paid are based on short-term maturities. As of June 30, 2017, we had no significant fixed-rate debt outstanding.

 

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