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SEC Filings

8-K
NN INC filed this Form 8-K on 08/23/2017
Entire Document
 


Note 3 – Pro Forma Adjustments

The following are descriptions of the pro forma adjustments related to the Transaction:

 

  (a) Reflects the allocation of net proceeds from the Transaction to pay down the Company’s credit facilities. The pro forma adjustment to debt includes the following amounts:

 

     As of June 30, 2017  

Proceeds from sale

   $ (387,630

Transaction costs incurred after June 30, 2017

     5,382  
  

 

 

 

Proceeds used to pay down credit facilities

     (382,248

Write-off of unamortized debt issuance costs

     14,572  
  

 

 

 

Pro forma adjustment to debt

   $ (367,676
  

 

 

 

 

  (b) Represents the estimated accrued income taxes payable, using a federal statutory rate of 34%, related to the estimated gain on sale of the PBC Business, net of the $0.1 million tax effect of $0.3 million of Transaction costs expensed prior to June 30, 2017.

 

  (c) Reflects the removal of transaction costs that were incurred prior to June 30, 2017 because they will not have a continuing impact on the Company.

 

  (d) The unaudited pro forma condensed consolidated statements of operations exclude the estimated gain resulting from the sale of the PBC Business. This estimated gain will not have a continuing impact on the Company and is therefore reflected as a pro forma adjustment to stockholders’ equity in the unaudited pro forma condensed consolidated balance sheet. The pro forma adjustment to stockholders’ equity includes the following amounts:

 

     As of June 30, 2017  

Proceeds from sale

   $ 387,630  

Transaction costs incurred after June 30, 2017

     (5,382

Provision for income taxes (1)

     (70,755

Deferred income taxes

     5,490  

Write-off of unamortized debt issuance costs

     (14,572
  

 

 

 

Pro forma adjustment to stockholders’ equity

   $ 302,411  
  

 

 

 

 

  (1) Provision for income taxes was estimated using the Company’s federal statutory rate of 34%.

 

  (e) Reflects a reduction of estimated interest expense and amortization of debt issuance costs incurred from the Company’s senior notes and credit facilities as a result of the pro forma assumptions that the Company 1) would have used proceeds from the Transaction to redeem its senior notes for approximately $304.8 million and to pay down approximately $77.4 million on its credit facilities and 2) would not have established a new incremental term loan in the credit facility amendment on April 3, 2017. The pro forma adjustment to interest expense gives effect to these assumptions as if the Transaction and repayment of debt had occurred on January 1, 2016. The pro forma adjustment to interest expense includes the following amounts:

 

     Six Months Ended
June 30, 2017
     Year Ended
December 31, 2016
 

Interest expense:

     

Senior Notes

   $ (6,529    $ (25,625

Credit Facility

     (5,721      (4,171

Amortization of debt issuance costs:

     

Senior Notes

     (263      (989

Credit Facility

     (367      (214
  

 

 

    

 

 

 

Pro forma adjustment to interest expense

   $ (12,880    $ (30,999
  

 

 

    

 

 

 

 

  (f) Represents the estimated income tax effect, using a federal statutory rate of 34%, related to the sale of the PBC Business, losses on the extinguishment of debt and write-off of unamortized debt issuance costs, and a reduction in interest expense. The effective tax rate of the Company after the Transaction may differ from what is presented in the unaudited pro forma condensed consolidated financial statements as a result of different tax jurisdictions.