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SEC Filings

10-Q
NN INC filed this Form 10-Q on 11/09/2017
Entire Document
 


Table of Contents
     Three Months Ended
September 30,
 
     2017      2016  

Interest on debt

   $ 11,591      $ 14,477  

Interest rate swaps settlements

     —          466  

Amortization of debt issuance costs

     1,084        1,062  

Capital lease interest

     286        213  

Capitalized interest (1)

     (222      (417
  

 

 

    

 

 

 

Total interest expense

   $ 12,739      $ 15,801  
  

 

 

    

 

 

 

Debt issuance costs write-off

     —          2,589  
  

 

 

    

 

 

 

 

(1) Capitalized interest primarily relates to equipment construction efforts at various plants.

Loss on Extinguishment of Debt and Write-off of Unamortized Debt Issuance Costs. In September 2016, we amended and restated our credit facility, and consequently we wrote off a total of $2.6 million in debt issuance costs related to the modification and extinguishment of debt.

Derivative Loss (Gain) on Change in Interest Rate Swap Fair Value. During the third quarter of 2016, we chose to discontinue hedge accounting. As a result, all amounts of accumulated other comprehensive income were reclassified to earnings.

Benefit for Income Taxes. Our effective tax rate from continuing operations was 26% in the third quarter of 2017 compared to 93% in the third quarter of 2016. Note 10 in the Notes to Condensed Consolidated Financial Statements describes effective tax rates for each period presented.

Income (Loss) from Continuing Operations. The $6.7 million decrease in income from operations was the primary reason for the $3.7 million decrease in income from continuing operations in the third quarter of 2017. In addition, the increase in net sales was offset by increases in cost of products sold and selling, general and administrative expense as described above. Also, acquisition related costs, primarily with respect to DRT Medical, accounted for $0.6 million of the decrease in income from operations compared to the third quarter of 2016. This decrease in income from operations was partially offset by a $3.1 million reduction in interest expense.

Income from Discontinued Operations, Net of Tax. The largest component of income from discontinued operations in the third quarter of 2017 was the $129.4 million gain on sale of our PBC business, net of tax. Note 2 in the Notes to Condensed Consolidated Financial Statements provides details of the results of discontinued operations.

Results by Segment

AUTOCAM PRECISION COMPONENTS GROUP

Within our APC segment, we manufacture highly engineered, difficult-to-manufacture precision metal components and sub-assemblies for the automotive, and industrial end markets.

 

     Three Months Ended September 30,  
     2017      2016      $ Change  

Net sales

   $ 81,664      $ 80,492      $ 1,172     

Volume

            $ 1,049  

Foreign exchange effects

              652  

Price/material inflation pass-through/mix

              (529

Income from operations

   $ 6,799      $ 8,464      $ (1,665   

Net sales increased during the third quarter of 2017 from the third quarter of 2016 due to industrial market demand improvements in the US and China and new automotive program launches in the US, China and Brazil. We are realizing the indirect benefits of our customers taking an increasing portion of market share in a key general industrial market. Also, as the Brazilian economy rebounds, demand for automotive products is increasing. During the third quarter of 2017, 63% of APC sales were in the US, 12% of APC sales were in China, and 11% of APC sales were in Brazil.

 

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