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SEC Filings

NN INC filed this Form 10-Q on 11/09/2017
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Restructuring and Integration Expense. The decrease in restructuring and integration expense was primarily due to limited spending on site closure costs in the first nine months of 2017 compared to the first nine months of 2016. The first nine months of 2016 included $3.9 million of cost incurred to close the Wheeling Plant.

Interest Expense. Interest expense decreased by $8.8 million due to the redemption of the Senior Notes at the beginning of the second quarter of 2017 with the proceeds of the Incremental Term Loan, which bears a lower interest rate based on LIBOR. Further interest savings resulted from the refinancing of the Senior Secured Term Loan and Senior Secured Revolver in the third quarter of 2016.


     Nine Months Ended September 30,  
     2017      2016  

Interest on debt

   $ 36,689      $ 44,824  

Interest rate swaps settlements

     —          1,393  

Amortization of debt issuance costs

     3,237        3,048  

Capital lease interest

     856        628  

Capitalized interest (1)

     (866      (1,185







Total interest expense

   $ 39,916      $ 48,708  








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

Loss on Extinguishment of Debt and Write-off of Unamortized Debt Issuance Costs. We wrote off $39.6 million in 2017 as a result of the extinguishment of the Senior Notes and modification of the credit facility.

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 31% for the nine-month period ended September 30, 2017, compared to 51% for the nine-month period ended September 30, 2016. Note 10 in the Notes to Condensed Consolidated Financial Statements describes effective tax rates for each period presented.

Loss from Continuing Operations. Income from operations of $32.3 million for the first nine months of 2017 was more than offset by the loss on extinguishment of debt and write-off of unamortized debt issuance cost and interest expense. 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 accounted for a $0.6 million reduction in income from operations compared to 2016. The loss was partially offset by an $8.8 million reduction in interest expense. Significant components of the changes in income from operations and interest expense were presented in the preceding paragraphs.

Income from Discontinued Operations, Net of Tax. The largest component of income from discontinued operations in the first nine months 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



     Nine Months Ended September 30,  
     2017      2016      $ Change  

Net sales

   $ 254,768      $ 247,473      $ 7,295     


            $ 7,727  

Foreign exchange effects


Price/material inflation pass-through/mix


Income from operations

   $ 28,088      $ 22,761      $ 5,327     

Net sales increased during the first nine months of 2017 from the first nine months 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. Also, as the Brazilian economy rebounds, demand for automotive products is increasing.