Notes to Condensed Consolidated Financial Statements
June 30, 2017
(Unaudited)
(In
thousands, except per share data)
Note 1. Interim Financial Statements
We are a diversified industrial company and a leading global manufacturer of high precision bearing components, industrial plastic products and precision metal
components to a variety of markets on a global basis. We have 40 manufacturing plants in North America, Europe, South America and Asia. Our business is aggregated into three reportable segments- the Precision Bearing Components Group, the Precision
Engineered Products Group (PEP) and the Autocam Precision Components Group. As used in this Quarterly Report on
Form 10-Q, the
terms NN, the Company,
we, our, or us refer to NN, Inc. and its subsidiaries.
The accompanying Condensed Consolidated Financial Statements
of NN, Inc., have not been audited, except that the Condensed Consolidated Balance Sheet at December 31, 2016, was derived from our audited consolidated financial statements included in our Annual Report on
Form 10-K
for the year ended December 31, 2016 (the 2016 Annual Report), which was filed with the U.S. Securities and Exchange Commission (the SEC), on March 16, 2017. In
our opinion, these Condensed Consolidated Financial Statements reflect all adjustments necessary to fairly state the results of operations for the three and six month periods ended June 30, 2017 and 2016, our financial position at
June 30, 2017 and December 31, 2016, and the cash flows for the six month periods ended June 30, 2017 and 2016, on a basis consistent with our audited consolidated financial statements. These adjustments are of a normal recurring
nature and are, in the opinion of management, necessary to present fairly our financial position and operating results for the interim periods.
Certain
information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted from the interim financial statements presented
in this Quarterly Report on Form
10-Q.
These unaudited Condensed Consolidated Financial Statements should be read in conjunction with our audited consolidated financial statements and the notes thereto
included in the 2016 Annual Report. The results for the six months ended June 30, 2017, are not necessarily indicative of results for the year ending December 31, 2017, or any other future periods. We have reclassified certain prior year
amounts to conform to the current years presentation.
Except for per share data or as otherwise indicated, all dollar amounts presented in the
tables in these Notes to Condensed Consolidated Financial Statements are in thousands.
Prior Periods Financial Statement Revision
In connection with the preparation of our Condensed Consolidated Financial Statements as of and for the three and six months ended June 30, 2017,
we identified misstatements in our previously issued financial statements related to the foreign currency translation of our investment in a China joint venture. We acquired a 49% investment in the joint venture as part of our acquisition of Autocam
Corporation (Autocam) on August 29, 2014. The investment in the joint venture was remeasured to fair value at the time of the acquisition and has been accounted for under the equity method of accounting. Following the completion of the
Autocam acquisition, the investment in the joint venture was accounted for in U.S. dollars whereas it should have been accounted for in the joint ventures functional currency of the Chinese Renminbi in accordance with Accounting Standards
Codification (ASC) Topic 830,
Foreign Currency Matters
. As a result, we did not correctly account for our investment in the joint venture and the related currency translation adjustment impacts.
We previously corrected as out of period adjustments certain immaterial misstatements and reflected them in the prior period financial statements, where
applicable. These immaterial previously recorded out of period adjustments were primarily due to misstatements related to the initial recording of deferred tax assets and liabilities and corresponding adjustments to goodwill as part of the purchase
price allocations of the Autocam and PEP acquisitions in 2014 and 2015, the accounting for the goodwill balances from those acquisitions for multi-currency reporting through Other Comprehensive Income, and to record the mark to market adjustments on
our interest rate hedge net of tax through Other Comprehensive Income.
We assessed the materiality of the misstatements on prior periods financial
statements in accordance with SEC Staff Accounting Bulletin (SAB) Topic 1.M,
Materiality
, codified in ASC Topic 250,
Presentation of Financial Statements
, (ASC 250) and concluded that the misstatements were not
material to any prior annual or interim periods. In accordance with ASC 250 (SAB Topic 1.N,
Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
), we have corrected these
misstatements for all prior periods presented by revising the Condensed Consolidated Financial Statements and other consolidated financial information included herein. We have revised, and will revise for annual and interim periods in future
filings, for certain amounts in the consolidated financial statements in order to correct these misstatements. See Note 14 in these Notes to Condensed Consolidated Financial Statements for additional information.
Newly Adopted Accounting Standards
In March 2016,
the Financial Accounting Standards Board (the FASB) issued Accounting Standards Update (ASU)
2016-09,
Improvements to Employee Share-Based Payment Accounting.
The new standard
changes how companies account for certain aspects of share-based payments to employees. Entities must recognize the income tax effects of awards in the statement of operations when the awards vest or are settled (i.e., additional
paid-in
capital pools were eliminated). The guidance changed regarding employers accounting for an employees use of shares to satisfy the employers statutory income tax withholding obligation and
for forfeitures. The guidance was effective for public business entities for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. As of January 1, 2017, we adopted ASU
2016-09,
and the effects of the standard are reflected in the three and six months ended June 30, 2017, balances. Upon adoption, $0.7 million in historical tax benefits were reclassified from deferred taxes to
retained earnings. Prospective tax benefits will be recognized in income tax expense. Tax payments in respect of shares withheld for taxes are now classified in the financing section of the statement of cash flows. The calculation of diluted
earnings per share now excludes tax benefits that would have generated more dilutive shares. The effects of the adoption were not material to the financial statements.
Issuance of New Accounting Standards
Revenue
Recognition.
In May 2014, the FASB issued a new standard that provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes most of the existing revenue recognition requirements. Under the new
guidance, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. In addition, the standard requires
disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Factors that will affect
pre-and
post-implementation include, but are not limited to,
identifying all the contracts that exist and whether incidental obligations or marketing incentives included in some of those contracts are performance obligations. Additionally, we are evaluating the transfer of control of certain consignment
contracts which may impact the timing of revenue recognition under the new standard.
7
The standard will be effective for us beginning January 1, 2018, with early adoption permitted. We believe
the most appropriate approach for us to adopt the standard effective January 1, 2018, would be to utilize the full retrospective transition method to restate each prior reporting period presented. We continue to evaluate the adoption method as
we progress through each phase of implementation.
While our ability to adopt the standard using the full retrospective method depends on system readiness
and completing our analysis of information necessary to restate prior period consolidated financial statements, we remain on schedule. We have completed a diagnostic accounting assessment, including an analysis of a representative sample of
contracts, to identify areas that will be most significantly impacted by implementation of the new standard. We have also completed an initial training phase to educate contract managers of the technical aspects of the new standard. We are in the
process of concluding on and documenting our assessments related to the standard as well as potential system and procedural changes. We are evaluating the impact the new standard will have on our financial condition, results of operations and cash
flows. Our final evaluation of the impact of adopting the new standard is expected to be completed during 2017.
Leases.
In February 2016, the FASB
issued ASU
2016-02,
Leases
. ASU
2016-02
creates Topic 842,
Leases,
in the ASC and supersedes ASC 840,
Leases.
Entities that hold numerous equipment
and real estate leases, in particular those with numerous operating leases, will be most affected by the new guidance. The lease accounting standard is effective for public companies beginning January 1, 2019, with modified retrospective
adoption required and early adoption permitted. The amendments in ASU
2016-02
are expected to impact balance sheets at many companies by adding lease-related assets and liabilities. This may affect compliance
with contractual agreements and loan covenants. We have performed inquiries within segment locations and compiled information on operating and capital leases. We are currently evaluating the impacts of the lease accounting standard on our financial
position, results of operations, and related disclosures.
Statement of Cash Flows.
In August 2016, the FASB issued ASU
2016-15,
Classification of Certain Cash Receipts and Cash Payments
. This standard provides clarification on how certain cash receipts and cash payments are presented and classified on the statement of cash
flows. The standard is effective for us beginning January 1, 2018, and is required to be adopted using a retrospective approach if practicable, with early adoption permitted. We are in the process of assessing the effects of the standard on
prior periods.
Goodwill.
In January 2017, the FASB issued ASU
2017-04,
Intangibles Goodwill and
Other (Topic 350): Simplifying the Test for Goodwill Impairment,
that eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of the current goodwill impairment test) to measure a goodwill impairment charge.
Instead, entities will record an impairment charge based on the excess of a reporting units carrying amount over its fair value (i.e., measure the charge based on the current Step 1 test). The standard is effective for us beginning with
impairment tests performed on or after January 1, 2020, with early adoption permitted. We are currently evaluating the impact this new guidance is expected to have on our financial position or results of operations and related disclosures.
Note 2. Inventories
Inventories are comprised of the
following amounts:
|
|
|
|
|
|
|
|
|
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
Raw materials
|
|
$
|
52,916
|
|
|
$
|
49,205
|
|
Work in process
|
|
|
34,786
|
|
|
|
31,348
|
|
Finished goods
|
|
|
36,000
|
|
|
|
34,298
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
$
|
123,702
|
|
|
$
|
114,851
|
|
|
|
|
|
|
|
|
|
|
Inventories on consignment at customer locations as of June 30, 2017, and December 31, 2016 totaled
$6.2 million and $5.0 million, respectively.
Inventories are stated at the lower of cost or net realizable value. Cost is determined using the
average cost method. The inventory valuations above were developed using normalized production capacities for each of our manufacturing locations. Any costs from abnormal excess capacity or underutilization of fixed production overheads are expensed
in the period incurred and are not included as a component of inventory valuation.
8
Note 3. Net Income (Loss) Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Net income (loss)
|
|
$
|
(21,529
|
)
|
|
$
|
2,119
|
|
|
$
|
(14,122
|
)
|
|
$
|
760
|
|
Weighted average shares outstanding
|
|
|
27,468
|
|
|
|
27,024
|
|
|
|
27,358
|
|
|
|
26,923
|
|
Effect of dilutive stock options
|
|
|
|
|
|
|
163
|
|
|
|
|
|
|
|
127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares outstanding
|
|
|
27,468
|
|
|
|
27,187
|
|
|
|
27,358
|
|
|
|
27,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share
|
|
$
|
(0.78
|
)
|
|
$
|
0.08
|
|
|
$
|
(0.52
|
)
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share
|
|
$
|
(0.78
|
)
|
|
$
|
0.08
|
|
|
$
|
(0.52
|
)
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For both the three and six month periods ended June 30, 2016, approximately 0.9 million potentially dilutive stock
options had the effect of being anti-dilutive and were excluded from the calculation of diluted net income per share. Given the net loss for the three and six months ended June 30, 2017, all options are considered anti-dilutive and were
excluded from the calculation of diluted net loss per share.
Note 4. Segment Information
The segment information and the accounting policies of each segment are the same as those described in the Notes to Consolidated Financial Statements entitled
Segment Information and Summary of Significant Accounting Policies and Practices, respectively, included in our 2016 Annual Report. Our business is aggregated into three reportable segments- the Precision Bearing Components
Group, the Precision Engineered Products Group, and the Autocam Precision Components Group. We did not have any significant inter-segment transactions during the three and six month periods ended June 30, 2017 and 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Precision
Bearing
Components
Group
|
|
|
Autocam
Precision
Components
Group
|
|
|
Precision
Engineered
Products
Group
|
|
|
Corporate
and
Consolidations
|
|
|
Total
|
|
Three Months ended June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers
|
|
$
|
67,928
|
|
|
$
|
86,658
|
|
|
$
|
71,289
|
|
|
$
|
|
|
|
$
|
225,875
|
|
Income (loss) from operations
|
|
$
|
8,351
|
|
|
$
|
10,688
|
|
|
$
|
10,600
|
|
|
$
|
(9,046
|
)
|
|
$
|
20,593
|
|
Six Months ended June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers
|
|
$
|
136,687
|
|
|
$
|
173,104
|
|
|
$
|
142,398
|
|
|
$
|
|
|
|
$
|
452,189
|
|
Income (loss) from operations
|
|
$
|
16,752
|
|
|
$
|
21,289
|
|
|
$
|
21,514
|
|
|
$
|
(16,804
|
)
|
|
$
|
42,751
|
|
Total assets
|
|
$
|
240,666
|
|
|
$
|
427,453
|
|
|
$
|
723,122
|
|
|
$
|
14,575
|
|
|
$
|
1,405,816
|
|
Three Months ended June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers
|
|
$
|
65,157
|
|
|
$
|
82,991
|
|
|
$
|
66,124
|
|
|
$
|
|
|
|
$
|
214,272
|
|
Income (loss) from operations
|
|
$
|
6,474
|
|
|
$
|
7,770
|
|
|
$
|
10,782
|
|
|
$
|
(7,724
|
)
|
|
$
|
17,302
|
|
Six Months ended June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers
|
|
$
|
129,902
|
|
|
$
|
166,981
|
|
|
$
|
129,615
|
|
|
$
|
|
|
|
$
|
426,498
|
|
Income (loss) from operations
|
|
$
|
12,800
|
|
|
$
|
14,297
|
|
|
$
|
16,203
|
|
|
$
|
(14,214
|
)
|
|
$
|
29,086
|
|
Total assets
|
|
$
|
226,943
|
|
|
$
|
418,664
|
|
|
$
|
740,475
|
|
|
$
|
8,651
|
|
|
$
|
1,394,733
|
|
9
Note 5. Debt
Long-term and short-term debt at June 30, 2017, and December 31, 2016, consisted of the following amounts:
|
|
|
|
|
|
|
|
|
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
$545.0 million Senior Secured Term Loan B (Senior Secured Term Loan) bearing
interest at the greater of 0.75% or 1 month LIBOR (1.22% at June 30, 2017), plus an applicable margin of 4.25% at June 30, 2017, expiring October 19, 2022, net of debt issuance costs of $17.7 million at June 30, 2017, and
$19.0 million at December 31, 2016
|
|
$
|
523,030
|
|
|
$
|
524,539
|
|
$300.0 million Incremental Term Loan (Incremental Term Loan) bearing interest at
the greater of 0.75% or 1 month LIBOR (1.22% at June 30, 2017), plus an applicable margin of 3.75% at June 30, 2017, expiring April 3, 2021, net of debt issuance costs of $3.0 million at June 30, 2017
|
|
|
294,023
|
|
|
|
|
|
$143.0 million Senior Secured Revolver (Senior Secured Revolver) bearing interest
at LIBOR (1.22% at June 30, 2017) plus an applicable margin of 3.5% at June 30, 2017, expiring October 19, 2020, net of debt issuance costs of $2.3 million at June 30, 2017, and $2.7 million at December 31,
2016
|
|
|
30,999
|
|
|
|
25,298
|
|
$250.0 million Senior Notes (Senior Notes) bearing interest at 10.25%, net of
debt issuance costs of $4.9 million at December 31, 2016
|
|
|
|
|
|
|
245,077
|
|
French Safeguard Obligations (Autocam)
|
|
|
388
|
|
|
|
358
|
|
Brazilian lines of credit and equipment notes (Autocam)
|
|
|
379
|
|
|
|
573
|
|
Chinese line of credit (Autocam)
|
|
|
3,319
|
|
|
|
2,619
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
852,138
|
|
|
|
798,464
|
|
Less current maturities of long-term debt
|
|
|
24,748
|
|
|
|
12,751
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, excluding current maturities of long-term debt
|
|
$
|
827,390
|
|
|
$
|
785,713
|
|
|
|
|
|
|
|
|
|
|
10
On April 3, 2017, we redeemed our Senior Notes for $281.6 million resulting in a loss on debt
extinguishment of $36.3 million, including $31.6 million cash paid for the call premium and a $4.7 million
non-cash
write-off
of unamortized debt issuance
costs. The Senior Notes were redeemed and the call premium was paid with the proceeds of a new $300.0 million Incremental Term Loan that was added by amendment to our existing credit facility. The Incremental Term Loan bears interest at the
lower of 0.75% or
one-month
LIBOR, plus 3.75%, and matures on April 3, 2021, with payments of $3.0 million due quarterly. Concurrent with the amendment, the Senior Secured Revolver was reduced from
$143.0 million to $100.0 million until such time as a certain leverage ratio covenant threshold has been met for four consecutive fiscal quarters. Upon satisfaction of the ratio threshold, the Senior Secured Revolver may be restored to
$143.0 million. In connection with the amendment, we paid $6.5 million in debt issuance costs of which $4.0 million was recorded as a direct reduction to the carrying amount of the associated debt and $2.5 million was recognized
as a loss on modification of the Senior Secured Term Loan. Debt issuance costs related to the amendment were paid with proceeds from the Incremental Term Loan. Also in connection with the amendment, we wrote off $0.8 million of unamortized debt
issuance costs related to the modification of the Senior Secured Revolver.
The Incremental Term Loan is subject to a call premium in an amount equal to
1.0% of the aggregate principal amount outstanding at the time of any repricing event occurring prior to October 3, 2017. A repricing event is any prepayment or repayment of principal with the proceeds of any indebtedness bearing interest with
an effective yield that is less than the effective yield applicable to the initial Incremental Term Loan.
As part of our acquisition of Autocam, we
assumed certain foreign credit facilities. These facilities relate to local borrowings in France, Brazil, and China. These facilities are with financial institutions in the countries in which foreign plants operate and are used to fund working
capital and equipment purchases in those countries. The following paragraphs describe these foreign credit facilities.
Our French operation (acquired
with Autocam) has liabilities with certain creditors subject to Safeguard protection. The liabilities are being paid annually over a
10-year
period until 2019 and carry a zero percent interest rate. Amounts
due as of June 30, 2017, to those creditors opting to be paid over a
10-year
period totaled $0.4 million, of which $0.1 million is included in current maturities of long-term debt and
$0.3 million is included in long-term debt, net of current portion, on the Condensed Consolidated Balance Sheet.
The Brazilian equipment notes
represent borrowings from certain Brazilian banks to fund equipment purchases for Autocams Brazilian plants. These credit facilities have annual interest rates ranging from 2.5% to 6.0%.
The Chinese line of credit is a working capital line of credit with a Chinese bank bearing an annual interest rate of approximately 4.6%.
Note 6. Goodwill, Net
The changes in the carrying amount
of goodwill, net, for the six months ended June 30, 2017, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Precision
Bearing
Components
Group
|
|
|
Autocam
Precision
Components
Group
|
|
|
Precision
Engineered
Products
Group
|
|
|
Total
|
|
Balance as of December 31, 2016
|
|
$
|
8,909
|
|
|
$
|
70,717
|
|
|
$
|
370,685
|
|
|
$
|
450,311
|
|
Currency impacts
|
|
|
174
|
|
|
|
474
|
|
|
|
1,323
|
|
|
|
1,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2017
|
|
$
|
9,083
|
|
|
$
|
71,191
|
|
|
$
|
372,008
|
|
|
$
|
452,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The goodwill balances are tested for impairment on an annual basis during the fourth quarter and more often if a triggering
event occurs. As of June 30, 2017, there were no indications of impairment at the reporting units with goodwill balances.
11
Note 7. Intangible Assets, Net
The changes in the carrying amount of intangible assets, net, for the six months ended June 30, 2017, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Precision
Bearing
Components
Group
|
|
|
Autocam
Precision
Components
Group
|
|
|
Precision
Engineered
Products
Group
|
|
|
Total
|
|
Balance as of December 31, 2016
|
|
$
|
1,718
|
|
|
$
|
42,928
|
|
|
$
|
211,335
|
|
|
$
|
255,981
|
|
Amortization
|
|
|
(104
|
)
|
|
|
(1,748
|
)
|
|
|
(9,933
|
)
|
|
|
(11,785
|
)
|
Currency impacts
|
|
|
70
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2017
|
|
$
|
1,684
|
|
|
$
|
41,178
|
|
|
$
|
201,402
|
|
|
$
|
244,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 8. Shared-Based Compensation
Share-based compensation expense during the three and six months ended June 30, 2017 and 2016, consisted of the following amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Stock options
|
|
$
|
194
|
|
|
$
|
292
|
|
|
$
|
575
|
|
|
$
|
494
|
|
Restricted stock
|
|
|
395
|
|
|
|
710
|
|
|
|
855
|
|
|
|
1,358
|
|
Performance share units
|
|
|
477
|
|
|
|
482
|
|
|
|
788
|
|
|
|
633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
|
|
$
|
1,066
|
|
|
$
|
1,484
|
|
|
$
|
2,218
|
|
|
$
|
2,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
During the
six months ended June 30, 2017, we granted 125,700 option awards to officers and certain other key employees. The weighted average grant date fair value of options granted during the six months ended June 30, 2017, was $11.84 per share.
The fair value of our options cannot be determined by market value, because our options are not traded in an open market. Accordingly, we utilized the Black Scholes financial pricing model to estimate the fair value. The weighted average
assumptions relevant to determining the fair value of the 2017 stock option grants are below:
|
|
|
|
|
|
|
2017
Stock Option
Awards
|
|
Term
|
|
|
6 years
|
|
Risk free interest rate
|
|
|
2.03
|
%
|
Dividend yield
|
|
|
1.16
|
%
|
Expected volatility
|
|
|
56.56
|
%
|
Expected forfeiture rate
|
|
|
3.00
|
%
|
12
The following table provides a reconciliation of option activity for the six months ended June 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
Shares (000)
|
|
|
Weighted-
Average
Exercise
Price
(per share)
|
|
|
Weighted-
Average
Remaining
Contractual
Term (years)
|
|
|
Aggregate
Intrinsic Value
|
|
Outstanding at January 1, 2017
|
|
|
897
|
|
|
$
|
12.22
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
126
|
|
|
|
24.20
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(220
|
)
|
|
|
11.81
|
|
|
|
|
|
|
|
|
|
Forfeited or expired
|
|
|
(6
|
)
|
|
|
7.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2017
|
|
|
797
|
|
|
$
|
14.22
|
|
|
|
6.6
|
|
|
$
|
10,538
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at June 30, 2017
|
|
|
555
|
|
|
$
|
12.17
|
|
|
|
5.5
|
|
|
$
|
8,490
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The intrinsic value is the amount by which the market price of our stock was greater than the exercise price of any individual option grant at June 30, 2017.
|
Restricted Stock
During the six months ended
June 30, 2017, we granted 85,393 restricted stock awards to
non-executive
directors, officers and certain other key employees. The shares of restricted stock granted during the six months ended
June 30, 2017, vest
pro-rata
over three years for officers and certain other key employees and over one year for
non-executive
directors. The fair value of the
shares issued was determined by using the closing price of our common stock as of the date of grant. The weighted average grant date value of restricted stock granted in the six months ended June 30, 2017, was $24.29 per share.
Performance Share Units
During the six months ended
June 30, 2017, we granted 98,618 performance share units to officers and certain other key employees. The performance share units granted will be satisfied in the form of shares of common stock during 2020 if certain performance and/or market
conditions are met. We are recognizing the compensation expense over the three-year period in which the performance and market conditions are measured. The fair value per share of the performance share units issued was determined by using the grant
date closing price of our common stock for the units with a performance condition, or $24.20, and a Monte Carlo valuation model for the units that have a market condition, or $29.84.
Note 9. Income Taxes
Our effective tax rate was 29% for
the three and six months ended June 30, 2017. Our effective tax rate was 48% and 2% for the three and six months ended June 30, 2016, respectively. The loss on extinguishment of our Senior Notes impacted the 2017 tax rate and was treated as a
discrete item during the three months ended June 30, 2017. The 2016 effective rate was impacted by changes in forecasted income and loss and driven by the application of the three- and six-month results against the permanent book to tax differences.
The effective tax rates for 2017 and 2016 differ from the U.S. federal statutory rate of 34% due primarily to our earnings outside the United States that are indefinitely reinvested and taxed at rates lower than the U.S. federal statutory rate.
Management believes that it is reasonably possible that the amount of unrecognized income tax benefits and interest may decrease during the next 12 months by
approximately $0.6 million related to the expiration of the statutes of limitations, of which $0.5 million would reduce income tax expense.
Note 10. Commitments and Contingencies
Brazil ICMS
Tax Matter
Prior to our acquisition of Autocam, Autocams Brazilian subsidiary received notification from the Brazilian tax authorities regarding
ICMS (state value added tax or VAT) tax credits claimed on intermediary materials (tooling and perishable items) used in the manufacturing process. The Brazilian tax authority notification disallowed state ICMS credits claimed on intermediary
materials based on the argument that these items are not intrinsically related to the manufacturing process. Autocam Brazil filed an administrative defense with the Brazilian tax authority arguing, among other matters, that it should qualify for an
ICMS tax credit, contending that the intermediary materials are directly related to the manufacturing process.
13
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.
14
Fair value principles prioritize valuation inputs across three broad levels. Level 1 inputs are quoted
prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or
indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the assumptions used to measure assets and liabilities at fair value. An asset or
liabilitys classification within the various levels is determined based on the lowest level input that is significant to the fair value measurement.
The following table summarizes the assets and liabilities measured at fair value on a recurring basis for our interest rate swap derivative financial
instrument:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at June 30, 2017
|
|
Description
|
|
June 30,
2017
|
|
|
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
|
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs (Level 3)
|
|
Derivative assetcurrent
|
|
$
|
5
|
|
|
$
|
|
|
|
$
|
5
|
|
|
$
|
|
|
Derivative assetnoncurrent
|
|
|
5
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
Derivative liabilitycurrent
|
|
|
(1,293
|
)
|
|
|
|
|
|
|
(1,293
|
)
|
|
|
|
|
Derivative liabilitynoncurrent
|
|
|
(464
|
)
|
|
|
|
|
|
|
(464
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(1,747
|
)
|
|
$
|
|
|
|
$
|
(1,747
|
)
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2016
|
|
Description
|
|
December 31,
2016
|
|
|
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
|
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs (Level 3)
|
|
Derivative assetcurrent
|
|
$
|
69
|
|
|
$
|
|
|
|
$
|
69
|
|
|
$
|
|
|
Derivative assetnoncurrent
|
|
|
6
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
Derivative liabilitycurrent
|
|
|
(1,903
|
)
|
|
|
|
|
|
|
(1,903
|
)
|
|
|
|
|
Derivative liabilitynoncurrent
|
|
|
(1,028
|
)
|
|
|
|
|
|
|
(1,028
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(2,856
|
)
|
|
$
|
|
|
|
$
|
(2,856
|
)
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our policy is to manage interest expense using a mix of fixed and variable rate debt. To manage this mix effectively, we
may enter into interest rate swaps in which we agree to exchange the difference between fixed and variable interest amounts calculated by reference to an agreed upon notional principal amount.
The inputs for determining fair value of the interest rate swap are classified as Level 2 inputs. Level 2 fair value is based on estimates using
standard pricing models. These standard pricing models use inputs which are derived from or corroborated by observable market data such as interest rate yield curves, index forward curves, discount curves, and volatility
surfaces. Counterparties to these derivative contracts are highly rated financial institutions which we believe carry only a minimal risk of nonperformance.
15
We have elected to present the derivative contracts on a gross basis in the Condensed Consolidated Balance Sheet
included within other current assets, other
non-current
assets, other current liabilities and other
non-current
liabilities. To the extent we presented the derivative
contract on a net basis, we would have a derivative in a net liability position of $1.7 million as of June 30, 2017. We do not have any cash collateral due under such agreements.
As of June 30, 2017, we reported no gains or losses in accumulated other comprehensive income related to the interest rate swaps. Additionally, during
the three and six months ended June 30, 2016, when the interest rate swap was accounted for in accordance with hedge accounting, the periodic settlements and related reclassification of other comprehensive income was $0.5 million and
$0.9 million, respectively, of net hedging losses on the interest rate swap in the interest expense line on the Condensed Consolidated Statements of Operations. We recognized $0.5 and $1.0 million of interest rate swap settlements during
the three and six months ended June 30, 2017, in the Derivative losses on change in interest rate swap fair value line on the Condensed Consolidated Statements of Operations. If there are no changes in the interest rates for the
next twelve months, we expect to make $1.3 million in cash payments related to the interest rate swap.
Note 13. Restructuring and Integration
Restructuring and integration costs totaling $0.3 million and $4.0 million were recognized in the three months ended June 30, 2017 and
2016. Restructuring and integration costs totaling $0.4 million and $6.6 million were recognized in the six months ended June 30, 2017 and 2016.
Within the Precision Bearing Components Group, restructuring initiatives to optimize operations in the U.S., Italy, the Netherlands, Mexico and at segment
headquarters resulted in a charge of $0.3 and $1.7 million for the three months ended June 30, 2017 and 2016, respectively, and $0.4 and $2.4 million for the six months ended June 30, 2017 and 2016. These charges consisted
primarily of severance and other employee costs relating to personnel reductions.
Within the Autocam Precision Components Group, certain restructuring
programs, including the closure of one facility, the Wheeling Plant, resulted in a charge of $6 thousand and $2.1 million for the three months ended June 30, 2017 and 2016, respectively, and $16 thousand and $3.6 million for
the six months ended June 30, 2017 and 2016.
Within the Precision Engineered Products Group, initiatives resulted in integration, site closure and
employee costs of $0.2 million and $0.6 million for the three and six months ended June 30, 2016. There were no charges in the three and six months ended June 30, 2017.
The following table summarizes restructuring and integration activity related to actions incurred for the three and six months ended June 30, 2017 and
2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Severance and other employee costs
|
|
$
|
306
|
|
|
$
|
1,814
|
|
|
$
|
446
|
|
|
$
|
3,390
|
|
Site closure and other associated costs
|
|
|
|
|
|
|
2,011
|
|
|
|
|
|
|
|
2,938
|
|
Integration and other associated costs
|
|
|
|
|
|
|
222
|
|
|
|
|
|
|
|
257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
306
|
|
|
$
|
4,047
|
|
|
$
|
446
|
|
|
$
|
6,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve
Balance at
December 31, 2016
|
|
|
Charges
|
|
|
Paid in
2017
|
|
|
Reserve
Balance at
June 30, 2017
|
|
Severance and other employee costs
|
|
$
|
3,019
|
|
|
$
|
446
|
|
|
$
|
(1,673
|
)
|
|
$
|
1,792
|
|
Site closure and other associated costs
|
|
|
1,626
|
|
|
|
|
|
|
|
(614
|
)
|
|
|
1,012
|
|
Integration and other associated costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,645
|
|
|
$
|
446
|
|
|
$
|
(2,287
|
)
|
|
$
|
2,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The total restructuring and impairment costs are still being identified at the various segments; therefore, we are not able to
estimate the ultimate costs at this time. We will include in future filings updates to these activities along with a reconciliation of beginning and ending liabilities recorded. The amounts recorded for the three and six months ended June 30,
2017, for restructuring charges that have been incurred are primarily expected to be paid out during 2017. Some amounts related to foreign locations extend through 2021.
16
Note 14. Prior Periods Financial Statement Revision
As described in Note 1 in these Notes to Condensed Consolidated Financial Statements, we have corrected misstatements for all prior periods presented by
revising the Condensed Consolidated Financial Statements and other financial information included herein. We have not revised our Consolidated Statements of Cash Flows for any periods.
The following tables present the effect of the revision on our Condensed Consolidated Statements of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2016
|
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
Selling, general and administrative expense
|
|
$
|
80,266
|
|
|
$
|
(37
|
)
|
|
$
|
80,229
|
|
Income from operations
|
|
|
59,400
|
|
|
|
37
|
|
|
|
59,437
|
|
Write-off
of unamortized debt issuance costs
|
|
|
3,089
|
|
|
|
(500
|
)
|
|
|
2,589
|
|
Income (loss) before provision (benefit) for income taxes and share of net income from joint
venture
|
|
|
(7,309
|
)
|
|
|
537
|
|
|
|
(6,772
|
)
|
Provision (benefit) for income taxes
|
|
|
(9,313
|
)
|
|
|
1,180
|
|
|
|
(8,133
|
)
|
Net income (loss)
|
|
|
7,942
|
|
|
|
(643
|
)
|
|
|
7,299
|
|
Basic net income (loss) per share
|
|
$
|
0.29
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.27
|
|
Diluted net income (loss) per share
|
|
$
|
0.29
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30, 2016
|
|
|
September 30, 2016
|
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
Selling, general and administrative expense
|
|
$
|
18,347
|
|
|
$
|
|
|
|
|
18,347
|
|
|
$
|
60,651
|
|
|
$
|
(509
|
)
|
|
$
|
60,142
|
|
Income (loss) from operations
|
|
|
18,727
|
|
|
|
|
|
|
|
18,727
|
|
|
|
47,304
|
|
|
|
509
|
|
|
|
47,813
|
|
Interest expense
|
|
|
16,337
|
|
|
|
(466
|
)
|
|
|
15,871
|
|
|
|
48,924
|
|
|
|
|
|
|
|
48,924
|
|
Income (loss) before provision (benefit) for income taxes and share of net income from joint
venture
|
|
|
(3,703
|
)
|
|
|
466
|
|
|
|
(3,237
|
)
|
|
|
(5,760
|
)
|
|
|
509
|
|
|
|
(5,251
|
)
|
Provision (benefit) for income taxes
|
|
|
(6,423
|
)
|
|
|
158
|
|
|
|
(6,265
|
)
|
|
|
(6,469
|
)
|
|
|
173
|
|
|
|
(6,296
|
)
|
Net income (loss)
|
|
|
4,147
|
|
|
|
308
|
|
|
|
4,455
|
|
|
|
4,879
|
|
|
|
336
|
|
|
|
5,215
|
|
Basic net income (loss) per share
|
|
$
|
0.15
|
|
|
$
|
0.01
|
|
|
$
|
0.16
|
|
|
$
|
0.18
|
|
|
$
|
0.01
|
|
|
$
|
0.19
|
|
Diluted net income (loss) per share
|
|
$
|
0.15
|
|
|
$
|
0.01
|
|
|
$
|
0.16
|
|
|
$
|
0.18
|
|
|
$
|
0.01
|
|
|
$
|
0.19
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30, 2016
|
|
|
June 30, 2016
|
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
Selling, general and administrative expense
|
|
$
|
21,592
|
|
|
$
|
(599
|
)
|
|
$
|
20,993
|
|
|
$
|
42,304
|
|
|
$
|
(509
|
)
|
|
$
|
41,795
|
|
Income from operations
|
|
|
16,703
|
|
|
|
599
|
|
|
|
17,302
|
|
|
|
28,577
|
|
|
|
509
|
|
|
|
29,086
|
|
Interest expense
|
|
|
16,165
|
|
|
|
466
|
|
|
|
16,631
|
|
|
|
32,587
|
|
|
|
466
|
|
|
|
33,053
|
|
Income (loss) before provision (benefit) for income taxes and share of net income from joint
venture
|
|
|
1,362
|
|
|
|
133
|
|
|
|
1,495
|
|
|
|
(2,057
|
)
|
|
|
43
|
|
|
|
(2,014
|
)
|
Provision (benefit) for income taxes
|
|
|
674
|
|
|
|
45
|
|
|
|
719
|
|
|
|
(46
|
)
|
|
|
15
|
|
|
|
(31
|
)
|
Net income
|
|
|
2,031
|
|
|
|
88
|
|
|
|
2,119
|
|
|
|
732
|
|
|
|
28
|
|
|
|
760
|
|
Basic net income per share
|
|
$
|
0.08
|
|
|
$
|
|
|
|
$
|
0.08
|
|
|
$
|
0.03
|
|
|
$
|
|
|
|
$
|
0.03
|
|
Diluted net income per share
|
|
$
|
0.07
|
|
|
$
|
0.01
|
|
|
$
|
0.08
|
|
|
$
|
0.03
|
|
|
$
|
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2016
|
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
Selling, general and administrative expense
|
|
$
|
20,712
|
|
|
$
|
90
|
|
|
$
|
20,802
|
|
Income (loss) from operations
|
|
|
11,874
|
|
|
|
(90
|
)
|
|
|
11,784
|
|
Income (loss) before provision (benefit) for income taxes and share of net income from joint
venture
|
|
|
(3,419
|
)
|
|
|
(90
|
)
|
|
|
(3,509
|
)
|
Provision (benefit) for income taxes
|
|
|
(720
|
)
|
|
|
(31
|
)
|
|
|
(751
|
)
|
Net income (loss)
|
|
|
(1,299
|
)
|
|
|
(59
|
)
|
|
|
(1,358
|
)
|
Basic net income (loss) per share
|
|
$
|
(0.05
|
)
|
|
$
|
|
|
|
$
|
(0.05
|
)
|
Diluted net income (loss) per share
|
|
$
|
(0.05
|
)
|
|
$
|
|
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2015
|
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
Selling, general and administrative expense
|
|
$
|
51,745
|
|
|
$
|
37
|
|
|
$
|
51,782
|
|
Income (loss) from operations
|
|
|
26,797
|
|
|
|
(37
|
)
|
|
|
26,760
|
|
Write-off
of unamortized debt issuance costs
|
|
|
18,673
|
|
|
|
500
|
|
|
|
19,173
|
|
Income (loss) before provision (benefit) for income taxes and share of net income from joint
venture
|
|
|
(22,950
|
)
|
|
|
(537
|
)
|
|
|
(23,487
|
)
|
Provision (benefit) for income taxes
|
|
|
(10,518
|
)
|
|
|
(1,180
|
)
|
|
|
(11,698
|
)
|
Net income (loss)
|
|
|
(7,431
|
)
|
|
|
643
|
|
|
|
(6,788
|
)
|
Basic net income (loss) per share
|
|
$
|
(0.35
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.32
|
)
|
Diluted net income (loss) per share
|
|
$
|
(0.35
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.32
|
)
|
18
The following tables present the effect of the revision on our Condensed Consolidated Statements of Comprehensive
Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2017
|
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
Net income
|
|
$
|
7,407
|
|
|
$
|
|
|
|
$
|
7,407
|
|
|
|
|
|
Foreign currency translation gain (loss)
|
|
|
4,706
|
|
|
|
298
|
|
|
|
5,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
4,706
|
|
|
|
298
|
|
|
|
5,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
12,113
|
|
|
$
|
298
|
|
|
$
|
12,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2016
|
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
Net income (loss)
|
|
$
|
7,942
|
|
|
$
|
(643
|
)
|
|
$
|
7,299
|
|
|
|
|
|
Change in fair value of interest rate hedge
|
|
|
3,015
|
|
|
|
(1,105
|
)
|
|
|
1,910
|
|
Foreign currency translation gain (loss)
|
|
|
(8,984
|
)
|
|
|
(743
|
)
|
|
|
(9,727
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
(5,969
|
)
|
|
|
(1,848
|
)
|
|
|
(7,817
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
1,973
|
|
|
$
|
(2,491
|
)
|
|
$
|
(518
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30, 2016
|
|
|
September 30, 2016
|
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
Net income
|
|
$
|
4,147
|
|
|
$
|
308
|
|
|
$
|
4,455
|
|
|
$
|
4,879
|
|
|
$
|
336
|
|
|
$
|
5,215
|
|
|
|
|
|
|
|
|
Change in fair value of interest rate hedge
|
|
|
4,211
|
|
|
|
(1,967
|
)
|
|
|
2,244
|
|
|
|
3,130
|
|
|
|
(1,105
|
)
|
|
|
2,025
|
|
Foreign currency translation gain (loss)
|
|
|
382
|
|
|
|
(760
|
)
|
|
|
(378
|
)
|
|
|
4,176
|
|
|
|
(2,402
|
)
|
|
|
1,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
4,593
|
|
|
|
(2,727
|
)
|
|
|
1,866
|
|
|
|
7,306
|
|
|
|
(3,507
|
)
|
|
|
3,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
8,740
|
|
|
$
|
(2,419
|
)
|
|
$
|
6,321
|
|
|
$
|
12,185
|
|
|
$
|
(3,171
|
)
|
|
$
|
9,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30, 2016
|
|
|
June 30, 2016
|
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
Net income
|
|
$
|
2,031
|
|
|
$
|
88
|
|
|
$
|
2,119
|
|
|
$
|
732
|
|
|
$
|
28
|
|
|
$
|
760
|
|
|
|
|
|
|
|
|
Change in fair value of interest rate hedge
|
|
|
(79
|
)
|
|
|
495
|
|
|
|
416
|
|
|
|
(1,081
|
)
|
|
|
862
|
|
|
|
(219
|
)
|
Foreign currency translation gain (loss)
|
|
|
(2,925
|
)
|
|
|
(2,146
|
)
|
|
|
(5,071
|
)
|
|
|
3,794
|
|
|
|
(1,642
|
)
|
|
|
2,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
(3,004
|
)
|
|
|
(1,651
|
)
|
|
|
(4,655
|
)
|
|
|
2,713
|
|
|
|
(780
|
)
|
|
|
1,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
(973
|
)
|
|
$
|
(1,563
|
)
|
|
$
|
(2,536
|
)
|
|
$
|
3,445
|
|
|
$
|
(752
|
)
|
|
$
|
2,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2016
|
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
Net income (loss)
|
|
$
|
(1,299
|
)
|
|
$
|
(59
|
)
|
|
$
|
(1,358
|
)
|
|
|
|
|
Change in fair value of interest rate hedge
|
|
|
(1,002
|
)
|
|
|
367
|
|
|
|
(635
|
)
|
Foreign currency translation gain (loss)
|
|
|
6,719
|
|
|
|
504
|
|
|
|
7,223
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
5,717
|
|
|
|
871
|
|
|
|
6,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
4,418
|
|
|
$
|
812
|
|
|
$
|
5,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2015
|
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
Net income (loss)
|
|
$
|
(7,431
|
)
|
|
$
|
643
|
|
|
$
|
(6,788
|
)
|
|
|
|
|
Change in fair value of interest rate hedge
|
|
|
(2,584
|
)
|
|
|
947
|
|
|
|
(1,637
|
)
|
Foreign currency translation gain (loss)
|
|
|
(21,936
|
)
|
|
|
(3,075
|
)
|
|
|
(25,011
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
(24,520
|
)
|
|
|
(2,128
|
)
|
|
|
(26,648
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
(31,951
|
)
|
|
$
|
(1,485
|
)
|
|
$
|
(33,436
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2014
|
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
Net income (loss)
|
|
$
|
8,217
|
|
|
$
|
|
|
|
$
|
8,217
|
|
|
|
|
|
Change in fair value of interest rate hedge
|
|
|
(431
|
)
|
|
|
158
|
|
|
|
(273
|
)
|
Foreign currency translation gain (loss)
|
|
|
(17,731
|
)
|
|
|
(868
|
)
|
|
|
(18,599
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
(18,162
|
)
|
|
|
(710
|
)
|
|
|
(18,872
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
(9,945
|
)
|
|
$
|
(710
|
)
|
|
$
|
(10,655
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
The following tables present the effect of the revision on our Condensed Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2017
|
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
Investment in joint venture
|
|
$
|
42,387
|
|
|
$
|
(4,388
|
)
|
|
$
|
37,999
|
|
Total assets
|
|
|
1,391,043
|
|
|
|
(4,388
|
)
|
|
|
1,386,655
|
|
Accumulated other comprehensive income (loss)
|
|
|
(20,416
|
)
|
|
|
(4,388
|
)
|
|
|
(24,804
|
)
|
Total stockholders equity
|
|
|
327,879
|
|
|
|
(4,388
|
)
|
|
|
323,491
|
|
Total liabilities and stockholders equity
|
|
|
1,391,043
|
|
|
|
(4,388
|
)
|
|
|
1,386,655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2016
|
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
Investment in joint venture
|
|
$
|
40,694
|
|
|
$
|
(4,686
|
)
|
|
$
|
36,008
|
|
Total assets
|
|
|
1,360,386
|
|
|
|
(4,686
|
)
|
|
|
1,355,700
|
|
Accumulated other comprehensive income (loss)
|
|
|
(25,122
|
)
|
|
|
(4,686
|
)
|
|
|
(29,808
|
)
|
Total stockholders equity
|
|
|
315,199
|
|
|
|
(4,686
|
)
|
|
|
310,513
|
|
Total liabilities and stockholders equity
|
|
|
1,360,386
|
|
|
|
(4,686
|
)
|
|
|
1,355,700
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2015
|
|
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
Current deferred tax assets
|
|
$
|
6,696
|
|
|
$
|
3,707
|
|
|
$
|
10,403
|
|
Total current assets
|
|
|
280,181
|
|
|
|
3,707
|
|
|
|
283,888
|
|
Property, plant and equipment, net
|
|
|
318,968
|
|
|
|
(329
|
)
|
|
|
318,639
|
|
Goodwill, net
|
|
|
449,898
|
|
|
|
5,072
|
|
|
|
454,970
|
|
Investment in joint venture
|
|
|
38,462
|
|
|
|
(2,212
|
)
|
|
|
36,250
|
|
Total assets
|
|
|
1,380,567
|
|
|
|
6,238
|
|
|
|
1,386,805
|
|
Accrued salaries, wages and benefits
|
|
|
21,125
|
|
|
|
(300
|
)
|
|
|
20,825
|
|
Income taxes payable
|
|
|
5,350
|
|
|
|
44
|
|
|
|
5,394
|
|
Total current liabilities
|
|
|
133,351
|
|
|
|
(256
|
)
|
|
|
133,095
|
|
Non-current
deferred tax liabilities
|
|
|
117,459
|
|
|
|
8,176
|
|
|
|
125,635
|
|
Other liabilities
|
|
|
4,746
|
|
|
|
178
|
|
|
|
4,924
|
|
Total liabilities
|
|
|
1,066,686
|
|
|
|
8,098
|
|
|
|
1,074,784
|
|
Additional
paid-in
capital
|
|
|
277,582
|
|
|
|
335
|
|
|
|
277,917
|
|
Retained earnings
|
|
|
55,151
|
|
|
|
643
|
|
|
|
55,794
|
|
Accumulated other comprehensive income (loss)
|
|
|
(19,153
|
)
|
|
|
(2,839
|
)
|
|
|
(21,992
|
)
|
Total stockholders equity
|
|
|
313,881
|
|
|
|
(1,861
|
)
|
|
|
312,020
|
|
Total liabilities and stockholders equity
|
|
|
1,380,567
|
|
|
|
6,238
|
|
|
|
1,386,805
|
|
The following tables present the effect of the revision on our Condensed Consolidated Statements of Changes in
Stockholders Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Previously
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
As of and for the year ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of interest rate hedge
|
|
$
|
(431
|
)
|
|
$
|
158
|
|
|
$
|
(273
|
)
|
Foreign currency translation gain (loss)
|
|
|
(17,731
|
)
|
|
|
(868
|
)
|
|
|
(18,599
|
)
|
Accumulated other comprehensive income (loss)
|
|
|
5,367
|
|
|
|
(710
|
)
|
|
|
4,657
|
|
Total stockholders equity
|
|
|
173,699
|
|
|
|
(710
|
)
|
|
|
172,989
|
|
|
|
|
|
As of and for the year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(7,431
|
)
|
|
|
643
|
|
|
|
(6,788
|
)
|
Change in fair value of interest rate hedge
|
|
|
(2,584
|
)
|
|
|
947
|
|
|
|
(1,637
|
)
|
Foreign currency translation gain (loss)
|
|
|
(21,936
|
)
|
|
|
(3,075
|
)
|
|
|
(25,011
|
)
|
Accumulated other comprehensive income (loss)
|
|
|
(19,153
|
)
|
|
|
(2,839
|
)
|
|
|
(21,992
|
)
|
Additional paid-in capital
|
|
|
277,582
|
|
|
|
335
|
|
|
|
277,917
|
|
Total stockholders equity
|
|
|
313,881
|
|
|
|
(1,861
|
)
|
|
|
312,020
|
|
|
|
|
|
As of and for the year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
7,942
|
|
|
|
(643
|
)
|
|
|
7,299
|
|
Change in fair value of interest rate hedge
|
|
|
3,015
|
|
|
|
(1,105
|
)
|
|
|
1,910
|
|
Foreign currency translation gain (loss)
|
|
|
(8,984
|
)
|
|
|
(743
|
)
|
|
|
(9,727
|
)
|
Accumulated other comprehensive income (loss)
|
|
|
(25,122
|
)
|
|
|
(4,686
|
)
|
|
|
(29,808
|
)
|
Total stockholders equity
|
|
|
315,199
|
|
|
|
(4,686
|
)
|
|
|
310,513
|
|
|
|
|
|
As of and for the three-months ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gain (loss)
|
|
|
4,706
|
|
|
|
298
|
|
|
|
5,004
|
|
Accumulated other comprehensive income (loss)
|
|
|
(20,416
|
)
|
|
|
(4,388
|
)
|
|
|
(24,804
|
)
|
Total stockholders equity
|
|
|
327,879
|
|
|
|
(4,388
|
)
|
|
|
323,491
|
|
22
Note 15. Subsequent Event
On July 10, 2017, we entered into a definitive agreement to sell our Precision Bearing Components Group for $375 million in cash, subject to certain
adjustments, to TSUBAKI NAKASHIMA Co., Ltd. The transaction is expected to be completed in the second half of 2017 and is subject to regulatory and customary closing conditions. Net proceeds are expected to be approximately $270 million.
Precision Bearing Components Group results will be reported as discontinued operations in our financial statements after the transaction closes.