☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 62-1096725 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Large accelerated filer | ☐ | Accelerated filer | ☒ | |||
Non-accelerated filer | ☐ (Do not check if a smaller reporting company) | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
Securities registered pursuant to Section 12(b) of the Act: | ||||
Title of each class | Trading symbol | Name of each exchange on which registered | ||
Common Stock, par value $0.01 per share | NNBR | The Nasdaq Stock Market, LLC |
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
Item 1. | Financial Statements |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Net sales | $ | 213,256 | $ | 169,148 | ||||
Cost of sales (exclusive of depreciation and amortization shown separately below) | 161,269 | 126,444 | ||||||
Selling, general and administrative expense | 28,125 | 22,177 | ||||||
Acquisition related costs excluded from selling, general and administrative expense | — | 1,776 | ||||||
Depreciation and amortization | 23,425 | 14,281 | ||||||
Restructuring and integration expense | (12 | ) | 755 | |||||
Other operating (income) expense, net | (152 | ) | 22 | |||||
Income from operations | 601 | 3,693 | ||||||
Interest expense | 13,801 | 11,996 | ||||||
Loss on extinguishment of debt and write-off of debt issuance costs | 2,699 | — | ||||||
Other (income) expense, net | 729 | (313 | ) | |||||
Loss before (provision) benefit for income taxes and share of net income from joint venture | (16,628 | ) | (7,990 | ) | ||||
(Provision) benefit for income taxes | (2,241 | ) | 1,176 | |||||
Share of net income from joint venture | 269 | 831 | ||||||
Net loss | $ | (18,600 | ) | $ | (5,983 | ) | ||
Other comprehensive income (loss): | ||||||||
Change in fair value of interest rate swap, net of tax | (3,856 | ) | — | |||||
Foreign currency translation gain | 1,262 | 5,465 | ||||||
Other comprehensive income (loss) | $ | (2,594 | ) | $ | 5,465 | |||
Comprehensive loss | $ | (21,194 | ) | $ | (518 | ) | ||
Basic net loss per share | ||||||||
Net loss per share | $ | (0.44 | ) | $ | (0.22 | ) | ||
Weighted average shares outstanding | 41,972 | 27,597 | ||||||
Diluted net loss per share | ||||||||
Net loss per share | $ | (0.44 | ) | $ | (0.22 | ) | ||
Weighted average shares outstanding | 41,972 | 27,597 |
March 31, 2019 | December 31, 2018 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 20,269 | $ | 17,988 | ||||
Accounts receivable, net | 147,131 | 133,421 | ||||||
Inventories | 128,922 | 122,615 | ||||||
Income tax receivable | 653 | 946 | ||||||
Other current assets | 17,475 | 21,901 | ||||||
Total current assets | 314,450 | 296,871 | ||||||
Property, plant and equipment, net | 352,923 | 361,028 | ||||||
Finance lease right-of-use assets | 12,886 | — | ||||||
Operating lease right-of-use assets | 68,458 | — | ||||||
Goodwill | 440,169 | 439,452 | ||||||
Intangible assets, net | 363,608 | 376,248 | ||||||
Investment in joint venture | 21,087 | 20,364 | ||||||
Other non-current assets | 7,412 | 7,607 | ||||||
Total assets | $ | 1,580,993 | $ | 1,501,570 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 74,348 | $ | 65,694 | ||||
Accrued salaries, wages and benefits | 27,990 | 24,636 | ||||||
Current maturities of long-term debt | 33,444 | 31,280 | ||||||
Current portion of operating lease liability | 7,630 | — | ||||||
Other current liabilities | 21,700 | 23,420 | ||||||
Total current liabilities | 165,112 | 145,030 | ||||||
Deferred tax liabilities | 87,993 | 93,482 | ||||||
Non-current income tax payable | 3,875 | 3,875 | ||||||
Long-term debt, net of current portion | 826,274 | 811,471 | ||||||
Operating lease liability, net of current portion | 66,975 | — | ||||||
Other non-current liabilities | 35,855 | 29,417 | ||||||
Total liabilities | 1,186,084 | 1,083,275 | ||||||
Commitments and contingencies (Note 12) | ||||||||
Stockholders’ equity: | ||||||||
Common stock - $0.01 par value, authorized 45,000 shares, 42,367 and 42,104 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively | 424 | 421 | ||||||
Additional paid-in capital | 512,274 | 511,545 | ||||||
Retained deficit | (83,570 | ) | (62,046 | ) | ||||
Accumulated other comprehensive loss | (34,219 | ) | (31,625 | ) | ||||
Total stockholders’ equity | 394,909 | 418,295 | ||||||
Total liabilities and stockholders’ equity | $ | 1,580,993 | $ | 1,501,570 |
Common Stock | |||||||||||||||||||||||
Number of shares | Par value | Additional paid in capital | Retained deficit | Accumulated other comprehensive loss | Total | ||||||||||||||||||
Balance, December 31, 2018 | 42,104 | $ | 421 | $ | 511,545 | $ | (62,046 | ) | $ | (31,625 | ) | $ | 418,295 | ||||||||||
Net loss | — | — | — | (18,600 | ) | — | (18,600 | ) | |||||||||||||||
Cash dividends declared | — | — | — | (2,942 | ) | — | (2,942 | ) | |||||||||||||||
Share-based compensation expense | 281 | 3 | 870 | — | — | 873 | |||||||||||||||||
Restricted shares forgiven for taxes and forfeited | (18 | ) | — | (141 | ) | — | — | (141 | ) | ||||||||||||||
Change in fair value of interest rate swap, net of tax of $1,104 | — | — | — | — | (3,856 | ) | (3,856 | ) | |||||||||||||||
Foreign currency translation gain | — | — | — | — | 1,262 | 1,262 | |||||||||||||||||
Adoption of new accounting standard (Note 1) | — | — | — | 18 | — | 18 | |||||||||||||||||
Balance, March 31, 2019 | 42,367 | $ | 424 | $ | 512,274 | $ | (83,570 | ) | $ | (34,219 | ) | $ | 394,909 |
Common Stock | |||||||||||||||||||||||
Number of shares | Par value | Additional paid in capital | Retained earnings | Accumulated other comprehensive loss | Total | ||||||||||||||||||
Balance, December 31, 2017 | 27,572 | $ | 275 | $ | 292,494 | $ | 211,080 | $ | (17,745 | ) | $ | 486,104 | |||||||||||
Net loss | — | — | — | (5,983 | ) | — | (5,983 | ) | |||||||||||||||
Cash dividends declared | — | — | — | (1,955 | ) | — | (1,955 | ) | |||||||||||||||
Share-based compensation expense | 87 | 1 | 1,255 | — | — | 1,256 | |||||||||||||||||
Shares issued for option exercises | 23 | — | 242 | — | — | 242 | |||||||||||||||||
Restricted shares and performance shares forgiven for taxes and forfeited | (16 | ) | — | (287 | ) | — | — | (287 | ) | ||||||||||||||
Foreign currency translation gain | — | — | — | — | 5,465 | 5,465 | |||||||||||||||||
Adoption of new accounting standard | — | — | — | 17 | — | 17 | |||||||||||||||||
Balance, March 31, 2018 | 27,666 | $ | 276 | $ | 293,704 | $ | 203,159 | $ | (12,280 | ) | $ | 484,859 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (18,600 | ) | $ | (5,983 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used by) operating activities: | ||||||||
Depreciation and amortization | 23,425 | 14,281 | ||||||
Amortization of debt issuance costs | 1,191 | 1,088 | ||||||
Loss on extinguishment of debt and write-off of debt issuance costs | 2,699 | — | ||||||
Share of net income from joint venture, net of cash dividends received | (269 | ) | (831 | ) | ||||
Compensation expense from issuance of share-based awards | 873 | 1,256 | ||||||
Deferred income taxes | (4,373 | ) | — | |||||
Other | 182 | 347 | ||||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||
Accounts receivable | (13,963 | ) | (9,433 | ) | ||||
Inventories | (6,302 | ) | (7,791 | ) | ||||
Accounts payable | 7,236 | (296 | ) | |||||
Income taxes receivable and payable, net | 248 | (613 | ) | |||||
Other | 4,941 | 7,001 | ||||||
Net cash used by operating activities | (2,712 | ) | (974 | ) | ||||
Cash flows from investing activities | ||||||||
Acquisition of property, plant and equipment | (14,073 | ) | (11,860 | ) | ||||
Proceeds from liquidation of short-term investment | 8,000 | — | ||||||
Cash paid to acquire businesses, net of cash received | — | (14,676 | ) | |||||
Cash paid for earnest money for Paragon Medical acquisition | — | (6,000 | ) | |||||
Other | 2,394 | (282 | ) | |||||
Net cash used by investing activities | (3,679 | ) | (32,818 | ) | ||||
Cash flows from financing activities | ||||||||
Cash paid for debt issuance or prepayment costs | (738 | ) | — | |||||
Dividends paid | (2,947 | ) | (1,931 | ) | ||||
Proceeds from long-term debt | 19,025 | 10,000 | ||||||
Repayment of long-term debt | (7,522 | ) | (13,000 | ) | ||||
Proceeds from (repayments of) short-term debt, net | 1,982 | (52 | ) | |||||
Other | (924 | ) | (1,278 | ) | ||||
Net cash provided by (used by) financing activities | 8,876 | (6,261 | ) | |||||
Effect of exchange rate changes on cash flows | (204 | ) | 562 | |||||
Net change in cash and cash equivalents | 2,281 | (39,491 | ) | |||||
Cash and cash equivalents at beginning of period | 17,988 | 224,446 | ||||||
Cash and cash equivalents at end of period | $ | 20,269 | $ | 184,955 | ||||
Supplemental schedule of non-cash operating, investing and financing activities | ||||||||
Non-cash additions to property, plant and equipment | $ | 4,071 | $ | 2,992 |
Three Months Ended March 31, 2018 | ||||
Pro forma net sales | $ | 209,830 | ||
Pro forma net loss | $ | (8,077 | ) | |
Basic net loss per share | $ | (0.29 | ) | |
Diluted net loss per share | $ | (0.29 | ) |
Mobile Solutions | Power Solutions | Life Sciences | Corporate and Consolidations | Total | ||||||||||||||||||
Three Months Ended March 31, 2019 | ||||||||||||||||||||||
Net sales | $ | 78,075 | $ | 49,657 | $ | 86,008 | $ | (484 | ) | (a) | $ | 213,256 | ||||||||||
Income (loss) from operations | $ | 4,107 | $ | 3,824 | $ | 3,846 | $ | (11,176 | ) | $ | 601 | |||||||||||
Interest expense | (13,801 | ) | ||||||||||||||||||||
Other | (3,428 | ) | ||||||||||||||||||||
Loss before provision for income taxes and share of net income from joint venture | $ | (16,628 | ) | |||||||||||||||||||
Three Months Ended March 31, 2018 | ||||||||||||||||||||||
Net sales | $ | 89,794 | $ | 48,682 | $ | 31,200 | $ | (528 | ) | (a) | $ | 169,148 | ||||||||||
Income (loss) from operations | $ | 9,785 | $ | 5,233 | $ | 4,204 | $ | (15,529 | ) | $ | 3,693 | |||||||||||
Interest expense | (11,996 | ) | ||||||||||||||||||||
Other | 313 | |||||||||||||||||||||
Loss before benefit for income taxes and share of net income from joint venture | $ | (7,990 | ) |
(a) | Includes elimination of intersegment transactions occurring during the ordinary course of business. |
Total Assets as of | ||||||||
March 31, 2019 | December 31, 2018 | |||||||
Mobile Solutions | $ | 392,100 | $ | 356,387 | ||||
Power Solutions | 311,771 | 297,947 | ||||||
Life Sciences | 824,891 | 802,770 | ||||||
Corporate and Consolidations | 52,231 | 44,466 | ||||||
Total | $ | 1,580,993 | $ | 1,501,570 |
March 31, 2019 | December 31, 2018 | |||||||
Raw materials | $ | 55,286 | $ | 52,930 | ||||
Work in process | 47,372 | 42,578 | ||||||
Finished goods | 26,264 | 27,107 | ||||||
Total inventories | $ | 128,922 | $ | 122,615 |
Mobile Solutions | Power Solutions | Life Sciences | Total | |||||||||||||
Balance as of December 31, 2018 | $ | — | $ | 94,505 | $ | 344,947 | $ | 439,452 | ||||||||
Currency impacts | — | 198 | 519 | 717 | ||||||||||||
Balance as of March 31, 2019 | $ | — | $ | 94,703 | $ | 345,466 | $ | 440,169 |
Mobile Solutions | Power Solutions | Life Sciences | Total | |||||||||||||
Balance as of December 31, 2018 | $ | 35,892 | $ | 95,991 | $ | 244,365 | $ | 376,248 | ||||||||
Amortization | (885 | ) | (2,748 | ) | (9,017 | ) | (12,650 | ) | ||||||||
Other | 2 | — | 8 | 10 | ||||||||||||
Balance as of March 31, 2019 | $ | 35,009 | $ | 93,243 | $ | 235,356 | $ | 363,608 |
Balance as of December 31, 2018 | $ | 20,364 | |
Share of earnings | 269 | ||
Foreign currency translation gain | 454 | ||
Balance as of March 31, 2019 | $ | 21,087 |
March 31, 2019 | December 31, 2018 | |||||||
Senior Secured Term Loan | $ | 530,625 | $ | 532,063 | ||||
Incremental Term Loan | 276,000 | 279,000 | ||||||
Senior Secured Revolver | 56,184 | 38,720 | ||||||
International lines of credit and other loans | 10,601 | 9,810 | ||||||
Total principal | 873,410 | 859,593 | ||||||
Less—current maturities of long-term debt | 33,444 | 31,280 | ||||||
Principal, net of current portion | 839,966 | 828,313 | ||||||
Less—unamortized debt issuance costs | 13,692 | 16,842 | ||||||
Long-term debt, net of current portion | $ | 826,274 | $ | 811,471 |
• | Equipment used in the manufacturing process as well as office equipment with terms between thirteen months and five years. |
• | Manufacturing plants and office facilities with terms between thirteen months and 25 years. |
Financial Statement Line Item | Three Months Ended March 31, 2019 | |||||
Lease cost: | ||||||
Finance lease cost | ||||||
Amortization of right-of-use assets | Depreciation and amortization | $ | 322 | |||
Interest expense | Interest expense | 53 | ||||
Operating lease cost | Cost of sales and selling, general and administrative expense | 3,434 | ||||
Short-term lease cost (1) | Cost of sales and selling, general and administrative expense | 107 | ||||
Total lease cost | $ | 3,916 |
Financial Statement Line Item | March 31, 2019 | |||||
Lease assets and liabilities: | ||||||
Assets | ||||||
Operating lease assets | Operating lease right-of-use assets | $ | 68,458 | |||
Finance lease asset | Finance lease right-of-use assets | 12,886 | ||||
Total lease assets | $ | 81,344 | ||||
Liabilities | ||||||
Current liabilities | ||||||
Operating lease liabilities | Current portion of operating lease liability | $ | 7,630 | |||
Finance lease liabilities | Other current liabilities | 2,401 | ||||
Non-current liabilities | ||||||
Operating lease liabilities | Operating lease liability, net of current portion | 66,975 | ||||
Finance lease liabilities | Other non-current liabilities | 6,150 | ||||
Total lease liabilities | $ | 83,156 |
Supplemental Cash Flows Information | Three Months Ended March 31, 2019 | |||
Cash paid for amounts included in the measurement of lease liabilities | ||||
Operating cash flows from finance leases | $ | 53 | ||
Operating cash flows from operating leases | 5,288 | |||
Financing cash flows from finance leases | 792 | |||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 2,836 |
Weighted-Average Remaining Lease Term (years) | Weighted-Average Discount Rate | ||||
Finance leases | 4.1 | 2.4 | % | ||
Operating leases | 10.5 | 8.5 | % |
Operating Leases | Finance Leases | |||||||
2019 (1) | $ | 10,104 | $ | 2,190 | ||||
2020 | 11,979 | 2,033 | ||||||
2021 | 11,118 | 2,020 | ||||||
2022 | 10,812 | 1,853 | ||||||
2023 | 9,264 | 962 | ||||||
Thereafter | 59,946 | 17 | ||||||
Total future minimum lease payments | 113,223 | 9,075 | ||||||
Less: imputed interest | 38,618 | 524 | ||||||
Total lease liabilities | $ | 74,605 | $ | 8,551 |
(1) | For the period from April 1, 2019 to December 31, 2019. |
Year Ending December 31, | ||||
2019 | $ | 13,337 | ||
2020 | 11,515 | |||
2021 | 10,557 | |||
2022 | 10,293 | |||
2023 | 8,752 | |||
Thereafter | 53,945 | |||
Total minimum payments | $ | 108,399 |
Three Months Ended March 31, 2019 | ||||||||||||||||||||
Mobile Solutions | Power Solutions | Life Sciences | Corporate and Consolidations | Total | ||||||||||||||||
Severance and other employee costs | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Site closure and other associated costs | (12 | ) | — | — | — | (12 | ) | |||||||||||||
Total | $ | (12 | ) | $ | — | $ | — | $ | — | $ | (12 | ) | ||||||||
Three Months Ended March 31, 2018 | ||||||||||||||||||||
Mobile Solutions | Power Solutions | Life Sciences | Corporate and Consolidations | Total | ||||||||||||||||
Severance and other employee costs | $ | — | $ | — | $ | — | $ | 728 | $ | 728 | ||||||||||
Site closure and other associated costs | 27 | — | — | — | 27 | |||||||||||||||
Total | $ | 27 | $ | — | $ | — | $ | 728 | $ | 755 |
Reserve Balance as of December 31, 2018 | Charges | Non-cash Adjustments | Cash Reductions | Reserve Balance as of March 31, 2019 | ||||||||||||||||
Severance and other employee costs | $ | 1,122 | $ | — | $ | — | $ | (274 | ) | $ | 848 | |||||||||
Site closure and other associated costs | 24 | (12 | ) | — | (12 | ) | — | |||||||||||||
Total | $ | 1,146 | $ | (12 | ) | $ | — | $ | (286 | ) | $ | 848 |
Three Months Ended March 31, 2019 | ||||||||||||||||||||
Mobile Solutions | Power Solutions | Life Sciences | Intersegment Sales Eliminations | Total | ||||||||||||||||
United States | $ | 44,457 | $ | 41,115 | $ | 68,343 | $ | (484 | ) | $ | 153,431 | |||||||||
China | 9,153 | 1,838 | 1,692 | — | 12,683 | |||||||||||||||
Mexico | 5,378 | 2,709 | 127 | — | 8,214 | |||||||||||||||
Brazil | 8,382 | 69 | — | — | 8,451 | |||||||||||||||
Germany | 1,406 | 16 | 8,885 | — | 10,307 | |||||||||||||||
Switzerland | 1,359 | 16 | 3,265 | — | 4,640 | |||||||||||||||
Poland | 1,913 | 4 | 6 | — | 1,923 | |||||||||||||||
Italy | 1,856 | 63 | 421 | — | 2,340 | |||||||||||||||
Czech Republic | 1,509 | 188 | — | — | 1,697 | |||||||||||||||
France | 44 | — | 1,225 | — | 1,269 | |||||||||||||||
Africa | — | 1,156 | — | — | 1,156 | |||||||||||||||
Other | 2,618 | 2,483 | 2,044 | — | 7,145 | |||||||||||||||
Total net sales | $ | 78,075 | $ | 49,657 | $ | 86,008 | $ | (484 | ) | $ | 213,256 |
Three Months Ended March 31, 2018 | ||||||||||||||||||||
Mobile Solutions | Power Solutions | Life Sciences | Intersegment Sales Eliminations | Total | ||||||||||||||||
United States | $ | 49,655 | $ | 40,128 | $ | 30,553 | $ | (528 | ) | $ | 119,808 | |||||||||
China | 11,581 | 1,485 | 126 | — | 13,192 | |||||||||||||||
Mexico | 7,236 | 3,197 | 172 | — | 10,605 | |||||||||||||||
Brazil | 9,885 | 50 | — | — | 9,935 | |||||||||||||||
Poland | 2,052 | 14 | — | — | 2,066 | |||||||||||||||
Czech Republic | 1,810 | — | — | — | 1,810 | |||||||||||||||
Italy | 1,577 | 98 | — | — | 1,675 | |||||||||||||||
Germany | 1,534 | 7 | 1 | — | 1,542 | |||||||||||||||
Switzerland | 1,406 | — | — | — | 1,406 | |||||||||||||||
Netherlands | — | 974 | — | — | 974 | |||||||||||||||
Other | 3,058 | 2,729 | 348 | — | 6,135 | |||||||||||||||
Total net sales | $ | 89,794 | $ | 48,682 | $ | 31,200 | $ | (528 | ) | $ | 169,148 |
Deferred Revenue | ||||
Balance at January 1, 2019 | $ | 2,974 | ||
Balance at March 31, 2019 | $ | 2,890 |
• | The performance obligation is part of a contract that has an original expected duration of one year or less. |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Stock options | $ | 192 | $ | 205 | ||||
Restricted stock | 459 | 460 | ||||||
Performance share units | 222 | 591 | ||||||
Share-based compensation expense | $ | 873 | $ | 1,256 |
2019 | ||
Expected term | 6 years | |
Risk free interest rate | 2.47 | % |
Dividend yield | 3.53 | % |
Expected volatility | 49.53 | % |
Expected forfeiture rate | 4.00 | % |
Number of Options (in thousands) | Weighted- Average Exercise Price (per share) | Weighted- Average Remaining Contractual Term (years) | Aggregate Intrinsic Value | ||||||||||||
Outstanding at January 1, 2019 | 771 | $ | 15.17 | ||||||||||||
Granted | 210 | 7.93 | |||||||||||||
Exercised | — | $ | — | ||||||||||||
Forfeited or expired | (3 | ) | 24.41 | ||||||||||||
Outstanding at March 31, 2019 | 978 | $ | 13.58 | 6.3 | $ | — | (1) | ||||||||
Exercisable at March 31, 2019 | 701 | $ | 14.27 | 5.0 | $ | — | (1) |
(1) | The aggregate intrinsic value is the sum of intrinsic values for each exercisable individual option grant. The intrinsic value is the amount by which the closing market price of our stock at March 31, 2019, was greater than the exercise price of any individual option grant. |
Nonvested Restricted Shares (in thousands) | Weighted Average Grant-Date Fair Value (per share) | ||||||
Nonvested at January 1, 2019 | 146 | $ | 22.07 | ||||
Granted | 281 | $ | 7.93 | ||||
Vested | (70 | ) | $ | 20.92 | |||
Forfeited | (18 | ) | $ | 18.98 | |||
Nonvested at March 31, 2019 | 339 | $ | 10.74 |
TSR Awards: | Threshold Performance (50% of Shares) | Target Performance (100% of Shares) | Maximum Performance (150% of Shares) | ||||||
2019 grants | 35th Percentile | 50th Percentile | 75th Percentile | ||||||
ROIC Awards: | Threshold Performance (35% of Shares) | Target Performance (100% of Shares) | Maximum Performance (150% of Shares) | ||||||
2019 grants (1) | 4.7 | % | 5.8 | % | 7.0 | % |
(1) | For the ROIC Awards granted in 2019, the denominator of the calculation is different than in prior years, and therefore the target percentages are not comparable to historical target percentages. |
TSR Awards | ROIC Awards | |||||||||||||
Award Year | Shares (in thousands) | Grant Date Fair Value (per share) | Shares (in thousands) | Grant Date Fair Value (per share) | ||||||||||
2019 | 136 | $ | 9.28 | 174 | $ | 7.93 |
Nonvested TSR Awards | Nonvested ROIC Awards | |||||||||||||
Shares (in thousands) | Weighted Average Grant-Date Fair Value (per share) | Shares (in thousands) | Weighted Average Grant-Date Fair Value (per share) | |||||||||||
Nonvested at January 1, 2019 | 94 | $ | 26.84 | 100 | $ | 24.39 | ||||||||
Granted | 136 | $ | 9.28 | 174 | $ | 7.93 | ||||||||
Forfeited | — | $ | — | — | $ | — | ||||||||
Nonvested at March 31, 2019 | 230 | $ | 16.47 | 274 | $ | 13.93 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Numerator: | ||||||||
Net loss | $ | (18,600 | ) | $ | (5,983 | ) | ||
Denominator: | ||||||||
Weighted average shares outstanding | 41,972 | 27,597 | ||||||
Effect of dilutive stock options | — | — | ||||||
Diluted shares outstanding | 41,972 | 27,597 | ||||||
Per common share net loss: | ||||||||
Basic net loss per share | $ | (0.44 | ) | $ | (0.22 | ) | ||
Diluted net loss per share | $ | (0.44 | ) | $ | (0.22 | ) | ||
Cash dividends declared per share | $ | 0.07 | $ | 0.07 |
Notional Amount | ||||
February 12, 2019 - December 30, 2020 | $ | 700,000 | ||
December 31, 2020 - December 30, 2021 | 466,667 | |||
December 31, 2021 - October 19, 2022 | 233,333 |
Fair Value Measurements as of March 31, 2019 | ||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||
Derivative liability - other current liabilities | $ | — | $ | 543 | $ | — | ||||||
Derivative liability - other non-current liabilities | — | 4,417 | — | |||||||||
Total | $ | — | $ | 4,960 | $ | — |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended March 31, | |||||||||||||||
2019 | 2018 | $ Change | |||||||||||||
Net sales | $ | 213,256 | $ | 169,148 | $ | 44,108 | |||||||||
Acquisitions | $ | 55,224 | |||||||||||||
Volume | (7,999 | ) | |||||||||||||
Foreign exchange effects | (2,820 | ) | |||||||||||||
Price/mix/inflation/other | (297 | ) | |||||||||||||
Cost of sales (exclusive of depreciation and amortization shown separately below) | 161,269 | 126,444 | 34,825 | ||||||||||||
Acquisitions | $ | 37,862 | |||||||||||||
Volume | (4,300 | ) | |||||||||||||
Foreign exchange effects | (2,346 | ) | |||||||||||||
Cost reduction projects | (3,008 | ) | |||||||||||||
Inflation | 1,691 | ||||||||||||||
Mix/other | 4,926 | ||||||||||||||
Selling, general and administrative expense | 28,125 | 22,177 | 5,948 | ||||||||||||
Acquisition related costs excluded from selling, general and administrative expense | — | 1,776 | (1,776 | ) | |||||||||||
Depreciation and amortization | 23,425 | 14,281 | 9,144 | ||||||||||||
Other operating (income) expense, net | (152 | ) | 22 | (174 | ) | ||||||||||
Restructuring and integration expense | (12 | ) | 755 | (767 | ) | ||||||||||
Income from operations | 601 | 3,693 | (3,092 | ) | |||||||||||
Interest expense | 13,801 | 11,996 | 1,805 | ||||||||||||
Loss on extinguishment of debt and write-off of debt issuance costs | 2,699 | — | 2,699 | ||||||||||||
Other (income) expense, net | 729 | (313 | ) | 1,042 | |||||||||||
Loss before (provision) benefit for income taxes and share of net income from joint venture | (16,628 | ) | (7,990 | ) | (8,638 | ) | |||||||||
(Provision) benefit for income taxes | (2,241 | ) | 1,176 | (3,417 | ) | ||||||||||
Share of net income from joint venture | 269 | 831 | (562 | ) | |||||||||||
Net loss | $ | (18,600 | ) | $ | (5,983 | ) | $ | (12,617 | ) |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Interest on debt | $ | 13,119 | $ | 10,802 | ||||
Amortization of debt issuance costs | 1,191 | 1,088 | ||||||
Capitalized interest | (553 | ) | (205 | ) | ||||
Other | 44 | 311 | ||||||
Total interest expense | $ | 13,801 | $ | 11,996 |
Three Months Ended March 31, | |||||||||||||||
2019 | 2018 | $ Change | |||||||||||||
Net sales | $ | 78,075 | $ | 89,794 | $ | (11,719 | ) | ||||||||
Volume | $ | (9,529 | ) | ||||||||||||
Foreign exchange effects | (2,642 | ) | |||||||||||||
Price/mix/inflation/other | 452 | ||||||||||||||
Income from operations | $ | 4,107 | $ | 9,785 | $ | (5,678 | ) |
Three Months Ended March 31, | |||||||||||||||
2019 | 2018 | $ Change | |||||||||||||
Net sales | $ | 49,657 | $ | 48,682 | $ | 975 | |||||||||
Acquisitions | $ | 1,612 | |||||||||||||
Volume | 359 | ||||||||||||||
Foreign exchange effects | (178 | ) | |||||||||||||
Price/mix/inflation/other | (818 | ) | |||||||||||||
Income from operations | $ | 3,824 | $ | 5,233 | $ | (1,409 | ) |
Three Months Ended March 31, | |||||||||||||||
2019 | 2018 | $ Change | |||||||||||||
Net sales | $ | 86,008 | $ | 31,200 | $ | 54,808 | |||||||||
Acquisitions | $ | 53,612 | |||||||||||||
Volume | 1,171 | ||||||||||||||
Price/mix/inflation/other | 25 | ||||||||||||||
Income from operations | $ | 3,846 | $ | 4,204 | $ | (358 | ) |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plan or Programs (1) | |||||||||
January 2019 | — | $ | — | — | — | ||||||||
February 2019 | — | — | — | — | |||||||||
March 2019 | 18,311 | 7.71 | — | — | |||||||||
Total | 18,311 | $ | 7.71 | — | — |
(1) | Shares were withheld to pay for tax obligations due upon the vesting of restricted stock held by certain employees granted under the NN, Inc. 2016 Omnibus Incentive Plan (the “Plan”). The Plan provides for the withholding of shares to satisfy tax obligations. It does not specify a maximum number of shares that can be withheld for this purpose. These shares may be deemed to be “issuer purchases” of shares that are required to be disclosed pursuant to this Item. |
Item 3. | Defaults upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit No. | Description | |
10.1* | ||
10.2* | ||
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Service | |
101.CAL | Taxonomy Calculation Linkbase | |
101.LAB | XBRL Taxonomy Label Linkbase | |
101.PRE | XBRL Presentation Linkbase Document | |
101.DEF | XBRL Definition Linkbase Document |
* | Management contract or compensatory plan or arrangement. |
NN, Inc. | |
(Registrant) | |
Date: May 10, 2019 | /s/ Richard D. Holder |
Richard D. Holder | |
President, Chief Executive Officer and Director | |
(Principal Executive Officer) | |
(Duly Authorized Officer) | |
Date: May 10, 2019 | /s/ Thomas C. Burwell, Jr. |
Thomas C. Burwell, Jr. | |
Senior Vice President—Chief Financial Officer | |
(Principal Financial Officer) | |
(Duly Authorized Officer) | |
Date: May 10, 2019 | /s/ Michael C. Felcher |
Michael C. Felcher | |
Vice President—Chief Accounting Officer | |
(Principal Accounting Officer) | |
1. | Compensation and Benefits in the Event of Separation from Service. In the event of the Executive’s Separation from Service, compensation and benefits shall be paid as set forth below. |
(a) | Qualifying Termination Prior To A Change In Control. If the Executive has a Qualifying Termination after the Effective Date and prior to a Change in Control, then upon such Qualifying Termination the Executive shall be entitled to receive the following: |
(i) | The Executive’s annual salary through the effective date of Separation from Service, at the annual rate in effect at the time the Notice of Termination is given (or death occurs), to the extent unpaid prior to such Separation from Service. |
(ii) | In consideration of Executive’s prior service to the Company an amount equal to 18 months of his annual base salary in effect on the date of his Separation from Service. These amounts shall be payable in accordance with the Company’s regular payroll procedures over the 18 month period following the Executive’s Separation from Service. |
(iii) | Any vested rights of Executive in accordance with the Company’s plans, programs or policies. A payment equal to the target annual bonus to which the Executive would have been entitled but for the Qualifying Termination, prorated for the portion of the year during which the Executive was employed by the Company (which bonus will be determined in accordance with the Company’s corporate guidelines and distributed after completion of the Company’s fiscal year end audit). |
(iv) | Prompt reimbursement for any and all reimbursable business expenses (to the extent not already reimbursed) upon Executive’s properly accounting for the same. |
(v) | $12,000.00 payable in a single lump sum to assist with the Executive’s transition from employment. |
(b) | Termination By The Company For Cause Or By The Executive Without Good Reason. In the event Executive’s Separation from Service is terminated (A) by action of the Company for Cause; (B) by action of the Executive without Good Reason; or (C) by reason of the Executive’s death, Disability or retirement, the following compensation and benefits shall be paid and provided the Executive (or his beneficiary): |
(i) | The Executive’s annual salary provided through the effective date of Separation from Service, at the annual rate in effect at the time the Notice of Termination is given (or death occurs), to the extent unpaid prior to such Separation from Service. |
(ii) | Any vested rights of Executive in accordance with the Company’s plans, programs or policies. |
(iii) | Prompt reimbursement for any and all reimbursable business expenses (to the extent not already reimbursed) upon Executive’s properly accounting for the same. |
(1) | The annual salary due to the Executive through the date of his Separation from Service. |
(2) | A lump sum payment equal to an amount set forth on Schedule A to this Agreement (the “Severance Payment”). The Severance Payment shall be made by wire transfer or immediately available funds to an account designated by Executive following the date of the Separation from Service. |
(3) | A payment equal to the target annual bonus to which Executive would have been entitled but for Executive’s Separation from Service, for the year of Executive’s termination; pro-rated for the portion of the year during which he was employed by the Company (“Pro-rated Bonus”). |
(4) | Any vested rights of Executive in accordance with the Company’s plans, programs or policies. |
(5) | Prompt reimbursement for any and all reimbursable business expenses (to the extent not already reimbursed) upon Executive’s properly accounting for the same. |
(6) | $12,000.00 payable in a single lump sum to assist with the Executive’s transition from employment. |
(1) | If it is determined that any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Change in Control Payment”), would constitute an “excess parachute payment” within the meaning of Section 280G of the Code, then the Company shall pay to the Executive whichever of the following gives the Executive the highest net after-tax amount (after taking into account all applicable federal, state, local and social security taxes): (i) the Change in Control Payment, or (ii) the amount that would not result in the imposition of excise tax on the Executive under Section 4999 of the Code. Any required reduction in the Change in Control Payment pursuant to the foregoing shall be accomplished solely by reducing the amount of severance payment payable pursuant to paragraph 1(c)(i)(1) of this Agreement and then, to the extent necessary, paragraph 1(c)(i)(2) of this Agreement. |
(2) | All determinations to be made under this paragraph 1(c)(ii) shall be made by an independent public accounting firm selected by the Company immediately prior to the Change in Control (the “Accounting Firm”), which shall provide its determinations and any supporting calculations both to the Company and the Executive within ten (10) days of the Change in Control. Any such determination by the Accounting Firm shall be binding upon the Company and the Executive. All of the fees and expenses of the Accounting Firm in performing the determinations referred to in this paragraph 1(c)(iii) shall be borne solely by the Company. |
(d) | Continuation of Benefits. Following Executive’s Separation from Service, the Executive shall have the right to continue in the Company’s group health insurance plan or other Company benefit program, at his or her own cost and without any contribution by the Company, as may be required by COBRA or any other federal or state law or regulation. |
(e) | Limit on Company Liability. Except as expressly set forth in this paragraph 1, the Company shall have no obligation to Executive under this Agreement following Executive’s Separation from Service. Without limiting the generality of the provision of the foregoing sentence, the Company shall not, following Executive’s Separation from Service, have any obligation to provide any further benefit to Executive under this Agreement or make any further |
2. | Disclosure of Confidential Information. The Company has developed confidential information, strategies and programs, which include customer lists, prospects, lists, expansion and acquisition plans, market research, sales systems, marketing programs, computer systems and programs, product development strategies, manufacturing strategies and techniques, budgets, pricing strategies, identity and requirements of national accounts, customer lists, methods of operating, service systems, training programs and methods, other trade secrets and information about the business in which the Company is engaged that is not known to the public and gives the Company an opportunity to obtain an advantage over competitors who do not know of such information (collectively, “Confidential Information”), provided that the term “Confidential Information” shall not include (i) any such information that, prior to its use or disclosure by Executive, can be shown to have been in the public domain or generally known or available to customers, suppliers or competitors of the Company through no breach of the provisions of this Agreement or other non-disclosure covenants; (ii) any such information that, prior to its disclosure by the Executive, was rightfully in the receiving third party’s possession, without violation of the provisions of this Agreement or other non-disclosure covenants; and (iii) any such information that, prior to its disclosure by the Executive, was independently developed by the receiving third party without violation of the provisions of this Agreement or other non-disclosure covenants. In performing duties for the Company, Executive regularly will be exposed to and work with Confidential Information of the Company. Executive may also be exposed to and work with Confidential Information of the Company’s affiliates and subsidiaries. Executive acknowledges that Confidential Information of the Company and its affiliates and subsidiaries is critical to the Company’s success and that the Company and its affiliates and subsidiaries have invested substantial sums of money in developing the Confidential Information. While Executive is employed by the Company and after such employment ends for any reason, Executive will never reproduce, publish, disclose, use, reveal, show or otherwise communicate to any person or entity any Confidential Information of Company, its affiliates, and/or its subsidiaries unless specifically directed by the Company to do so in writing, provided that nothing herein shall prohibit the Executive from disclosing Confidential Information as required by law or pursuant to legal process. Executive agrees that whenever Executive’s employment with the Company ends for any reason, all documents containing or referring to Confidential Information of the Company, its affiliates, and/or its subsidiaries that may be in Executive’s possession or control will be delivered by Executive to the Company promptly upon the Company’s request. |
3. | Non-Interference with Personnel Relations. At any time while Executive is employed by the Company and at any time during the Restrictive Period after such employment ends for any reason, Executive acting either directly or indirectly, or through any other person, firm, or corporation, will not then, at such time, hire, contract with or employ any then employee of the Company, and/or any then employee of an affiliate or subsidiary of the Company with which Executive interacted or about which Executive gained Confidential Information during his employment with Company (“Restricted Employees”). Further, Executive will not induce or attempt to induce or influence any of the Restricted Employees to terminate employment with the Company, affiliate, and/or subsidiary. |
4. | Non-Competition. While Executive is employed by the Company and for the Restrictive Period after such employment ends, Executive will not, directly or indirectly, or through any other person, firm or corporation (i) be employed by, consult for, have any ownership interest in or engage in any activity on behalf of any company that engages in a Competing Business, as defined below, or (ii) call on, solicit or communicate with any of the Company’s customers or suppliers for any purpose related to a Competing Business, as defined below. A “Competing Business” is one that engages in the production, sale, or marketing of a product or service that is substantially similar to, or serves the same purpose as, any product or service produced, sold or marketed by the Company or any parent, subsidiary or affiliate of the Company with which Executive interacted or about which Executive gained Confidential Information during his employment with the Company. The term “customer” or “supplier” means any customer or supplier (whether actual or potential) with whom Executive or any other employee of the Company or any parent, subsidiary or affiliate of the Company had business contact during the eighteen (18) months immediately before Executive’s employment with the Company ended. Notwithstanding the foregoing, this paragraph shall not be construed to prohibit Executive from owning less than five percent (5%) of the outstanding securities of a corporation which is publicly traded on a securities exchange or over-the-counter. |
5. | Notification to Subsequent Employers. Executive grants the Company the right to notify any future employer or prospective employer of Executive concerning the existence of and terms of this Agreement and grants the Company the right to provide a copy of this Agreement to any such subsequent employer or prospective employer. |
6. | Company Proprietary Rights. |
(a) | Company to Retain Rights. Executive agrees that all right, title and interest of every kind and nature whatsoever in and to copyrights, patents, ideas, business or strategic plans and concepts, studies, presentations, creations, inventions, writings, properties, discoveries and all other intellectual property conceived by Executive during the term of this Agreement and pertaining to or useful in or to (directly or indirectly) the activities of the Company and/or any parent, subsidiary or affiliate of the Company (collectively, “Company Intellectual Property”) shall become and remain the exclusive property of the Company and/or such parent, subsidiary or affiliate, and Executive shall have no interest therein. |
(b) | Further Assurances. At the request of the Company, Executive shall, at the Company’s expense but without additional consideration, execute such documents and perform such other acts as the Company may deem necessary or appropriate to vest in the Company or its designee such title as Executive may have to all Company Intellectual Property in which Executive may be able to claim any rights by virtue of his employment under this Agreement. |
(c) | Return of Material. Upon the termination of the Executive’s employment under this Agreement at the Company’s written request, the Executive will promptly return to the Company all copies of information protected by paragraph 6(a) hereof which are in his possession, custody or control, whether prepared by him or others, and the Executive agrees that he shall not retain any of same. |
7. | Withholding. Any provision of this Agreement to the contrary notwithstanding, all payments made by the Company hereunder to the Executive or his estate or beneficiaries shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Company may reasonably determine should be withheld pursuant to any applicable law or regulation. In lieu of withholding such amounts, the Company may accept other provisions, provided that it has sufficient funds to pay all taxes required by law to be withheld in respect of any or all such payments. |
8. | Mitigation. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be subject to set off for any reason and shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against Executive or others. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this agreement and such amounts shall not be reduced whether or not Executive obtains other employment. |
9. | Notices. All notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be sufficiently given if and when mailed in the continental United States by registered or certified mail, or personally delivered to the party entitled thereto, at the address stated below or to such changed address as the addressee may have given by a similar notice: |
10. | Successors: Binding Agreement. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in the form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement. For purposes of this Agreement, “Company” shall include any successor |
11. | Modification, Waiver or Discharge. No provision of this Agreement may be modified or discharged unless such modification or discharge is authorized by the Board of Directors of the Company and is agreed to in writing, signed by the Executive and by an officer of the Company duly authorized by the Board. However, the Company may unilaterally revise the provisions of this Agreement governed by the provisions of Section 409A of the Code in order to make the Agreement compliant therewith, and as necessary under any provision of the Code or any other federal or state statute or regulation to prevent the imposition of any federal or state fine, tax, or penalty upon Company or Executive that would result from the performance of any provisions of this Agreement. No waiver by either party hereto of any breach by the other party hereto of any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the time or at any time or at any prior or subsequent time. |
12. | Entire Agreement. This Agreement constitutes the entire understanding of the parties hereto with respect to its subject matter and supersedes all prior agreements between the parties hereto with respect to its subject matter, including, but not limited to, all employment agreements, change of control agreements, non-competition agreements or any other agreement related to Executive’s employment with the Company; provided, however, nothing herein shall affect the terms of any indemnification agreement by and between the Company and Executive or any general indemnification policy in favor of Executive, which shall continue and remain in full force and effect. |
13. | Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Tennessee, without regard to its conflict of laws principles, to the extent federal law does not apply. |
14. | Resolution of Disputes. Any dispute or claim arising out of or relating to this Agreement shall be settled by final and binding arbitration in Johnson City, Tennessee in accordance with the Commercial Arbitration rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The fees and expenses of the arbitration panel shall be equally borne by the Company and Executive. Each party shall be liable for its own costs and expenses as a result of any dispute related to this Agreement. |
15. | Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which latter provisions shall remain in full force and effect. |
16. | Compliance with Section 409A. |
(a) | General. It is intended that the Agreement will comply with Section 409A of the Code and the regulations and other guidance thereunder (“Section 409A”), and the Agreement shall be interpreted consistent with such intent. As permitted by Section 409A, each installment or other payment made or benefit provided hereunder shall be treated as “separate payment” for purposes of Section 409A and the available exemptions under Section 409A shall be stacked to the maximum extent possible. This Agreement may be amended in any respect deemed necessary (including retroactively) by the Company in order to pursue compliance with Section 409A. The foregoing shall not be construed as a guarantee of any particular tax effect for benefits under this Agreement. The Executive or any beneficiary, as applicable, is solely responsible and liable for the satisfaction of all taxes, interest and penalties that may be imposed on the Executive or any beneficiary in connection with any payments to the Executive or beneficiary under the Agreement, including any taxes, interest and penalties under Section 409A, and neither the Company nor any director, officer or affiliate shall have any obligation to indemnify or otherwise hold the Executive or a beneficiary harmless from any and all of such taxes, interest and penalties. To the extent Executive is entitled to be paid or reimbursed for any taxable expenses under this Agreement, and such payments or reimbursements are includible in Executive’s federal gross taxable income, the amount of such expenses reimbursable in any one calendar year shall not affect the amount reimbursable in any other calendar year, and the reimbursement of an eligible expense shall be made no later than December 31 of the year after the year in which the expense was incurred. Executive’s right to reimbursement of expenses under this Agreement shall not be subject to liquidation or exchange for another benefit. |
(b) | Six Month Delay for Specified Employees. Notwithstanding anything in the Agreement to the contrary, if the Executive is determined to be a “specified employee” (as defined in Section 409A) for the year in which the Executive incurs a Separation from Service, any payment due under the Agreement that is not permitted to be paid on the date of such separation without the imposition of additional taxes, interest and penalties under Section 409A shall be paid on the first business day following the six-month anniversary of the Executive's date of separation or, if earlier, the Executive's death. |
17. | No Adequate Remedy At Law. The Company and the Executive recognize that each party may have no adequate remedy at law for breach by the other of any of the agreements contained herein, and particularly a breach of paragraphs 2, 3, 4, and 6, and, in the event of any such breach, the Company and the Executive hereby agree and consent that the other shall be entitled to injunctive relief or other appropriate remedy to enforce performance of such agreements. |
18. | Non-Assignability. This Agreement, and the rights and obligations of the parties hereunder, are personal and neither this Agreement, nor any right, benefit or obligation of either party hereto, shall |
19. | Headings. The section headings contained in this Agreement are for convenience of reference only and will not be deemed to control or affect the meaning or construction of any provision of this Agreement. Reference to paragraphs are to paragraphs in this Agreement. |
20. | Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but of which together will constitute one and the same instrument. |
21. | Definitions. For purposes of this Agreement, the following terms shall have the following meanings: |
(i) | the failure of the Executive to perform the Executive’s duties under this Agreement (other than as a result of physical or mental illness or injury), which failure, if correctable, and provided it does not constitute willful misconduct or gross negligence, remains uncorrected for 10 days following written notice to Executive by the Chief Executive Officer or the Board of Directors of the Company of such breach; |
(ii) | willful misconduct or gross negligence by the Executive in either case that results in material damage to the business or reputation of the Company; |
(iii) | a material breach by Executive of this Agreement which, if correctable, remains uncorrected for 10 days following written notice to Executive by the Chief Executive Officer or the Board of Directors of the Company of such breach; or |
(iv) | the Executive is convicted of a felony or any other crime (other than traffic violations) involving moral turpitude (whether or not in connection with the performance by Executive of his duties under this Agreement). |
(i) | A person, corporation, entity or group (1) makes a tender or exchange offer for the issued and outstanding voting stock of NN, Inc., (“NN”) and beneficially owns fifty percent (50%) or more of the issued and outstanding voting stock of NN after such tender or exchange offer, or (2) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person, corporation, entity or group), directly or indirectly, the beneficial ownership of fifty percent (50%) or |
(ii) | NN is a party to a merger, consolidation or similar transaction and following such transaction, fifty percent (50%) or more of the issued and outstanding voting stock of the resulting entity is not beneficially owned by those persons, corporations or entities that constituted the stockholders of NN immediately prior to the transaction; |
(iii) | NN sells fifty percent (50%) or more of its assets to any other person or persons (other than an affiliate or affiliates of NN); or |
(iv) | Individuals who, during any 12-month period, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least seventy-five percent (75%) of the Board of Directors of NN; provided, however, that any individual becoming a director whose election or nomination was approved by a majority of the directors than comprising the Incumbent Board, shall be considered a member of the Incumbent Board, but not including any individual whose initial board membership is a result of an actual or threatened election contest (as that term is used in Rule 14a-11 promulgated under the Securities Act of 1934, as amended) or an actual or threatened solicitation of proxies or consents by or on behalf of a party other than the Board. |
(c) | “Code” means the Internal Revenue Code of 1986 as amended. |
(d) | “Disability” means the Executive (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees or directors of the Company. Executive will be deemed Disabled if he is determined to be totally disabled by the Social Security Administration, or if Executive is determined to be disabled in accordance with a disability insurance program maintained by the Company if the definition of “disability” applied under such disability insurance program complies with the requirements of the preceding sentence. Upon the request of the plan administrator, the Executive must submit proof to the plan administrator of the Social Security Administration’s or the provider’s determination. |
(e) | “Good Reason” means any of the following events if not remedied by the Company within 30 days after receipt of notice thereof from the Executive: (i) assignment to the Executive of any duties inconsistent with Executive’s position duties, responsibilities, office, or any other action by the Company that results in a material diminution in the Executive’s position, authority, duties or responsibilities; (ii) any material failure by the Company to comply with this Agreement; (iii) any material adverse change in Executive’s annual compensation and other benefits; or (iv) a requirement to relocate Executive’s place of employment in excess of fifty (50) miles from the current principal office of the Company as of the date hereof. |
(f) | “Notice of Termination” means a written notice which shall include the specific termination provision under this Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment. Any purported termination of the Executive’s employment hereunder by action of either party shall be communicated by delivery of a Notice of Termination to the other party. Any termination by Executive of his employment without Good Reason shall be made on not less than 14 days’ notice. |
(g) | “Qualifying Termination” means a Separation from Service by action of the Company that is not for Cause, or a Separation from Service by action of the Executive that is for Good Reason. |
(h) | “Restrictive Period” means (i) a number of months following Executive’s termination of employment pursuant to paragraph 1(a) or 1(c) above which is equal to the number of months for which the Executive is entitled to receive his base salary under paragraph 1(a) or 1(c) above, or a period of 12 months following Executive’s termination of employment pursuant to paragraph 1(b) above. |
(i) | “Separation from Service” means Executive’s “separation from service” as defined in Treasury Regulation Section 1.409A-1(h). |
1. | 2.0 times Executive’s base salary (as of the date of Executive’s termination); plus |
2. | 1.0 times Executive’s target bonus. |
1. | Compensation and Benefits in the Event of Separation from Service. In the event of the Executive’s Separation from Service, compensation and benefits shall be paid as set forth below. |
(a) | Qualifying Termination Prior To A Change In Control. If the Executive has a Qualifying Termination after the Effective Date and prior to a Change in Control, then upon such Qualifying Termination the Executive shall be entitled to receive the following: |
(i) | The Executive’s annual salary through the effective date of Separation from Service, at the annual rate in effect at the time the Notice of Termination is given (or death occurs), to the extent unpaid prior to such Separation from Service. |
(ii) | In consideration of Executive’s prior service to the Company an amount equal to 18 months of his annual base salary in effect on the date of his Separation from Service. These amounts shall be payable in accordance with the Company’s regular payroll procedures over the 18 month period following the Executive’s Separation from Service. |
(iii) | Any vested rights of Executive in accordance with the Company’s plans, programs or policies. A payment equal to the target annual bonus to which the Executive would have been entitled but for the Qualifying Termination, prorated for the portion of the year during which the Executive was employed by the Company (which bonus will be determined in accordance with the Company’s corporate guidelines and distributed after completion of the Company’s fiscal year end audit). |
(iv) | Prompt reimbursement for any and all reimbursable business expenses (to the extent not already reimbursed) upon Executive’s properly accounting for the same. |
(v) | $12,000.00 payable in a single lump sum to assist with the Executive’s transition from employment. |
(b) | Termination By The Company For Cause Or By The Executive Without Good Reason. In the event Executive’s Separation from Service is terminated (A) by action of the Company for Cause; (B) by action of the Executive without Good Reason; or (C) by reason of the Executive’s death, Disability or retirement, the following compensation and benefits shall be paid and provided the Executive (or his beneficiary): |
(i) | The Executive’s annual salary provided through the effective date of Separation from Service, at the annual rate in effect at the time the Notice of Termination is given (or death occurs), to the extent unpaid prior to such Separation from Service. |
(ii) | Any vested rights of Executive in accordance with the Company’s plans, programs or policies. |
(iii) | Prompt reimbursement for any and all reimbursable business expenses (to the extent not already reimbursed) upon Executive’s properly accounting for the same. |
(1) | The annual salary due to the Executive through the date of his Separation from Service. |
(2) | A lump sum payment equal to an amount set forth on Schedule A to this Agreement (the “Severance Payment”). The Severance Payment shall be made by wire transfer or immediately available funds to an account designated by Executive following the date of the Separation from Service. |
(3) | A payment equal to the target annual bonus to which Executive would have been entitled but for Executive’s Separation from Service, for the year of Executive’s termination; pro-rated for the portion of the year during which he was employed by the Company (“Pro-rated Bonus”). |
(4) | Any vested rights of Executive in accordance with the Company’s plans, programs or policies. |
(5) | Prompt reimbursement for any and all reimbursable business expenses (to the extent not already reimbursed) upon Executive’s properly accounting for the same. |
(6) | $12,000.00 payable in a single lump sum to assist with the Executive’s transition from employment. |
(1) | If it is determined that any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Change in Control Payment”), would constitute an “excess parachute payment” within the meaning of Section 280G of the Code, then the Company shall pay to the Executive whichever of the following gives the Executive the highest net after-tax amount (after taking into account all applicable federal, state, local and social security taxes): (i) the Change in Control Payment, or (ii) the amount that would not result in the imposition of excise tax on the Executive under Section 4999 of the Code. Any required reduction in the Change in Control Payment pursuant to the foregoing shall be accomplished solely by reducing the amount of severance payment payable pursuant to paragraph 1(c)(i)(1) of this Agreement and then, to the extent necessary, paragraph 1(c)(i)(2) of this Agreement. |
(2) | All determinations to be made under this paragraph 1(c)(ii) shall be made by an independent public accounting firm selected by the Company immediately prior to the Change in Control (the “Accounting Firm”), which shall provide its determinations and any supporting calculations both to the Company and the Executive within ten (10) days of the Change in Control. Any such determination by the Accounting Firm shall be binding upon the Company and the Executive. All of the fees and expenses of the Accounting Firm in performing the determinations referred to in this paragraph 1(c)(iii) shall be borne solely by the Company. |
(d) | Continuation of Benefits. Following Executive’s Separation from Service, the Executive shall have the right to continue in the Company’s group health insurance plan or other Company benefit program, at his or her own cost and without any contribution by the Company, as may be required by COBRA or any other federal or state law or regulation. |
(e) | Limit on Company Liability. Except as expressly set forth in this paragraph 1, the Company shall have no obligation to Executive under this Agreement following Executive’s Separation from Service. Without limiting the generality of the provision of the foregoing sentence, the Company shall not, following Executive’s Separation from Service, have any obligation to provide any further benefit to Executive under this Agreement or make any further |
2. | Disclosure of Confidential Information. The Company has developed confidential information, strategies and programs, which include customer lists, prospects, lists, expansion and acquisition plans, market research, sales systems, marketing programs, computer systems and programs, product development strategies, manufacturing strategies and techniques, budgets, pricing strategies, identity and requirements of national accounts, customer lists, methods of operating, service systems, training programs and methods, other trade secrets and information about the business in which the Company is engaged that is not known to the public and gives the Company an opportunity to obtain an advantage over competitors who do not know of such information (collectively, “Confidential Information”), provided that the term “Confidential Information” shall not include (i) any such information that, prior to its use or disclosure by Executive, can be shown to have been in the public domain or generally known or available to customers, suppliers or competitors of the Company through no breach of the provisions of this Agreement or other non-disclosure covenants; (ii) any such information that, prior to its disclosure by the Executive, was rightfully in the receiving third party’s possession, without violation of the provisions of this Agreement or other non-disclosure covenants; and (iii) any such information that, prior to its disclosure by the Executive, was independently developed by the receiving third party without violation of the provisions of this Agreement or other non-disclosure covenants. In performing duties for the Company, Executive regularly will be exposed to and work with Confidential Information of the Company. Executive may also be exposed to and work with Confidential Information of the Company’s affiliates and subsidiaries. Executive acknowledges that Confidential Information of the Company and its affiliates and subsidiaries is critical to the Company’s success and that the Company and its affiliates and subsidiaries have invested substantial sums of money in developing the Confidential Information. While Executive is employed by the Company and after such employment ends for any reason, Executive will never reproduce, publish, disclose, use, reveal, show or otherwise communicate to any person or entity any Confidential Information of Company, its affiliates, and/or its subsidiaries unless specifically directed by the Company to do so in writing, provided that nothing herein shall prohibit the Executive from disclosing Confidential Information as required by law or pursuant to legal process. Executive agrees that whenever Executive’s employment with the Company ends for any reason, all documents containing or referring to Confidential Information of the Company, its affiliates, and/or its subsidiaries that may be in Executive’s possession or control will be delivered by Executive to the Company promptly upon the Company’s request. |
3. | Non-Interference with Personnel Relations. At any time while Executive is employed by the Company and at any time during the Restrictive Period after such employment ends for any reason, Executive acting either directly or indirectly, or through any other person, firm, or corporation, will not then, at such time, hire, contract with or employ any then employee of the Company, and/or any then employee of an affiliate or subsidiary of the Company with which Executive interacted or about which Executive gained Confidential Information during his employment with Company (“Restricted Employees”). Further, Executive will not induce or attempt to induce or influence any of the Restricted Employees to terminate employment with the Company, affiliate, and/or subsidiary. |
4. | Non-Competition. While Executive is employed by the Company and for the Restrictive Period after such employment ends, Executive will not, directly or indirectly, or through any other person, firm or corporation (i) be employed by, consult for, have any ownership interest in or engage in any activity on behalf of any company that engages in a Competing Business, as defined below, or (ii) call on, solicit or communicate with any of the Company’s customers or suppliers for any purpose related to a Competing Business, as defined below. A “Competing Business” is one that engages in the production, sale, or marketing of a product or service that is substantially similar to, or serves the same purpose as, any product or service produced, sold or marketed by the Company or any parent, subsidiary or affiliate of the Company with which Executive interacted or about which Executive gained Confidential Information during his employment with the Company. The term “customer” or “supplier” means any customer or supplier (whether actual or potential) with whom Executive or any other employee of the Company or any parent, subsidiary or affiliate of the Company had business contact during the eighteen (18) months immediately before Executive’s employment with the Company ended. Notwithstanding the foregoing, this paragraph shall not be construed to prohibit Executive from owning less than five percent (5%) of the outstanding securities of a corporation which is publicly traded on a securities exchange or over-the-counter. |
5. | Notification to Subsequent Employers. Executive grants the Company the right to notify any future employer or prospective employer of Executive concerning the existence of and terms of this Agreement and grants the Company the right to provide a copy of this Agreement to any such subsequent employer or prospective employer. |
6. | Company Proprietary Rights. |
(a) | Company to Retain Rights. Executive agrees that all right, title and interest of every kind and nature whatsoever in and to copyrights, patents, ideas, business or strategic plans and concepts, studies, presentations, creations, inventions, writings, properties, discoveries and all other intellectual property conceived by Executive during the term of this Agreement and pertaining to or useful in or to (directly or indirectly) the activities of the Company and/or any parent, subsidiary or affiliate of the Company (collectively, “Company Intellectual Property”) shall become and remain the exclusive property of the Company and/or such parent, subsidiary or affiliate, and Executive shall have no interest therein. |
(b) | Further Assurances. At the request of the Company, Executive shall, at the Company’s expense but without additional consideration, execute such documents and perform such other acts as the Company may deem necessary or appropriate to vest in the Company or its designee such title as Executive may have to all Company Intellectual Property in which Executive may be able to claim any rights by virtue of his employment under this Agreement. |
(c) | Return of Material. Upon the termination of the Executive’s employment under this Agreement at the Company’s written request, the Executive will promptly return to the Company all copies of information protected by paragraph 6(a) hereof which are in his possession, custody or control, whether prepared by him or others, and the Executive agrees that he shall not retain any of same. |
7. | Withholding. Any provision of this Agreement to the contrary notwithstanding, all payments made by the Company hereunder to the Executive or his estate or beneficiaries shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Company may reasonably determine should be withheld pursuant to any applicable law or regulation. In lieu of withholding such amounts, the Company may accept other provisions, provided that it has sufficient funds to pay all taxes required by law to be withheld in respect of any or all such payments. |
8. | Mitigation. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be subject to set off for any reason and shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against Executive or others. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this agreement and such amounts shall not be reduced whether or not Executive obtains other employment. |
9. | Notices. All notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be sufficiently given if and when mailed in the continental United States by registered or certified mail, or personally delivered to the party entitled thereto, at the address stated below or to such changed address as the addressee may have given by a similar notice: |
10. | Successors: Binding Agreement. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in the form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement. For purposes of this Agreement, “Company” shall include any successor |
11. | Modification, Waiver or Discharge. No provision of this Agreement may be modified or discharged unless such modification or discharge is authorized by the Board of Directors of the Company and is agreed to in writing, signed by the Executive and by an officer of the Company duly authorized by the Board. However, the Company may unilaterally revise the provisions of this Agreement governed by the provisions of Section 409A of the Code in order to make the Agreement compliant therewith, and as necessary under any provision of the Code or any other federal or state statute or regulation to prevent the imposition of any federal or state fine, tax, or penalty upon Company or Executive that would result from the performance of any provisions of this Agreement. No waiver by either party hereto of any breach by the other party hereto of any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the time or at any time or at any prior or subsequent time. |
12. | Entire Agreement. This Agreement constitutes the entire understanding of the parties hereto with respect to its subject matter and supersedes all prior agreements between the parties hereto with respect to its subject matter, including, but not limited to, all employment agreements, change of control agreements, non-competition agreements or any other agreement related to Executive’s employment with the Company; provided, however, nothing herein shall affect the terms of any indemnification agreement by and between the Company and Executive or any general indemnification policy in favor of Executive, which shall continue and remain in full force and effect. |
13. | Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Tennessee, without regard to its conflict of laws principles, to the extent federal law does not apply. |
14. | Resolution of Disputes. Any dispute or claim arising out of or relating to this Agreement shall be settled by final and binding arbitration in Johnson City, Tennessee in accordance with the Commercial Arbitration rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The fees and expenses of the arbitration panel shall be equally borne by the Company and Executive. Each party shall be liable for its own costs and expenses as a result of any dispute related to this Agreement. |
15. | Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which latter provisions shall remain in full force and effect. |
16. | Compliance with Section 409A. |
(a) | General. It is intended that the Agreement will comply with Section 409A of the Code and the regulations and other guidance thereunder (“Section 409A”), and the Agreement shall be interpreted consistent with such intent. As permitted by Section 409A, each installment or other payment made or benefit provided hereunder shall be treated as “separate payment” for purposes of Section 409A and the available exemptions under Section 409A shall be stacked to the maximum extent possible. This Agreement may be amended in any respect deemed necessary (including retroactively) by the Company in order to pursue compliance with Section 409A. The foregoing shall not be construed as a guarantee of any particular tax effect for benefits under this Agreement. The Executive or any beneficiary, as applicable, is solely responsible and liable for the satisfaction of all taxes, interest and penalties that may be imposed on the Executive or any beneficiary in connection with any payments to the Executive or beneficiary under the Agreement, including any taxes, interest and penalties under Section 409A, and neither the Company nor any director, officer or affiliate shall have any obligation to indemnify or otherwise hold the Executive or a beneficiary harmless from any and all of such taxes, interest and penalties. To the extent Executive is entitled to be paid or reimbursed for any taxable expenses under this Agreement, and such payments or reimbursements are includible in Executive’s federal gross taxable income, the amount of such expenses reimbursable in any one calendar year shall not affect the amount reimbursable in any other calendar year, and the reimbursement of an eligible expense shall be made no later than December 31 of the year after the year in which the expense was incurred. Executive’s right to reimbursement of expenses under this Agreement shall not be subject to liquidation or exchange for another benefit. |
(b) | Six Month Delay for Specified Employees. Notwithstanding anything in the Agreement to the contrary, if the Executive is determined to be a “specified employee” (as defined in Section 409A) for the year in which the Executive incurs a Separation from Service, any payment due under the Agreement that is not permitted to be paid on the date of such separation without the imposition of additional taxes, interest and penalties under Section 409A shall be paid on the first business day following the six-month anniversary of the Executive's date of separation or, if earlier, the Executive's death. |
17. | No Adequate Remedy At Law. The Company and the Executive recognize that each party may have no adequate remedy at law for breach by the other of any of the agreements contained herein, and particularly a breach of paragraphs 2, 3, 4, and 6, and, in the event of any such breach, the Company and the Executive hereby agree and consent that the other shall be entitled to injunctive relief or other appropriate remedy to enforce performance of such agreements. |
18. | Non-Assignability. This Agreement, and the rights and obligations of the parties hereunder, are personal and neither this Agreement, nor any right, benefit or obligation of either party hereto, shall |
19. | Headings. The section headings contained in this Agreement are for convenience of reference only and will not be deemed to control or affect the meaning or construction of any provision of this Agreement. Reference to paragraphs are to paragraphs in this Agreement. |
20. | Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but of which together will constitute one and the same instrument. |
21. | Definitions. For purposes of this Agreement, the following terms shall have the following meanings: |
(i) | the failure of the Executive to perform the Executive’s duties under this Agreement (other than as a result of physical or mental illness or injury), which failure, if correctable, and provided it does not constitute willful misconduct or gross negligence, remains uncorrected for 10 days following written notice to Executive by the Chief Executive Officer or the Board of Directors of the Company of such breach; |
(ii) | willful misconduct or gross negligence by the Executive in either case that results in material damage to the business or reputation of the Company; |
(iii) | a material breach by Executive of this Agreement which, if correctable, remains uncorrected for 10 days following written notice to Executive by the Chief Executive Officer or the Board of Directors of the Company of such breach; or |
(iv) | the Executive is convicted of a felony or any other crime (other than traffic violations) involving moral turpitude (whether or not in connection with the performance by Executive of his duties under this Agreement). |
(i) | A person, corporation, entity or group (1) makes a tender or exchange offer for the issued and outstanding voting stock of NN, Inc., (“NN”) and beneficially owns fifty percent (50%) or more of the issued and outstanding voting stock of NN after such tender or exchange offer, or (2) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person, corporation, entity or group), directly or indirectly, the beneficial ownership of fifty percent (50%) or |
(ii) | NN is a party to a merger, consolidation or similar transaction and following such transaction, fifty percent (50%) or more of the issued and outstanding voting stock of the resulting entity is not beneficially owned by those persons, corporations or entities that constituted the stockholders of NN immediately prior to the transaction; |
(iii) | NN sells fifty percent (50%) or more of its assets to any other person or persons (other than an affiliate or affiliates of NN); or |
(iv) | Individuals who, during any 12-month period, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least seventy-five percent (75%) of the Board of Directors of NN; provided, however, that any individual becoming a director whose election or nomination was approved by a majority of the directors than comprising the Incumbent Board, shall be considered a member of the Incumbent Board, but not including any individual whose initial board membership is a result of an actual or threatened election contest (as that term is used in Rule 14a-11 promulgated under the Securities Act of 1934, as amended) or an actual or threatened solicitation of proxies or consents by or on behalf of a party other than the Board. |
(c) | “Code” means the Internal Revenue Code of 1986 as amended. |
(d) | “Disability” means the Executive (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees or directors of the Company. Executive will be deemed Disabled if he is determined to be totally disabled by the Social Security Administration, or if Executive is determined to be disabled in accordance with a disability insurance program maintained by the Company if the definition of “disability” applied under such disability insurance program complies with the requirements of the preceding sentence. Upon the request of the plan administrator, the Executive must submit proof to the plan administrator of the Social Security Administration’s or the provider’s determination. |
(e) | “Good Reason” means any of the following events if not remedied by the Company within 30 days after receipt of notice thereof from the Executive: (i) assignment to the Executive of any duties inconsistent with Executive’s position duties, responsibilities, office, or any other action by the Company that results in a material diminution in the Executive’s position, authority, duties or responsibilities; (ii) any material failure by the Company to comply with this Agreement; (iii) any material adverse change in Executive’s annual compensation and other benefits; or (iv) a requirement to relocate Executive’s place of employment in excess of fifty (50) miles from the current principal office of the Company as of the date hereof. |
(f) | “Notice of Termination” means a written notice which shall include the specific termination provision under this Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment. Any purported termination of the Executive’s employment hereunder by action of either party shall be communicated by delivery of a Notice of Termination to the other party. Any termination by Executive of his employment without Good Reason shall be made on not less than 14 days’ notice. |
(g) | “Qualifying Termination” means a Separation from Service by action of the Company that is not for Cause, or a Separation from Service by action of the Executive that is for Good Reason. |
(h) | “Restrictive Period” means (i) a number of months following Executive’s termination of employment pursuant to paragraph 1(a) or 1(c) above which is equal to the number of months for which the Executive is entitled to receive his base salary under paragraph 1(a) or 1(c) above, or a period of 12 months following Executive’s termination of employment pursuant to paragraph 1(b) above. |
(i) | “Separation from Service” means Executive’s “separation from service” as defined in Treasury Regulation Section 1.409A-1(h). |
1. | 2.0 times Executive’s base salary (as of the date of Executive’s termination); plus |
2. | 1.0 times Executive’s target bonus. |
1) | I have reviewed this quarterly report on Form 10-Q of NN, Inc.; |
2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4) | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5) | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
May 10, 2019 | /s/ Richard D. Holder | |||
Richard D. Holder | ||||
President, Chief Executive Officer and Director | ||||
(Principal Executive Officer) |
1) | I have reviewed this quarterly report on Form 10-Q of NN, Inc.; |
2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4) | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5) | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
May 10, 2019 | /s/ Thomas C. Burwell, Jr. | |||
Thomas C. Burwell, Jr. | ||||
Senior Vice President – Chief Financial Officer | ||||
(Principal Financial Officer) |
May 10, 2019 | /s/ Richard D. Holder | |||
Richard D. Holder | ||||
President, Chief Executive Officer and Director (Principal Executive Officer) |
May 10, 2019 | /s/ Thomas C. Burwell, Jr. | |||
Thomas C. Burwell, Jr. | ||||
Senior Vice President – Chief Financial Officer (Principal Financial Officer) |
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Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
May 03, 2019 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | NN INC | |
Entity Central Index Key | 0000918541 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Trading Symbol | NNBR | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 42,366,961 |
Condensed Consolidated Balance Sheets - Parenthetical - $ / shares |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 45,000,000 | 45,000,000 |
Common stock, shares issued (in shares) | 42,367,000 | 42,104,000 |
Common stock, shares outstanding (in shares) | 42,367,000 | 42,104,000 |
Condensed Consolidated Statement of Changes in Stockholders' Equity (Parenthetical) $ in Thousands |
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Mar. 31, 2019
USD ($)
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Statement of Stockholders' Equity [Abstract] | |
Change in fair value interest rate swap, tax | $ 1,104 |
Interim Financial Statements |
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Mar. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Interim Financial Statements | Interim Financial Statements Nature of Business NN, Inc., is a global diversified industrial company that combines advanced engineering and production capabilities with in-depth materials science expertise to design and manufacture high-precision components and assemblies for the medical, aerospace and defense, electrical, automotive, and general industrial markets. 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. As of March 31, 2019, we had 51 facilities in North America, Europe, South America, and China. Basis of Presentation The accompanying condensed consolidated financial statements have not been audited, except that the Condensed Consolidated Balance Sheet as of December 31, 2018, was derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 Annual Report”), which we filed with the U.S. Securities and Exchange Commission (the “SEC”), on March 18, 2019. In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary to fairly state our results of operations for the three months ended March 31, 2019 and 2018; financial position as of March 31, 2019, and December 31, 2018; and cash flows for the three months ended March 31, 2019 and 2018, on a basis consistent with our audited consolidated financial statements other than the adoption of new accounting standards, such as the new lease standard (see Note 10). These adjustments are of a normal recurring nature and are, in the opinion of management, necessary to state fairly the Company’s 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 accounting principles generally accepted in the United States (“U.S. GAAP”) 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 accompanying notes included in the 2018 Annual Report. The results for the three months ended March 31, 2019, are not necessarily indicative of results for the year ending December 31, 2019, or any other future periods. Except for per share data or as otherwise indicated, all U.S. dollar amounts presented in the tables in these Notes to Condensed Consolidated Financial Statements are in thousands. Accounting Standards Recently Adopted Leases. On January 1, 2019, we adopted Accounting Standards Codification (“ASC”) 842, Leases, which superseded ASC 840, Leases. We adopted ASC 842 utilizing the modified retrospective transition approach, therefore, historical financial information and disclosures do not reflect the new standard and will continue to be presented under the previous lease accounting guidance. Under the modified retrospective transition method, we recognized the cumulative effect of the initial adoption adjustment to the opening balance of retained deficit as of January 1, 2019. The adoption adjustment to retained deficit was less than $0.1 million. As part of the adoption of ASC 842, we elected the package of practical expedients, the short-term lease exemption, and the practical expedient to not separate lease and non-lease components. We recorded lease-related assets and liabilities to our balance sheet for leases with terms greater than twelve months that were classified as operating leases and not previously recorded on our balance sheet. See Note 10 for the required disclosures related to ASC 842. Derivatives and Hedging. In August 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, (“ASU 2017-12”). ASU 2017-12 provides new rules that expand the hedging strategies that qualify for hedge accounting. The new rules also allow additional time to complete hedge effectiveness testing and allow qualitative assessments subsequent to initial quantitative tests if there is supportable expectation that the hedge will remain highly effective. We adopted the guidance on January 1, 2019. We have applied the new rules to 2019 hedging activities as disclosed in Note 16 to these condensed consolidated financial statements. The new guidance has no effect on our historical financial statements. Effects of Tax Reform in Other Comprehensive Income. In February 2018, the FASB issued guidance related to the impacts of the U.S. Tax Cuts and Jobs Act of 2017 (“Tax Act”). Under existing U.S. GAAP, the effects of changes in tax rates and laws on deferred tax balances are recorded as a component of income tax expense in the period in which the law was enacted. When deferred tax balances related to items originally recorded in accumulated other comprehensive income (“AOCI”) are adjusted, certain tax effects become stranded in AOCI. The FASB issued ASU 2018-2, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, that permits reclassification of certain income tax effects of the Tax Act from AOCI to retained earnings. The guidance also requires certain disclosures about stranded tax effects. The new guidance was effective for us on January 1, 2019. We adopted the new guidance at the beginning of the period of adoption. The new guidance had no effect on our financial statements. Accounting Standards Not Yet Adopted Fair Value Disclosures. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, that modifies fair value disclosure requirements. The new guidance could impact us by streamlining disclosures of Level 3 fair value measurements. The modified disclosures are effective for NN beginning in the first quarter of 2020, with early adoption allowed. ASU 2018-13 changes only disclosures and does not impact our financial condition, results of operations, or cash flows. We are in the process of evaluating the effects of this guidance on our fair value disclosures. Internal-Use Software. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force), that provides guidance on a customer’s accounting for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by the vendor. Under the new guidance, customers will apply the same criteria for capitalizing implementation costs as they would for an arrangement that has a software license. ASU 2018-15 is effective for us on January 1, 2020, using either a prospective or retrospective approach and with early adoption permitted. We are in the process of evaluating the effects of this guidance on our financial statements. |
Acquisitions |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions Paragon Medical, Inc. On May 7, 2018, we acquired 100% of the stock of PMG Intermediate Holding Corporation, the parent company of Paragon Medical, Inc. (“Paragon Medical”). For accounting purposes, Paragon Medical meets the definition of a business and has been accounted for as a business combination. Paragon Medical is a medical device manufacturer which focuses on the orthopedic, case and tray, implant, and instrument markets. This acquisition continues our strategic focus to expand our Life Sciences portfolio as well as create a balanced business by diversifying our products and finished device offerings. We have performed an assessment of the opening balance sheet which is subject to completion of our internal review procedures over fair value estimates. Opening balance sheet deferred taxes have been recorded based on estimates made as of the acquisition date as well as information currently available to management. As estimates are refined and additional information is received throughout the measurement period, adjustments to opening deferred taxes may be recorded with an offsetting adjustment to goodwill. Beginning May 7, 2018, our consolidated results of operations include the results of Paragon Medical. The unaudited pro forma financial results shown in the table below for the three months ended March 31, 2018, combine the consolidated results of NN and Paragon Medical giving effect to the Paragon Medical acquisition as if it had been completed on January 1, 2017. The unaudited pro forma financial results do not give effect to any of our other acquisitions that occurred after January 1, 2017, and do not include any anticipated synergies or other assumed benefits of the Paragon Medical acquisition. This unaudited pro forma financial information is presented for informational purposes only and is not indicative of future operations or results had the Paragon Medical acquisition been completed as of January 1, 2017. The unaudited pro forma financial results include certain adjustments for debt service costs and additional depreciation and amortization expense based upon the fair value step-up and estimated useful lives of Paragon Medical depreciable fixed assets and definite-life amortizable assets acquired. The provision for income taxes has also been adjusted for all periods, based upon the foregoing adjustments to historical results.
Other Acquisitions Bridgemedica, LLC. On February 22, 2018, we completed the acquisition of 100% of the assets of Bridgemedica, LLC (“Bridgemedica”). For accounting purposes, Bridgemedica meets the definition of a business and has been accounted for as a business combination. Bridgemedica is a medical device company that provides concept to supply solutions through design, development engineering, and manufacturing. Operating results of Bridgemedica are reported in our Life Sciences group after the acquisition date. We have finalized the purchase price allocation with no material changes to the initial allocation. Southern California Technical Arts, Inc. On August 9, 2018, we completed the acquisition of 100% of the capital stock of Southern California Technical Arts, Inc. (“Technical Arts”). For accounting purposes, Technical Arts meets the definition of a business and has been accounted for as a business combination. Technical Arts is an industrial machining company that manufactures tight tolerance metal components and assemblies. The acquisition of Technical Arts expands our presence in the aerospace and defense end market. Operating results of Technical Arts are reported in our Power Solutions group after the acquisition date. We have completed a preliminary purchase price allocation and are in the process of finalizing the fair value of assets acquired and liabilities assumed. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information We determined our reportable segments under the provisions of U.S. GAAP related to disclosures about segments of an enterprise. Management has concluded that Mobile Solutions, Power Solutions, and Life Sciences each constitutes an operating segment as each engages in business activities for which it earns revenues and incurs expenses for which separate financial information is available, and this is the level at which the Chief Operating Decision Maker (“CODM”) reviews discrete financial information for purposes of allocating resources and assessing performance. Mobile Solutions Mobile Solutions is focused on growth in the general industrial and automotive end markets. We have developed an expertise in manufacturing highly complex, system critical components for fuel systems, engines and transmissions, power steering systems, and electromechanical motors on a high-volume basis. This expertise has been gained through investment in technical capabilities, processes and systems, and skilled program management and product launch capabilities. Power Solutions Power Solutions is focused on growth in the electrical and aerospace and defense end markets. Within this group we combine materials science expertise with advanced engineering and production capabilities to design and manufacture a broad range of high-precision metal and plastic components, assemblies, and finished devices used in applications ranging from power control to flight control and for military devices. We manufacture a variety of products including electrical contacts, connectors, contact assemblies, and precision stampings for the electrical end market and high precision products for the aerospace and defense end markets utilizing our extensive process technologies for optical grade plastics, thermally conductive plastics, titanium, Inconel, magnesium, and electroplating. Life Sciences Life Sciences is focused on growth in the medical end market. Within this group we combine advanced engineering and production capabilities to design and manufacture a broad range of high-precision metal and plastic components, assemblies, and finished devices. We manufacture a variety of components, assemblies, and instruments, such as surgical knives, bioresorbable implants, surgical staples, cases and trays, orthopedic implants and tools, laparoscopic devices, and drug delivery devices for the medical and life sciences end market. Segment Results The following table presents results of operations for each reportable segment.
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Inventories |
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Inventories | Inventories Inventories are comprised of the following amounts:
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Goodwill |
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Goodwill | Goodwill The following table shows changes in the carrying amount of goodwill.
Based on the closing price of a share of our common stock as of March 31, 2019, our market capitalization had declined to a level that is less than the net book value of our stockholders’ equity. A prolonged or significant decline in market capitalization could be an indicator of additional goodwill impairment. We will continue to monitor our market capitalization to determine if an indicator of impairment exists in subsequent periods. During 2018, as a result of our annual goodwill impairment analysis performed during the fourth quarter of 2018, we recorded an impairment of $109.1 million in our Power Solutions group. After the impairment, Power Solutions reported a goodwill balance of $94.5 million at December 31, 2018. Given the carrying value of the Power Solutions reporting unit was equal to its fair value at December 31, 2018 as a result of the 2018 goodwill impairment, if actual performance of the Power Solutions reporting unit falls short of expected results, additional material impairment charges may be required. During the first quarter of 2019, we reassessed the relevant facts and circumstances and concluded there was no impairment during the period. We will continue to monitor and assess Power Solutions during 2019. |
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Intangible Assets | Intangible Assets, Net The following table shows changes in the carrying amount of intangible assets, net.
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Investment in Joint Venture |
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Investment in Joint Venture | Investment in Joint Venture We own a 49% investment in Wuxi Weifu Autocam Precision Machinery Company, Ltd. (the “JV”), a joint venture located in Wuxi, China. The JV is jointly controlled and managed, and we account for it under the equity method. The following table summarizes activity related to our investment in the JV.
During the fourth quarter of 2018, as a result of changing market conditions, the fair value of the JV was assessed and we recorded an impairment charge of $16.6 million against our investment in the JV. The fair value assessment was most significantly affected by changes in our assessment of future growth rates. It is reasonably possible that material deviation of future performance from the estimates used in the 2018 valuation could result in further impairment to our investment in the JV in subsequent periods. There was no impairment of our investment in the JV during the three months ended March 31, 2019. We recognized sales to the JV of less than $0.1 million and $0.1 million during the three months ended March 31, 2019 and 2018, respectively. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our effective tax rate was (13.5)% for the three months ended March 31, 2019, and 14.7% for the three months ended March 31, 2018. Our 2019 effective tax rate differs from the U.S. federal statutory tax rate of 21% principally due to a discrete tax charge of $6.0 million related to final tax regulations published by the Department of the Treasury and Internal Revenue Service on February 4, 2019. The 2019 effective tax rate was also impacted by the minimum tax on global intangible low-tax income (“GILTI”) and earnings outside the United States, which are taxed at different rates than the U.S. federal statutory tax rate of 21%. Our 2018 effective tax rate differed from the U.S. federal statutory tax rate of 21% due to permanent differences including GILTI and earnings outside the United States, which were taxed at different rates than the U.S. federal statutory rate of 21%. |
Debt |
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Debt | Debt Collectively, our credit facility is comprised of a term loan with a face amount of $545.0 million, maturing on October 19, 2022 (the “Senior Secured Term Loan”); a term loan with a face amount of $300.0 million, maturing on April 3, 2021 (the Incremental Term Loan”); and a revolving line of credit with a face amount of $143.0 million, maturing on October 19, 2020 (the “Senior Secured Revolver”). The credit facility is collateralized by all of our assets. The following table presents debt balances as of March 31, 2019, and December 31, 2018.
We capitalized interest costs amounting to $0.6 million and $0.2 million in the three months ended March 31, 2019 and 2018, respectively, related to construction in progress. Senior Secured Term Loan Outstanding borrowings under the Senior Secured Term Loan bear interest at the greater of 0.75% or one-month London Interbank Offered Rate (“LIBOR”) plus an applicable margin of 3.75%. At March 31, 2019, the Senior Secured Term Loan bore interest at 6.24%. Incremental Term Loan Outstanding borrowings under the Incremental Term Loan bear interest at one-month LIBOR plus an applicable margin of 3.25%. At March 31, 2019, the Incremental Term Loan bore interest of 5.74%. Senior Secured Revolver Outstanding borrowings under the Senior Secured Revolver bear interest at one-month LIBOR plus an applicable margin of 3.50%. At March 31, 2019, the Senior Secured Revolver bore interest of 5.99%. We pay an annual commitment fee of 0.50% for unused capacity under the Senior Secured Revolver on a quarterly basis. Total available capacity under the Senior Secured Revolver was $125.0 million as of March 31, 2019. Our credit facility is subject to certain financial covenants based on a consolidated net leverage ratio, as defined in the credit facility agreement. The financial covenants are effective when we have outstanding borrowings under our Senior Secured Revolver on the last day of any fiscal quarter, become more restrictive over time, and are dependent upon our operational and financial performance. If our operational or financial performance is below our expectations, we may be required to take actions to reduce expenditures and decrease our net indebtedness to maintain compliance in future periods. We had $56.2 million outstanding under the Senior Secured Revolver at March 31, 2019, and we were in compliance with all covenants under our credit facility. On March 15, 2019, we amended our existing credit facility (the “March 2019 amendment”) to amend the defined terms within the credit facility. We paid $0.8 million of debt issuance costs related to the March 2019 amendment which was recorded as a direct reduction to the carrying amount of the associated long-term debt. We also wrote-off $2.7 million of unamortized debt issuance costs related to the modification of the credit facility. Derivative Instruments and Hedging Activities In February 2019, we entered into a $700.0 million amortizing notional amount fixed-rate interest rate swap agreement to manage the interest rate risk associated with our long-term variable-rate debt until 2022. The fixed-rate interest rate swap agreement calls for us to receive interest monthly at a variable rate equal to one-month LIBOR and to pay interest monthly at a fixed rate of 2.4575%. Refer to Note 16 for further discussion of the interest rate swap agreement. |
Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases We adopted ASC 842 on January 1, 2019, and elected the modified retrospective approach in which the new standard is applied to all leases existing at the date of adoption through a cumulative-effect adjustment of less than $0.1 million to retained deficit. Consequently, financial information is not updated, and the disclosures required under the new standard are not provided for periods prior to January 1, 2019. As part of the adoption, we elected the package of practical expedients, the short-term lease exemption, and the practical expedient to not separate lease and non-lease components permitted within ASC 842. Accordingly, we accounted for our existing operating leases as operating leases under the new standard, without reassessing (a) whether the contracts contain a lease under ASC 842, (b) whether classification of the operating leases would be different in accordance with ASC 842, or (c) whether any unamortized initial direct costs would have met the definition of initial direct costs in ASC 842 at lease commencement. We determine whether an arrangement is a lease at inception. Right-of-use (“ROU”) lease assets represent our right to use an underlying asset for the lease term, and lease obligations represent our obligation to make lease payments arising from the lease. ROU lease assets and obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term. When the implicit rate is not readily determinable, we use the estimated incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Amortization of ROU lease assets is recognized in expense on a straight-line basis over the lease term. Short-term leases are leases having a term of twelve months or less. We recognize short-term leases on a straight-line basis and do not record a related lease asset or liability for such leases. Finance lease ROU assets consist of equipment used in the manufacturing process with terms between thirteen months and five years. Operating lease ROU assets consist of the following:
The following table presents components of lease expense for the three months ended March 31, 2019:
_______________________________ (1) Excludes expenses related to leases with a lease term of one month or less. The following table presents the lease-related assets and liabilities recorded on the balance sheet as of March 31, 2019:
The following table contains supplemental information related to leases for the three months ended March 31, 2019:
As of March 31, 2019, the weighted average remaining lease term and weighted-average discount rate for finance and operating leases was as follows:
The future minimum lease obligations with noncancelable terms in excess of twelve months as of March 31, 2019, is as follows:
As of March 31, 2019, we have an additional operating lease commitment that has not yet commenced that would require us to pay a total of approximately $21.9 million base rent payments over the lease term of 15 years. This lease is expected to commence during the fourth quarter of 2019. The following table summarizes the future minimum lease payments under operating leases with initial or non-cancelable lease terms in excess of one year prior to adoption of ASC 842 as reported in our Annual Report on Form 10-K for the year ended December 31, 2018.
During the three months ended March 31, 2018, we recognized rent expense of $2.1 million. |
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Leases | Leases We adopted ASC 842 on January 1, 2019, and elected the modified retrospective approach in which the new standard is applied to all leases existing at the date of adoption through a cumulative-effect adjustment of less than $0.1 million to retained deficit. Consequently, financial information is not updated, and the disclosures required under the new standard are not provided for periods prior to January 1, 2019. As part of the adoption, we elected the package of practical expedients, the short-term lease exemption, and the practical expedient to not separate lease and non-lease components permitted within ASC 842. Accordingly, we accounted for our existing operating leases as operating leases under the new standard, without reassessing (a) whether the contracts contain a lease under ASC 842, (b) whether classification of the operating leases would be different in accordance with ASC 842, or (c) whether any unamortized initial direct costs would have met the definition of initial direct costs in ASC 842 at lease commencement. We determine whether an arrangement is a lease at inception. Right-of-use (“ROU”) lease assets represent our right to use an underlying asset for the lease term, and lease obligations represent our obligation to make lease payments arising from the lease. ROU lease assets and obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term. When the implicit rate is not readily determinable, we use the estimated incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Amortization of ROU lease assets is recognized in expense on a straight-line basis over the lease term. Short-term leases are leases having a term of twelve months or less. We recognize short-term leases on a straight-line basis and do not record a related lease asset or liability for such leases. Finance lease ROU assets consist of equipment used in the manufacturing process with terms between thirteen months and five years. Operating lease ROU assets consist of the following:
The following table presents components of lease expense for the three months ended March 31, 2019:
_______________________________ (1) Excludes expenses related to leases with a lease term of one month or less. The following table presents the lease-related assets and liabilities recorded on the balance sheet as of March 31, 2019:
The following table contains supplemental information related to leases for the three months ended March 31, 2019:
As of March 31, 2019, the weighted average remaining lease term and weighted-average discount rate for finance and operating leases was as follows:
The future minimum lease obligations with noncancelable terms in excess of twelve months as of March 31, 2019, is as follows:
As of March 31, 2019, we have an additional operating lease commitment that has not yet commenced that would require us to pay a total of approximately $21.9 million base rent payments over the lease term of 15 years. This lease is expected to commence during the fourth quarter of 2019. The following table summarizes the future minimum lease payments under operating leases with initial or non-cancelable lease terms in excess of one year prior to adoption of ASC 842 as reported in our Annual Report on Form 10-K for the year ended December 31, 2018.
During the three months ended March 31, 2018, we recognized rent expense of $2.1 million. |
Restructuring and Integration |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Integration | Restructuring and Integration The following table summarizes restructuring and integration charges incurred for the three months ended March 31, 2019 and 2018.
The following table summarizes restructuring and integration reserve activity for the three months ended March 31, 2019.
The amount accrued for restructuring and integration costs represents what we expect to pay over the next 1.9 years. We expect to pay $0.5 million within the next twelve months. |
Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Brazil ICMS Tax Matter Prior to the acquisition of Autocam Corporation in 2014 (“Autocam”), Autocam’s Brazilian subsidiary (“Autocam Brazil”) received notification from the Brazilian tax authority regarding ICMS (state value added tax or “VAT”) tax credits claimed on intermediary materials (e.g., tooling and perishable items) used in the manufacturing process. The Brazilian tax authority notification disallowed state ICMS tax credits claimed on intermediary materials based on the argument that these items are not intrinsically related to the manufacturing processes. 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. We believe that we have substantial legal and factual defenses, and we plan to defend our interests in this matter vigorously. The matter encompasses several lawsuits filed with the Brazilian courts requesting declaratory actions that no tax is due or seeking a stay of execution on the collection of the tax. In 2018, we obtained a favorable decision in one of the declaratory actions for which the period for appeal has expired. We have filed actions in each court requesting dismissal of the matter based on the earlier court action. Although we anticipate a favorable resolution to all matters, we can provide no assurances that we will be successful in achieving dismissal of all pending cases. 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 March 31, 2019, for this matter. 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 the Autocam acquisition. 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. |
Revenue from Contracts with Customers |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts with Customers | Revenue from Contracts with Customers Revenue is recognized when control of the good or service is transferred to the customer either at a point in time or, in limited circumstances, as our services are rendered over time. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or services. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. The following tables summarize sales to external customers by major source.
Deferred Revenue The following table provides information about contract liabilities from contracts with customers.
Revenue recognized during the three months ended March 31, 2019, from amounts included in deferred revenue at the beginning of the period for performance obligations satisfied or partially satisfied during the period, was approximately $0.6 million. Transaction Price Allocated to Future Performance Obligations We are required to disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of March 31, 2019, unless our contracts meet one of the practical expedients. Our contracts met the following practical expedient provided by the guidance:
Sales Concentration During the three months ended March 31, 2019, we recognized sales from a single customer of $23.3 million, or 10.9% of consolidated net sales. Revenues from this customer are in our Life Sciences and Power Solutions groups. No customers represented more than 10% of our net sales during the three months ended March 31, 2018. |
Shared-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shared-Based Compensation | Shared-Based Compensation The following table lists the components of share-based compensation expense by type of award.
Stock Options During the three months ended March 31, 2019, we granted options to purchase 210,400 shares to certain key employees. The weighted average grant date fair value of the options granted during the three months ended March 31, 2019, was $2.77 per share. The fair value of our options cannot be determined by market value because they are not traded in an open market. Accordingly, we utilized the Black Scholes financial pricing model to estimate the fair value. The following table shows the weighted average assumptions relevant to determining the fair value of stock options granted in 2019.
The expected term is derived from using the simplified method of determining stock option terms as described under the Staff Accounting Bulletin Topic 14, Share-based payment. The simplified method was used because sufficient historical stock option exercise experience was not available, primarily due to the transformation of the management structure over the past several years. The average risk-free interest rate is derived from United States Department of Treasury published interest rates of daily yield curves for the same time period as the expected term. The expected dividend yield is derived by a mathematical formula which uses the expected annual dividends over the expected term divided by the fair market value of our common stock at the grant date. The expected volatility rate is derived from our actual common stock historical volatility over the same time period as the expected term. The volatility rate is derived by mathematical formula utilizing daily closing price data. The forfeiture rate is determined from examining the historical pre-vesting forfeiture patterns of past option issuances to key employees. While the forfeiture rate is not an input of the Black Scholes model for determining the fair value of the options, it is an important determinant of stock option compensation expense to be recorded. The following table summarizes stock option activity for the three months ended March 31, 2019.
Restricted Stock During the three months ended March 31, 2019, we granted 281,065 restricted stock awards to non-executive directors, officers and certain other key employees. The shares of restricted stock granted during the three months ended March 31, 2019, vest pro-rata over three years for officers and certain other key employees and over one year for non-executive directors. We determined the fair value of the shares awarded 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 three months ended March 31, 2019, was $7.93 per share. Total grant-date fair value of restricted stock that vested in the three months ended March 31, 2019, was $1.5 million. The following table summarizes the status of unvested restricted stock awards as of March 31, 2019, and changes during the three months then ended.
Performance Share Units Performance Share Units (“PSUs”) are a form of long-term incentive compensation awarded to executive officers and certain other key employees designed to directly align the interests of employees to the interests of our stockholders, and to create long-term stockholder value. PSU awards granted in 2019 were made pursuant to the NN, Inc. 2016 Omnibus Incentive Plan and a Performance Share Unit Agreement (the “2016 Omnibus Agreement”). Some PSUs are based on total shareholder return (“TSR Awards”), and other PSUs are based on return on invested capital (“ROIC Awards”). The TSR Awards vest, if at all, upon our achieving a specified relative total shareholder return, which will be measured against the total shareholder return of the S&P SmallCap 600 Index during specified performance periods as defined in the 2016 Omnibus Agreement. The ROIC Awards vest, if at all, upon our achieving a specified average return on invested capital during the performance periods. Each performance period generally begins on January 1 of the year of grant and ends 36 months later on December 31. We recognize compensation expense over the performance period in which the performance and market conditions are measured. If the PSUs do not vest at the end of the performance periods, then the PSUs will expire automatically. Upon vesting, the PSUs will be settled by the issuance of shares of our common stock, subject to the executive officer’s continued employment. The actual number of shares of common stock to be issued to each award recipient at the end of the performance periods will be interpolated between a threshold and maximum payout amount based on actual performance results. No dividends will be paid on outstanding PSUs during the performance period; however, dividend equivalents will be paid based on the number of shares of common stock that are ultimately earned at the end of the performance periods. With respect to the TSR Awards, a participant will earn 50% of the target number of PSUs for “Threshold Performance,” 100% of the target number of PSUs for “Target Performance,” and 150% of the target number of PSUs for “Maximum Performance.” With respect to the ROIC Awards, a participant will earn 35% of the target number of PSUs for “Threshold Performance,” 100% of the target number of PSUs for “Target Performance,” and 150% of the target number of PSUs for “Maximum Performance. For performance levels falling between the values shown below, the percentages will be determined by interpolation. The following table presents the goals with respect to TSR Awards and ROIC Awards granted in 2019.
We estimate the grant date fair value of TSR Awards using the Monte Carlo simulation model, as the total shareholder return metric is considered a market condition under ASC Topic 718, Compensation – stock compensation. The grant date fair value of ROIC Awards is based on the closing price of a share of our common stock on the date of grant. The following table presents the number of awards granted and the grant date fair value of each award in the period presented.
We recognize expense for ROIC Awards based on the probable outcome of the associated performance condition. We generally recognize an expense for ROIC Awards based on the Target Performance threshold of 100% because, at the date of grant, the Target Performance is the probable level of performance achievement. The following table summarizes the status of unvested PSUs as of March 31, 2019, and changes during the three months then ended.
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Net Income (Loss) Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) Per Share | Net Income (Loss) Per Share
The calculation of diluted net loss per share for the three months ended March 31, 2019 and 2018, excludes 0.7 million and 0.5 million potentially dilutive stock options, which had the effect of being anti-dilutive. Given the net loss for the three months ended March 31, 2019 and 2018, all options are considered anti-dilutive and were excluded from the calculation of diluted net loss per share. |
Fair Value Measurements |
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Fair Value Measurements | Fair Value Measurements Fair value is an exit price representing the expected amount that an entity would receive to sell an asset or pay to transfer a liability in an orderly transaction with market participants at the measurement date. We followed consistent methods and assumptions to estimate fair values as more fully described in the 2018 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. As of March 31, 2019, the carrying values 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 March 31, 2019, we had $10.6 million fixed-rate debt outstanding included in the “International lines of credit and other loans” line item within Note 9 to these Notes to Condensed Consolidated Financial Statements. These fair values represent Level 2 under the three-tier hierarchy described above. Due to the nature of these loans, fair value approximates book value. Recurring Fair Value Measurements 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 liability’s classification within the various levels is determined based on the lowest level input that is significant to the fair value measurement. We manage our exposure to fluctuations in interest rates using a mix of fixed and variable rate debt. On February 8, 2019, we entered into a $700.0 million fixed-rate interest rate swap agreement that changed the LIBOR-based portion of the interest rate on a portion of our variable rate debt to a fixed rate of 2.4575% (the “interest rate swap”). The term of the interest rate swap is from the effective date of February 12, 2019, through the termination date of October 19, 2022 (the “interest rate swap term”). The interest rate swap effectively mitigates our exposures to the risks and variability of changes in LIBOR. The notional amount of the interest rate swap will decrease over the interest rate swap term as follows:
The objective of the interest rate swap is to eliminate the variability of cash flows in interest payments on the first $700.0 million of variable rate debt attributable to changes in benchmark one-month LIBOR interest rates. The hedged risk is the interest rate risk exposure to changes in interest payments, attributable to changes in benchmark one-month LIBOR interest rates over the interest rate swap term. If one-month LIBOR is greater than the minimum percentage under the Senior Secured Term Loan, the changes in cash flows of the interest rate swap are expected to exactly offset changes in cash flows of the variable rate debt. The interest rate swap is designated as a cash flow hedge. As of March 31, 2019, we reported $3.9 million loss , net of tax, in accumulated other comprehensive income related to the interest rate swap. The following shows the liabilities measured at fair value on a recurring basis for the interest rate swap as of March 31, 2019.
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. Counterparty to this derivative contracts is a highly rated financial institution which we believe carries only a minimal risk of nonperformance. As of December 31, 2018, we had no interest rate swap agreements outstanding. |
Subsequent Events |
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Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Event Tennessee Shared Service Center Closure On April 18, 2019, we announced the closure of our shared service center in Johnson City, Tennessee, effective at the end of June 2019. Closure of the Tennessee shared service center aligns with our focus on operating excellence and efficiency and is not expected to have a material impact on our financial statements. |
Interim Financial Statements (Policies) |
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Mar. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Nature of Business | Nature of Business NN, Inc., is a global diversified industrial company that combines advanced engineering and production capabilities with in-depth materials science expertise to design and manufacture high-precision components and assemblies for the medical, aerospace and defense, electrical, automotive, and general industrial markets. 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. As of March 31, 2019, we had 51 facilities in North America, Europe, South America, and China. |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements have not been audited, except that the Condensed Consolidated Balance Sheet as of December 31, 2018, was derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 Annual Report”), which we filed with the U.S. Securities and Exchange Commission (the “SEC”), on March 18, 2019. In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary to fairly state our results of operations for the three months ended March 31, 2019 and 2018; financial position as of March 31, 2019, and December 31, 2018; and cash flows for the three months ended March 31, 2019 and 2018, on a basis consistent with our audited consolidated financial statements other than the adoption of new accounting standards, such as the new lease standard (see Note 10). These adjustments are of a normal recurring nature and are, in the opinion of management, necessary to state fairly the Company’s 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 accounting principles generally accepted in the United States (“U.S. GAAP”) 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 accompanying notes included in the 2018 Annual Report. The results for the three months ended March 31, 2019, are not necessarily indicative of results for the year ending December 31, 2019, or any other future periods. Except for per share data or as otherwise indicated, all U.S. dollar amounts presented in the tables in these Notes to Condensed Consolidated Financial Statements are in thousands. |
Accounting Standards | Accounting Standards Recently Adopted Leases. On January 1, 2019, we adopted Accounting Standards Codification (“ASC”) 842, Leases, which superseded ASC 840, Leases. We adopted ASC 842 utilizing the modified retrospective transition approach, therefore, historical financial information and disclosures do not reflect the new standard and will continue to be presented under the previous lease accounting guidance. Under the modified retrospective transition method, we recognized the cumulative effect of the initial adoption adjustment to the opening balance of retained deficit as of January 1, 2019. The adoption adjustment to retained deficit was less than $0.1 million. As part of the adoption of ASC 842, we elected the package of practical expedients, the short-term lease exemption, and the practical expedient to not separate lease and non-lease components. We recorded lease-related assets and liabilities to our balance sheet for leases with terms greater than twelve months that were classified as operating leases and not previously recorded on our balance sheet. See Note 10 for the required disclosures related to ASC 842. Derivatives and Hedging. In August 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, (“ASU 2017-12”). ASU 2017-12 provides new rules that expand the hedging strategies that qualify for hedge accounting. The new rules also allow additional time to complete hedge effectiveness testing and allow qualitative assessments subsequent to initial quantitative tests if there is supportable expectation that the hedge will remain highly effective. We adopted the guidance on January 1, 2019. We have applied the new rules to 2019 hedging activities as disclosed in Note 16 to these condensed consolidated financial statements. The new guidance has no effect on our historical financial statements. Effects of Tax Reform in Other Comprehensive Income. In February 2018, the FASB issued guidance related to the impacts of the U.S. Tax Cuts and Jobs Act of 2017 (“Tax Act”). Under existing U.S. GAAP, the effects of changes in tax rates and laws on deferred tax balances are recorded as a component of income tax expense in the period in which the law was enacted. When deferred tax balances related to items originally recorded in accumulated other comprehensive income (“AOCI”) are adjusted, certain tax effects become stranded in AOCI. The FASB issued ASU 2018-2, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, that permits reclassification of certain income tax effects of the Tax Act from AOCI to retained earnings. The guidance also requires certain disclosures about stranded tax effects. The new guidance was effective for us on January 1, 2019. We adopted the new guidance at the beginning of the period of adoption. The new guidance had no effect on our financial statements. Accounting Standards Not Yet Adopted Fair Value Disclosures. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, that modifies fair value disclosure requirements. The new guidance could impact us by streamlining disclosures of Level 3 fair value measurements. The modified disclosures are effective for NN beginning in the first quarter of 2020, with early adoption allowed. ASU 2018-13 changes only disclosures and does not impact our financial condition, results of operations, or cash flows. We are in the process of evaluating the effects of this guidance on our fair value disclosures. Internal-Use Software. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force), that provides guidance on a customer’s accounting for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by the vendor. Under the new guidance, customers will apply the same criteria for capitalizing implementation costs as they would for an arrangement that has a software license. ASU 2018-15 is effective for us on January 1, 2020, using either a prospective or retrospective approach and with early adoption permitted. We are in the process of evaluating the effects of this guidance on our financial statements. |
Acquisitions (Tables) |
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Business Acquisition, Pro Forma Information | The provision for income taxes has also been adjusted for all periods, based upon the foregoing adjustments to historical results.
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Segment Information (Tables) |
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Segment Information | The following table presents results of operations for each reportable segment.
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Inventories (Tables) |
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Summary of Inventories | Inventories are comprised of the following amounts:
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Goodwill (Tables) |
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Changes in Carrying Amount of Goodwill | The following table shows changes in the carrying amount of goodwill.
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Intangible Assets, Net (Tables) |
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Summary of Carrying Amount of Intangible Assets Net | The following table shows changes in the carrying amount of intangible assets, net.
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Investment in Joint Venture (Tables) |
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Summarized Activity Related to Investment in Joint Venture | The following table summarizes activity related to our investment in the JV.
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Debt (Tables) |
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Summary of Debt | The following table presents debt balances as of March 31, 2019, and December 31, 2018.
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Leases (Tables) |
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Lease, Cost | The following table contains supplemental information related to leases for the three months ended March 31, 2019:
As of March 31, 2019, the weighted average remaining lease term and weighted-average discount rate for finance and operating leases was as follows:
The following table presents components of lease expense for the three months ended March 31, 2019:
_______________________________ (1) Excludes expenses related to leases with a lease term of one month or less. |
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Assets and Liabilities, Lessee | The following table presents the lease-related assets and liabilities recorded on the balance sheet as of March 31, 2019:
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Lessee, Operating Lease, Liability, Maturity | The future minimum lease obligations with noncancelable terms in excess of twelve months as of March 31, 2019, is as follows:
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Finance Lease, Liability, Maturity | The future minimum lease obligations with noncancelable terms in excess of twelve months as of March 31, 2019, is as follows:
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Schedule of Future Minimum Rental Payments for Operating Leases | The following table summarizes the future minimum lease payments under operating leases with initial or non-cancelable lease terms in excess of one year prior to adoption of ASC 842 as reported in our Annual Report on Form 10-K for the year ended December 31, 2018.
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Restructuring and Integration (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Restructuring and Integration Charges and Reserve Activity | The following table summarizes restructuring and integration charges incurred for the three months ended March 31, 2019 and 2018.
The following table summarizes restructuring and integration reserve activity for the three months ended March 31, 2019.
|
Revenue from Contracts with Customers (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Revenue from Contracts with Customers | The following tables summarize sales to external customers by major source.
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Summary of Contract Liabilities from Contracts with Customers | The following table provides information about contract liabilities from contracts with customers.
|
Shared-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Share-Based Compensation Expense by Type of Award | The following table lists the components of share-based compensation expense by type of award.
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Weighted Average Assumptions Relevant to Determining the Fair Value at the Dates of Grant and Stock Option Modification | The following table shows the weighted average assumptions relevant to determining the fair value of stock options granted in 2019.
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Reconciliation of Option Activity | The following table summarizes stock option activity for the three months ended March 31, 2019.
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Reconciliation of Restricted Stock Option Activity | The following table summarizes the status of unvested restricted stock awards as of March 31, 2019, and changes during the three months then ended.
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Schedule of Performance Based Awards Goals with Respect to TSR and ROIC | The following table presents the goals with respect to TSR Awards and ROIC Awards granted in 2019.
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Schedule of Number of Awards Granted and Grant Date Fair Value of Each Award in Periods | The following table presents the number of awards granted and the grant date fair value of each award in the period presented.
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Summary of Status of Unvested PSU Awards | The following table summarizes the status of unvested PSUs as of March 31, 2019, and changes during the three months then ended.
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Net Income (Loss) Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Net Income (Loss) Per Share |
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Fair Value Measurements (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notional Amounts of Outstanding Derivative Positions | The notional amount of the interest rate swap will decrease over the interest rate swap term as follows:
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Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following shows the liabilities measured at fair value on a recurring basis for the interest rate swap as of March 31, 2019.
|
Interim Financial Statements - Additional Information (Detail) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019
Facility
|
Jan. 01, 2019
USD ($)
|
Jan. 01, 2018
USD ($)
|
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Number of manufacturing facilities | Facility | 51 | ||
Cumulative effect of new accounting principle of adoption | $ 18 | $ 17 | |
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative effect of new accounting principle of adoption | $ 100 |
Acquisitions - Additional Information (Detail) |
Aug. 09, 2018 |
May 07, 2018 |
Feb. 22, 2018 |
---|---|---|---|
Paragon Medical Inc | |||
Business Acquisition [Line Items] | |||
Acquisition percentage | 100.00% | ||
Bridgemedica, LLC | |||
Business Acquisition [Line Items] | |||
Acquisition percentage | 100.00% | ||
Southern California Technical Arts, Inc. | |||
Business Acquisition [Line Items] | |||
Acquisition percentage | 100.00% |
Acquisitions Pro Forma Financial Results (Details) - Paragon Medical Inc $ / shares in Units, $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
$ / shares
| |
Business Acquisition [Line Items] | |
Pro forma net sales | $ | $ 209,830 |
Pro forma net loss | $ | $ (8,077) |
Basic net loss per share (in dollars per share) | $ / shares | $ (0.29) |
Diluted net loss per share (in dollars per share) | $ / shares | $ (0.29) |
Inventories - Summary of Inventories (Detail) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 55,286 | $ 52,930 |
Work in process | 47,372 | 42,578 |
Finished goods | 26,264 | 27,107 |
Total inventories | $ 128,922 | $ 122,615 |
Goodwill - Changes in Carrying Amount of Goodwill (Detail) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Goodwill [Roll Forward] | ||
Beginning Balance | $ 439,452,000 | |
Currency impacts | 717,000 | |
Ending Balance | 440,169,000 | $ 439,452,000 |
Mobile Solutions | ||
Goodwill [Roll Forward] | ||
Beginning Balance | 0 | |
Currency impacts | 0 | |
Ending Balance | 0 | 0 |
Power Solutions | ||
Goodwill [Roll Forward] | ||
Beginning Balance | 94,505,000 | |
Currency impacts | 198,000 | |
Ending Balance | 94,703,000 | 94,505,000 |
Goodwill, impairment loss | 0 | 109,100,000 |
Life Sciences | ||
Goodwill [Roll Forward] | ||
Beginning Balance | 344,947,000 | |
Currency impacts | 519,000 | |
Ending Balance | $ 345,466,000 | $ 344,947,000 |
Goodwill - Additional Information (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Goodwill [Line Items] | ||
Goodwill | $ 440,169,000 | $ 439,452,000 |
Power Solutions | ||
Goodwill [Line Items] | ||
Goodwill, impairment loss | 0 | 109,100,000 |
Goodwill | $ 94,703,000 | $ 94,505,000 |
Intangible Assets, Net - Summary of Carrying Amount of Intangible Assets by Segment (Detail) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Finite-lived Intangible Assets [Roll Forward] | |
Beginning Balance | $ 376,248 |
Amortization | (12,650) |
Other | 10 |
Ending balance | 363,608 |
Mobile Solutions | |
Finite-lived Intangible Assets [Roll Forward] | |
Beginning Balance | 35,892 |
Amortization | (885) |
Other | 2 |
Ending balance | 35,009 |
Power Solutions | |
Finite-lived Intangible Assets [Roll Forward] | |
Beginning Balance | 95,991 |
Amortization | (2,748) |
Other | 0 |
Ending balance | 93,243 |
Life Sciences | |
Finite-lived Intangible Assets [Roll Forward] | |
Beginning Balance | 244,365 |
Amortization | (9,017) |
Other | 8 |
Ending balance | $ 235,356 |
Investment in Joint Venture - Additional Information (Detail) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2018 |
|
Joint Venture | |||
Schedule of Equity Method Investments [Line Items] | |||
Impairment charge | $ 0 | $ 16,600,000 | |
Net sales | $ 100,000 | ||
Joint Venture | Maximum | |||
Schedule of Equity Method Investments [Line Items] | |||
Net sales | $ 100,000 | ||
Wuxi Weifu Autocam Precision Machinery Company, Ltd. | |||
Schedule of Equity Method Investments [Line Items] | |||
Investment in joint venture | 49.00% |
Investment in Joint Venture - Summarized Activity Related to Investment in Joint Venture (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Equity Method Investments [Roll Forward] | ||
Beginning Balance | $ 20,364 | |
Our share of cumulative earnings | 269 | $ 831 |
Ending Balance | 21,087 | |
Joint Venture | ||
Equity Method Investments [Roll Forward] | ||
Beginning Balance | 20,364 | |
Our share of cumulative earnings | 269 | |
Foreign currency translation gain | 454 | |
Ending Balance | $ 21,087 |
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Tax Disclosure [Abstract] | ||
Effective tax rate from continuing operations | (13.50%) | 14.70% |
Change in tax rate, income tax expense (benefit) | $ 6.0 |
Debt - Summary of Debt (Detail) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Total | $ 873,410 | $ 859,593 |
Less current maturities of long-term debt | 33,444 | 31,280 |
Principal, net of current portion | 839,966 | 828,313 |
Less unamortized debt issuance costs | 13,692 | 16,842 |
Long-term debt, net of current portion | 826,274 | 811,471 |
Chinese | ||
Debt Instrument [Line Items] | ||
International lines of credit and other loans | 10,601 | 9,810 |
Senior Secured Term Loan B | ||
Debt Instrument [Line Items] | ||
Senior debt | 530,625 | 532,063 |
Incremental Term Loan | ||
Debt Instrument [Line Items] | ||
Senior debt | 276,000 | 279,000 |
Senior Secured Revolving Facility | ||
Debt Instrument [Line Items] | ||
Senior debt | $ 56,184 | $ 38,720 |
Leases - Finance and Operating Lease Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Finance lease cost | ||
Amortization of right-of-use assets | $ 322 | |
Interest expense | 53 | |
Operating lease cost | 3,434 | |
Short-term lease cost | 107 | |
Total lease cost | 3,916 | |
Assets | ||
Operating lease right-of-use assets | 68,458 | |
Finance lease right-of-use assets | 12,886 | |
Lease, right-of-use asset | 81,344 | |
Current liabilities | ||
Operating lease liabilities | 7,630 | $ 0 |
Finance lease liabilities | 2,401 | |
Non-current liabilities | ||
Operating lease liabilities | 66,975 | |
Finance lease liabilities | 6,150 | |
Total lease liabilities | $ 83,156 |
Leases - Supplemental Cash Flow Information (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Cash paid for amounts included in the measurement of lease liabilities | |
Operating cash flows from finance leases | $ 53 |
Operating cash flows from operating leases | 5,288 |
Financing cash flows from finance leases | 792 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 2,836 |
Leases - Weighted Average Remaining Lease Term and Discount Rate (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Weighted-Average Remaining Lease Term (years) | |
Finance leases | 4 years 1 month 6 days |
Operating leases | 10 years 6 months 18 days |
Weighted-Average Discount Rate | |
Finance leases | 2.40% |
Operating leases | 8.50% |
Leases - Future Minimum Lease Obligations After Adoption of 842 (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Operating Leases | |
2019 | $ 10,104 |
2020 | 11,979 |
2021 | 11,118 |
2022 | 10,812 |
2023 | 9,264 |
Thereafter | 59,946 |
Total future minimum lease payments | 113,223 |
Less: imputed interest | 38,618 |
Total lease liabilities | 74,605 |
Finance Leases | |
2019 | 2,190 |
2020 | 2,033 |
2021 | 2,020 |
2022 | 1,853 |
2023 | 962 |
Thereafter | 17 |
Total future minimum lease payments | 9,075 |
Less: imputed interest | 524 |
Total lease liabilities | $ 8,551 |
Leases Leases - Future Minimum Lease Obligations Before Adoption of 842 (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Leases [Abstract] | |
2019 | $ 13,337 |
2020 | 11,515 |
2021 | 10,557 |
2022 | 10,293 |
2023 | 8,752 |
Thereafter | 53,945 |
Total minimum payments | $ 108,399 |
Restructuring and Integration - Additional Information (Detail) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Restructuring and Related Activities [Abstract] | |
Pay period for accrued restructuring and integration costs | 1 year 10 months 25 days |
Restructuring and related cost, expected cost remaining | $ 0.5 |
Commitments and Contingencies - Additional Information (Detail) |
Mar. 31, 2019
USD ($)
|
---|---|
Contingencies And Commitments [Line Items] | |
Amount accrued for estimation of loss | $ 0 |
Minimum | |
Contingencies And Commitments [Line Items] | |
Possible loss estimated | 0 |
Maximum | |
Contingencies And Commitments [Line Items] | |
Possible loss estimated | $ 6,000,000 |
Revenue from Contracts with Customers - Summary of Contract Liabilities from Contracts with Customers (Detail) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Contract with Customer, Liability [Abstract] | |
Deferred revenue, beginning balance | $ 2,974 |
Deferred revenue, ending balance | $ 2,890 |
Revenue from Contracts with Customers Additional Information (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Revenue, Major Customer [Line Items] | |
Amounts included in deferred revenue for performance obligations satisfied or partially satisfied | $ 0.6 |
Major Customer | |
Revenue, Major Customer [Line Items] | |
Revenues | $ 23.3 |
Major Customer | Customer Concentration Risk | Sales Revenue, Net | |
Revenue, Major Customer [Line Items] | |
Concentration risk, percentage | 10.90% |
Shared-Based Compensation - Components of Share-Based Compensation Expense by Type of Award (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation | $ 873 | $ 1,256 |
Stock Option Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation | 192 | 205 |
Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation | 459 | 460 |
Performance Based Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation | $ 222 | $ 591 |
Shared-Based Compensation - Weighted Average Assumptions Relevant to Determining the Fair Value at the Dates of Grant and Stock Option Modification (Detail) - Stock Option Awards |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term | 6 years |
Risk free interest rate | 2.47% |
Dividend yield | 3.53% |
Expected volatility | 49.53% |
Expected forfeiture rate | 4.00% |
Shared-Based Compensation - Schedule of Performance Based Awards Goals with Respect to TSR and ROIC (Detail) |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
TSR Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Threshold performance, percentage | 35.00% |
Target performance, percentage | 50.00% |
Maximum performance, percentage | 75.00% |
ROIC Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Threshold performance, percentage | 4.70% |
Target performance, percentage | 5.80% |
Maximum performance, percentage | 7.00% |
Shared-Based Compensation - Summary of Number of Awards Granted and Grand Date Fair Value (Detail) shares in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Grant Date Fair Value (in USD per share) | $ 7.93 |
TSR Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of awards granted in fair values (in shares) | shares | 136 |
Grant Date Fair Value (in USD per share) | $ 9.28 |
ROIC Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of awards granted in fair values (in shares) | shares | 174 |
Grant Date Fair Value (in USD per share) | $ 7.93 |
Net Income (Loss) Per Share - Summary of Net Income (Loss) Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Earnings Per Share [Abstract] | ||
Net loss | $ (18,600) | $ (5,983) |
Weighted average shares outstanding (in shares) | 41,972 | 27,597 |
Effect of dilutive stock options (in shares) | 0 | 0 |
Diluted shares outstanding (in shares) | 41,972 | 27,597 |
Basic - net loss per share (in dollars per share) | $ (0.44) | $ (0.22) |
Diluted - net loss per share (in dollars per share) | (0.44) | (0.22) |
Cash dividends declared per share (in dollars per share) | $ 0.07 | $ 0.07 |
Net Income (Loss) Per Share - Additional Information (Detail) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Stock Option Awards | ||
Net Income Per Share [Line Items] | ||
Anti-dilutive securities excluded from the calculation of diluted earnings per share from continuing operation | 0.7 | 0.5 |
Fair Value Measurements - Additional Information (Detail) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Feb. 28, 2019 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fixed-rate debt, outstanding | $ 10,600,000 | ||
Change in fair value of interest rate swap, net of tax | (3,856,000) | $ 0 | |
Interest Rate Swap | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivative, notional amount | $ 700,000,000 | ||
Derivative, fixed interest rate | 2.4575% | ||
Change in fair value of interest rate swap, net of tax | $ (3,900,000) |
Fair Value Measurements - Assets and Liabilities Measured on a Recurring Basis (Details) - Fair Value, Measurements, Recurring $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Quoted Prices in Active Markets for Identical Assets (Level 1) | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Derivative liability - other current liabilities | $ 0 |
Derivative liability - other non-current liabilities | 0 |
Total | 0 |
Significant Other Observable Inputs (Level 2) | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Derivative liability - other current liabilities | 543 |
Derivative liability - other non-current liabilities | 4,417 |
Total | 4,960 |
Significant Unobservable Inputs (Level 3) | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Derivative liability - other current liabilities | 0 |
Derivative liability - other non-current liabilities | 0 |
Total | $ 0 |
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