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Exhibit 99.2

 

LOGO

AUTOCAM CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2013 AND 2014


AUTOCAM CORPORATION

INDEX TO FINANCIAL INFORMATION

 

     Page  

Autocam Corporation Financial Statements:

  

Condensed Consolidated Balance Sheets

     3   

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

     4   

Condensed Consolidated Statements of Cash Flows

     5   

Notes to Condensed Consolidated Financial Statements

     6   

 

2


AUTOCAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

 

     December 31,     June 30,  
Amounts in thousands, except share information    2013     2014  

Assets

    

Current assets:

    

Cash and equivalents

   $ 9,974      $ 10,755   

Accounts receivable, net of allowances of $324 and $246, respectively

     33,683        41,910   

Inventories

     24,472        26,853   

Prepaid expenses and other current assets

     4,640        5,333   
  

 

 

   

 

 

 

Total current assets

     72,769        84,851   

Property, plant and equipment, net

     136,390        135,218   

Investment in joint venture

     11,657        14,242   

Equipment deposits and other long-term assets

     4,129        6,855   
  

 

 

   

 

 

 

Total Assets

   $ 224,945      $ 241,166   
  

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

    

Current liabilities:

    

Current maturities of long-term obligations

   $ 18,537      $ 18,427   

Accounts payable

     16,436        18,190   

Accrued liabilities:

    

Compensation

     7,821        8,335   

Other

     671        2,969   
  

 

 

   

 

 

 

Total current liabilities

     43,465        47,921   
  

 

 

   

 

 

 

Long-term obligations, net of current maturities

     45,571        46,382   

Deferred taxes

     28,238        28,619   

Other long-term liabilities

     4,990        6,277   

Shareholders’ equity:

    

Common stock – no par value; 10,200,000 shares authorized; 96,550 issued and outstanding at December 31, 2013 and June 30, 2014

    

Additional paid-in capital

     182,890        182,890   

Accumulated other comprehensive losses

     (985     (188

Accumulated deficit

     (79,224     (70,735
  

 

 

   

 

 

 

Total shareholders’ equity

     102,681        111,967   
  

 

 

   

 

 

 

Total Liabilities and Shareholders’ Equity

   $ 224,945      $ 241,166   
  

 

 

   

 

 

 

See notes to condensed consolidated financial statements.

 

3


AUTOCAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

(unaudited)

 

     Three Months Ended     Six Months Ended  
     June 30,     June 30,  
Amounts in thousands    2013     2014     2013     2014  

Sales

   $ 59,717      $ 65,438      $ 114,656      $ 129,704   

Cost of sales

     (51,898     (55,220     (101,455     (110,702
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     7,819        10,218        13,201        19,002   

Selling, general and administrative expenses

     (3,445     (3,831     (7,036     (7,353
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations before stock-based compensation expense

     4,374        6,387        6,165        11,649   

Stock-based compensation expense

     (18     (288     (36     (576
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations after stock-based compensation expense

     4,356        6,099        6,129        11,073   

Interest expense, net

     (736     (745     (1,339     (1,495

Other expense, net

     (193     (50     (343     (95
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes and equity in net income of joint venture

     3,427        5,304        4,447        9,483   

Taxes

     (894     (1,486     (1,293     (2,680

Equity in net income of joint venture

     904        733        1,654        1,686   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

   $ 3,437      $ 4,551      $ 4,808      $ 8,489   
  

 

 

   

 

 

   

 

 

   

 

 

 

Statements of Comprehensive Income (Loss):

        

Net income

   $ 3,437      $ 4,551      $ 4,808      $ 8,489   

Other comprehensive income (losses):

        

Foreign currency translation adjustments

     (1,942     (61     (2,452     814   

Change in fair value of interest rate hedge

     37        1        68        (17
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive Income (Loss)

   $ 1,532      $ 4,491      $ 2,424      $ 9,286   
  

 

 

   

 

 

   

 

 

   

 

 

 

See notes to condensed consolidated financial statements.

 

4


AUTOCAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

     Six Months Ended  
     June 30,  
Amounts in thousands    2013     2014  

Net cash provided by operating activities

   $ 3,340      $ 10,962   

Cash flows from investing activities:

    

Expenditures for property, plant and equipment

     (15,687     (10,390

Other

     183        (133
  

 

 

   

 

 

 

Net cash used in investing activities

     (15,504     (10,523
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Borrowings under lines of credit

     38,718        36,526   

Repayments on lines of credit

     (33,844     (31,326

Proceeds from issuance of long-term obligations

     10,562        1,001   

Principal payments of long-term obligations

     (4,447     (5,989

Other

     151        212   
  

 

 

   

 

 

 

Net cash provided by financing activities

     11,140        424   
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and equivalents

     (140     (82
  

 

 

   

 

 

 

Increase (decrease) in cash and equivalents

     (1,164     781   

Cash and equivalents at beginning of period

     9,492        9,974   
  

 

 

   

 

 

 

Cash and Equivalents at End of Period

   $ 8,328      $ 10,755   
  

 

 

   

 

 

 

See notes to condensed consolidated financial statements.

 

5


AUTOCAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(unaudited)

 

            Accumulated              
     Additional      Other              
     Paid-In      Comprehensive     Accumulated        
Amounts in thousands    Capital      Income (Loss)     Deficit     Total  

Balance, January 1, 2014

   $ 182,890         ($985     ($79,224   $ 102,681   

Net income

          8,489        8,489   

Foreign currency translation adjustments

        814          814   

Change in fair value of interest rate hedge

        (17       (17
  

 

 

    

 

 

   

 

 

   

 

 

 

Balance, June 30, 2014

   $ 182,890         ($188     ($70,735   $ 111,967   
  

 

 

    

 

 

   

 

 

   

 

 

 

See notes to condensed consolidated financial statements.

 

6


AUTOCAM CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2014

(unaudited)

1. Basis of Presentation and Significant Accounting Policies

Interim Financial Statements– The accompanying condensed consolidated financial statements of Autocam have not been audited, except that the condensed consolidated balance sheet at December 31, 2013 was derived from our audited consolidated financial statements. In our opinion, these financial statements reflect all adjustments necessary to fairly state the results of operations for the three and six month periods ended June 30, 2014 and 2013, our financial position at June 30, 2014 and December 31, 2013, and the cash flows for the six month periods ended June 30, 2014 and 2013 on a basis consistent with our audited financial statements. These adjustments are of a normal recurring nature and are, in the opinion of management, necessary for fair statement of the 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 generally accepted accounting principles have been condensed or omitted from the interim financial statements. These unaudited, condensed and consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto. The results for the three and six month periods ended June 30, 2014 are not necessarily indicative of results for the year ending December 31, 2014 or any other future periods. In these notes, unless the context otherwise requires, “we,” “our” or “us” refer to Autocam Corporation together with its consolidated subsidiaries (“Autocam”). All currency figures referenced in these notes are reflected in thousands of U.S. dollars, unless otherwise noted.

Pension Plans – We sponsor a defined benefit pension plan for substantially all employees of our Bouverat plant in France. Set forth below are the components of net periodic benefit cost for the plan:

 

     Six Months Ended June 30,  
     2013     2014  

Service and interest costs

   $ 46      $ 55   

Expected return on plan assets

     (12     (13

Amortization of prior service costs

     5        5   
  

 

 

   

 

 

 

Net periodic benefit cost

   $ 39      $ 47   
  

 

 

   

 

 

 

Financial Instruments consist principally of cash and equivalents, accounts receivable and payable and indebtedness. We have determined the estimated fair value amounts for indebtedness using available market information and valuation methodologies (see Note 4). We have determined the estimated fair value of accounts receivable and payable as approximating their book values given their possessing short-term maturities.

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. Our assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

 

7


Set forth below is information about the fair value of our financial assets and liabilities at December 31, 2013 and June 30, 2014, according to the valuation techniques we used to determine their fair values:

 

     Level 1 1      Level 2 2  
     December 31, 2013      June 30, 2014      December 31, 2013      June 30, 2014  

Asset -

           

Cash and equivalents

   $ 9,974       $ 10,755         

Liability -

           

Interest rate swap arrangements

  

   $ 131       $ 105   

 

1  Quoted prices in active markets for identical assets or liabilities.
2  Observable inputs other than quoted prices in active markets for identical assets and liabilities.

Cash equivalents consist of highly-liquid investments with original maturities of three months or less at the date of purchase, including money market accounts with an active market valuation Level 1 estimate.

Derivative and hedging activity- We are exposed to interest rate risk on approximately one-half of our outstanding indebtedness. All indebtedness to to our senior lender bears interest at variable rates.

From time to time, we manage interest rate risk through the use of interest rate swap agreements. Set forth below are our interest rate swaps outstanding as of June 30, 2014:

 

Dates      Notional      Monthly      Rate Amounts  
Effective    Maturity      Amount      Amortization      Fixed     Float  
6/3/10      6/3/15       $ 1,900,000.00       $ 158,333.00         2.17     1 Mo LIBOR   
1/4/11      12/31/15         1,050,000.00         58,333.00         1.90     1 Mo LIBOR   
6/30/11      7/31/16         1,596,641.00         64,845.00         1.58     1 Mo LIBOR   
8/31/12      8/31/16         4,333,333.00         166,667.00         0.75     1 Mo LIBOR   
11/30/13      10/31/18         7,600,000.00         279,033.00         1.06     1 Mo LIBOR   

2. Inventories

Set forth below are the components of Inventories:

 

     December 31,      June 30,  
     2013      2014  

Raw materials

   $ 10,407       $ 11,514   

Production supplies

     4,166         4,693   

Work in-process

     7,085         7,670   

Finished goods

     2,814         2,976   
  

 

 

    

 

 

 

Total Inventories

   $ 24,472       $ 26,853   
  

 

 

    

 

 

 

Inventories are stated at the lower of cost or market on a first-in, first-out (FIFO) basis.

 

8


3. Property, Plant and Equipment, Net

Set forth below are the components of Property, Plant and Equipment, Net:

 

     December 31,     June 30,  
     2013     2014  

Buildings and land

   $ 22,940      $ 24,296   

Machinery and equipment

     173,930        179,390   

Furniture and fixtures

     6,182        6,489   
  

 

 

   

 

 

 

Total

     203,052        210,175   

Accumulated depreciation

     (66,662     (74,957
  

 

 

   

 

 

 

Total Property, Plant and Equipment, Net

   $ 136,390      $ 135,218   
  

 

 

   

 

 

 

4. Long-Term Obligations

Set forth below are the components of Long-Term Obligations (percentages represent interest rates as of June 30, 2014):

 

     December 31,     June 30,  
     2013     2014  

Senior indebtedness:

    

Term notes:

    

August 2012 (2.18%)

   $ 5,333      $ 4,333   

October 2013 (3.21%)

     16,184        14,510   

Equipment term notes:

    

July 2011 (3.95%)

     756        609   

February 2012 (3.78%)

     1,534        1,292   

Mortgage payable (3.25%)

     300        260   

Revolving line of credit (2.5%)

     2,201        8,842   

Capital lease obligations

     20,431        18,001   

Subordinated affiliate note

     5,000        5,000   

French Safeguard obligations

     3,235        3,206   

Brazilian lines of credit

     6,451        5,564   

Other

     2,683        3,192   
  

 

 

   

 

 

 

Total long-term obligations

     64,108        64,809   

Current portion

     (18,537     (18,427
  

 

 

   

 

 

 

Long-term portion

   $ 45,571      $ 46,382   
  

 

 

   

 

 

 

 

9


5. Supplemental Cash Flow Information

Set forth below is a reconciliation of net income to net cash provided by operating activities:

 

     Six Months Ended  
     June 30,  
     2013     2014  

Net income

   $ 4,808      $ 8,489   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     7,995        9,357   

Deferred taxes

     (264     370   

Other, net

     205        892   

Changes in assets and liabilities that provided (used) cash:

    

Accounts receivable

     (11,878     (7,945

Inventories

     (1,013     (1,218

Prepaid expenses and other current assets

     929        (675

Other long-term assets

     (1,925     (1,897

Accounts payable

     (527     530   

Accrued liabilities

     5,193        2,759   

Deferred taxes and other

     (183     300   
  

 

 

   

 

 

 

Net Cash Provided by Operating Activities

   $ 3,340      $ 10,962   
  

 

 

   

 

 

 

6. Income Taxes

For the six month periods ended June 30, 2014 and 2013, our effective tax rates were 28% and 29%, respectively. The difference between the U.S. federal statutory tax rate of 35% and our effective tax rates for the six months ended June 30, 2014 was primarily due to the effective tax rate being impacted by non-U.S. based earnings being taxed at lower rates.

As of June 30, 2014, we do not foresee any significant changes to our unrecognized tax benefits within the next twelve months.

7. Investment in Non-Consolidated Joint Venture

We and an unrelated entity jointly own and operate Wuxi Weifu Autocam Precision Machinery Company, Ltd. (“JV”), a Chinese company located in the city of Wuxi, China. During 2013, we sold to our joint venture partner 1% of the JV for $205, but control of the board of directors remained split evenly between our partner and us. Our remaining 49% investment in JV is being accounted for under the equity method.

Set forth below are JV fuel delivery systems components sales to a customer’s Asian operations:

 

     Three Months Ended      Six Months Ended  
     June 30,      June 30,  
Amounts in thousands    2013      2014      2013      2014  

Sales

   $ 10,615       $ 12,271       $ 19,106       $ 24,217   

 

10


Set forth below are the components of the change in our JV investment balance:

 

     Six Months Ended  
     June 30,  
     2013     2014  

Beginning Balance

   $ 9,744      $ 11,657   

Investments

       500   

Sale of 1% ownership interest

     (205  

Our share of cumulative earnings

     1,689        2,085   
  

 

 

   

 

 

 
   $ 11,228      $ 14,242   
  

 

 

   

 

 

 

Set forth below is summarized balance sheet information for JV:

 

     December 31,     June 30,  
     2013     2014  

Current assets

   $ 21,488      $ 29,539   

Non-current assets

     18,864        19,777   
  

 

 

   

 

 

 

Total assets

   $ 40,352      $ 49,316   
  

 

 

   

 

 

 

Current liabilities

   $ 13,477      $ 17,392   

Non-current liabilities

     (242     (250
  

 

 

   

 

 

 

Total liabilities

   $ 13,235      $ 17,142   
  

 

 

   

 

 

 

Set forth below are sales of product we made to the JV:

 

     Three Months Ended      Six Months Ended  
     June 30,      June 30,  
Amounts in thousands    2013      2014      2013      2014  

Sales

   $ 51       $ 62       $ 150       $ 126   

Amounts due to us from JV were $308 as of December 31, 2013 and $197 as of June 30, 2014.

8. Subsequent Events

On July 21, 2014, we announced the signing of a definitive agreement to merge with NN, Inc. (“NN”). On August 29, 2014, we completed our merger with NN for $259,089 in cash, $29,830 in assumed debt and $31,707 in stock. This acquisition will leverage NN’s and Autocam’s complementary core strengths and values and will position NN’s Precision Metal Components business segment to take advantage of global market trends in fuel efficient technologies such as gasoline direct injection systems, high-pressure diesel injection systems and variable valve timing.

 

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