What changed in this filing

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Item 1. Financial Statements

2020-11-06 compared with 2020-08-07 · 432 added, 246 removed, 615 unchanged (52% of the section changed)

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except per share data) 2020 2019 2020 2019

5 unchanged sentences

Goodwill impairment — — 92,942 —

Other operating (income) expense, net ( 955 ) 388 4,174 236

Income (loss) from operations ( 8,206 ) 7,512 ( 253,538 ) 7,195

Other operating expense (income), net ( 39 ) ( 1,161 ) 4,138 ( 905 )

Loss from operations ( 1,456 ) ( 1,811 ) ( 116,483 ) ( 7,457 )

Interest expense 6,873 3,805 17,036 8,829

Loss on extinguishment of debt and write-off of debt issuance costs 144 — 144 308

Other (income) expense, net ( 881 ) 57 239 786

Loss before benefit (provision) for income taxes and share of net income (loss) from joint venture ( 26,021 ) ( 6,503 ) ( 289,550 ) ( 24,049 )

Other expense (income), net ( 262 ) 633 67 863

Loss from continuing operations before benefit (provision) for income taxes and share of net income from joint venture ( 8,211 ) ( 6,249 ) ( 133,730 ) ( 17,457 )

Benefit (provision) for income taxes 8,715 1,134 7,935 ( 3,694 )

Share of net income (loss) from joint venture 927 ( 203 ) 656 66

Net loss $ ( 21,748 ) $ ( 7,283 ) $ ( 269,939 ) $ ( 26,801 )

Other comprehensive gain (loss):

Share of net income from joint venture 1,136 279 1,792 345

Income (loss) from continuing operations 1,640 ( 4,836 ) ( 124,003 ) ( 20,806 )

Income (loss) from discontinued operations, net of tax (Note 2) 20,330 ( 1,019 ) ( 123,966 ) ( 11,850 )

Net income (loss) $ 21,970 $ ( 5,855 ) $ ( 247,969 ) $ ( 32,656 )

Other comprehensive income (loss):

Foreign currency translation gain (loss) $ 6,712 $ ( 11,178 ) $ ( 6,636 ) $ ( 11,354 )

Interest rate swap:

Change in fair value of interest rate swap, net of tax ( 1,255 ) ( 6,962 ) ( 12,464 ) ( 10,818 )

reclassification adjustment for losses included in net loss, net of tax 2,638 — 3,690 —

Change in fair value, net of tax 21 ( 1,181 ) ( 12,443 ) ( 11,999 )

Reclassification adjustment for losses included in net income (loss), net of tax 3,148 238 6,838 238

Other comprehensive income (loss) $ 9,881 $ ( 12,121 ) $ ( 12,241 ) $ ( 23,115 )

Comprehensive loss $ ( 19,371 ) $ ( 15,742 ) $ ( 292,061 ) $ ( 37,795 )

Basic net loss per common share:

Net loss per common share $ ( 0.59 ) $ ( 0.17 ) $ ( 6.55 ) $ ( 0.64 )

Comprehensive income (loss) $ 31,851 $ ( 17,976 ) $ ( 260,210 ) $ ( 55,771 )

Basic net income (loss) per common share:

Income (loss) from continuing operations per common share $ ( 0.04 ) $ ( 0.12 ) $ ( 3.16 ) $ ( 0.50 )

Income (loss) from discontinued operations per common share 0.49 ( 0.02 ) ( 2.94 ) ( 0.28 )

Net income (loss) per common share $ 0.45 $ ( 0.14 ) $ ( 6.10 ) $ ( 0.78 )

Weighted average common shares outstanding 42,202 42,038 42,170 42,013

Diluted net loss per common share:

Net loss per common share $ ( 0.59 ) $ ( 0.17 ) $ ( 6.55 ) $ ( 0.64 )

Diluted net income (loss) per common share:

Income (loss) from continuing operations per common share $ ( 0.04 ) $ ( 0.12 ) $ ( 3.16 ) $ ( 0.50 )

Income (loss) from discontinued operations per common share 0.49 ( 0.02 ) ( 2.94 ) ( 0.28 )

Net income (loss) per common share $ 0.45 $ ( 0.14 ) $ ( 6.10 ) $ ( 0.78 )

Weighted average common shares outstanding 42,202 42,038 42,170 42,013

1 unchanged sentence

Condensed Consolidated Balance Sheets

(in thousands, except per share data) June 30, 2020 December 31, 2019

(in thousands, except per share data) September 30, 2020 December 31, 2019

Current assets:

3 unchanged sentences

Income tax receivable 13,640 5,973

Current assets held for sale 630,900 117,000

Other current assets 11,753 11,778

5 unchanged sentences

Investment in joint venture 24,147 21,755

Deferred tax assets 38,026 —

Non-current assets held for sale — 695,054

Other non-current assets 6,716 8,574

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Current portion of operating lease liabilities 5,005 4,288

Current liabilities held for sale 120,832 41,546

Other current liabilities 25,113 17,300

4 unchanged sentences

Operating lease liabilities, net of current portion 56,111 48,575

Non-current liabilities held for sale — 84,199

Other non-current liabilities 25,137 40,457

1 unchanged sentence

Commitments and contingencies (Note 12)

Series B convertible preferred stock - $ 0.01 par value per share, 100 shares authorized, 100 shares issued and outstanding at December 31, 2019, and June 30, 2020

Series B convertible preferred stock - $ 0.01 par value per share, 100 shares authorized, 100 shares issued and outstanding at December 31, 2019, and September 30, 2020

101,846 93,012

Stockholders' equity:

Common stock - $ 0.01 par value per share, 90,000 shares authorized, 42,313 and 42,747 shares issued and outstanding at December 31, 2019, and June 30, 2020, respectively

Common stock - $ 0.01 par value per share, 90,000 shares authorized, 42,313 and 42,739 shares issued and outstanding at December 31, 2019, and September 30, 2020, respectively

Additional paid-in capital 495,967 501,615

6 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Three Months Ended June 30, 2020 and 2019

Three Months Ended September 30, 2020 and 2019

(in thousands) Number

2 unchanged sentences

deficit) Accumulated other comprehensive income (loss) Total

Balance, March 31, 2020 42,757 $ 428 $ 499,925 $ 1,076 $ ( 353,474 ) $ ( 69,053 ) $ 78,902

Net loss — — — — ( 21,748 ) — ( 21,748 )

Balance, June 30, 2020 42,747 $ 427 $ 498,294 $ 1,076 $ ( 375,222 ) $ ( 66,676 ) $ 57,899

Net income — — — — 21,970 — 21,970

Dividends accrued for preferred stock — — ( 3,139 ) — — — ( 3,139 )

Share-based compensation expense — — 1,435 — — — 1,435

Restricted shares forgiven for taxes ( 8 ) — ( 46 ) — — — ( 46 )

Change in estimate of share-based award vesting — — ( 577 ) — — — ( 577 )

Reclassification of warrants to liabilities (Note 18) — — — ( 1,076 ) — — ( 1,076 )

Change in fair value of interest rate swap, net of tax of $ 6

— — — — — 21 21

Reclassification of interest rate swap settlement to income, net of tax of $ 798

Reclassification of interest rate swap settlement to net income, net of tax of $ 952

— — — — — 3,148 3,148

Foreign currency translation gain — — — — — 6,712 6,712

Balance, June 30, 2020 42,747 $ 427 $ 498,294 $ 1,076 $ ( 375,222 ) $ ( 66,676 ) $ 57,899

Balance, September 30, 2020 42,739 $ 427 $ 495,967 $ — $ ( 353,252 ) $ ( 56,795 ) $ 86,347

(in thousands) Number

2 unchanged sentences

deficit) Accumulated other comprehensive income (loss) Total

Balance, March 31, 2019 42,367 $ 424 $ 506,442 $ ( 78,060 ) $ ( 33,849 ) $ 394,957

Balance, June 30, 2019 42,367 $ 424 $ 504,556 $ ( 85,343 ) $ ( 42,308 ) $ 377,329

Net loss — — — ( 5,855 ) — ( 5,855 )

Dividends declared or accrued for common stock — — ( 2,973 ) — — ( 2,973 )

Shares issued for options exercised 5 — 21 — — 21

Share-based compensation expense ( 50 ) ( 1 ) 1,152 — — 1,151

Restricted shares forgiven for taxes ( 25 ) — ( 10 ) — — ( 10 )

Change in estimate of share-based award vesting — — ( 1,240 ) — — ( 1,240 )

Change in fair value of interest rate swap, net of tax of $ 375

— — — — ( 1,181 ) ( 1,181 )

Reclassification of interest rate swap settlement to net loss, net of tax of $ 68

— — — — 238 238

Foreign currency translation loss — — — — ( 11,178 ) ( 11,178 )

Balance, June 30, 2019 42,367 $ 424 $ 504,556 $ ( 85,343 ) $ ( 42,308 ) $ 377,329

Balance, September 30, 2019 42,297 $ 423 $ 501,506 $ ( 91,198 ) $ ( 54,429 ) $ 356,302

See notes to condensed consolidated financial statements (unaudited).

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Six Months Ended June 30, 2020 and 2019

Nine Months Ended September 30, 2020 and 2019

(in thousands) Number

6 unchanged sentences

Share-based compensation expense 442 4 4,138 — — — 4,142

Restricted shares forgiven for taxes and forfeited ( 8 ) — ( 30 ) — — — ( 30 )

Restricted shares forgiven for taxes ( 16 ) — ( 76 ) — — — ( 76 )

Change in estimate of share-based award vesting — — ( 577 ) — — — ( 577 )

Reclassification of warrants to liabilities (Note 18) — — — ( 1,076 ) — — ( 1,076 )

Change in fair value of interest rate swap, net of tax of $ 3,764

— — — — — ( 12,443 ) ( 12,443 )

Reclassification of interest rate swap settlement to income, net of tax of $ 1,116

Reclassification of interest rate swap settlement to net loss, net of tax of $ 2,068

— — — — — 6,838 6,838

Foreign currency translation loss — — — — — ( 6,636 ) ( 6,636 )

Balance, June 30, 2020 42,747 $ 427 $ 498,294 $ 1,076 $ ( 375,222 ) $ ( 66,676 ) $ 57,899

Balance, September 30, 2020 42,739 $ 427 $ 495,967 $ — $ ( 353,252 ) $ ( 56,795 ) $ 86,347

(in thousands) Number

5 unchanged sentences

Dividends declared or accrued for common stock — — ( 8,907 ) — — ( 8,907 )

Shares issued for option exercises 5 — 21 — — 21

Share-based compensation expense 231 2 3,128 — — 3,130

Restricted shares forgiven for taxes and forfeited ( 18 ) — ( 141 ) — — ( 141 )

Restricted shares forgiven for taxes ( 43 ) — ( 151 ) — — ( 151 )

Change in estimate of share-based award vesting — — ( 1,240 ) — — ( 1,240 )

Change in fair value of interest rate swap, net of tax of $ 3,472

— — — — ( 11,999 ) ( 11,999 )

Reclassification of interest rate swap settlement to net loss, net of tax of $ 68

— — — — 238 238

Foreign currency translation loss — — — — ( 11,354 ) ( 11,354 )

Adoption of new accounting standard — — — ( 51 ) — ( 51 )

Balance, June 30, 2019 42,367 $ 424 $ 504,556 $ ( 85,343 ) $ ( 42,308 ) $ 377,329

Balance, September 30, 2019 42,297 423 501,506 ( 91,198 ) ( 54,429 ) 356,302

See notes to condensed consolidated financial statements (unaudited).

Condensed Consolidated Statements of Cash Flows

Six Months Ended

Nine Months Ended

September 30,

(in thousands) 2020 2019

2 unchanged sentences

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

Depreciation and amortization 46,385 46,349

Depreciation and amortization of continuing operations 34,119 33,552

Depreciation and amortization of discontinued operations 35,731 35,418

Amortization of debt issuance costs 4,981 3,538

Goodwill impairment 239,699 —

Goodwill impairment of continuing operations 92,942 —

Goodwill impairment of discontinued operations 146,757 —

Loss on extinguishment of debt and write-off of debt issuance costs 1,532 2,699

20 unchanged sentences

Proceeds from long-term debt 64,716 52,144

Repayment of long-term debt ( 9,078 ) ( 12,055 )

Repayments of long-term debt ( 17,123 ) ( 26,634 )

Proceeds from (repayments of) short-term debt, net ( 849 ) ( 6,086 )

5 unchanged sentences

Cash and cash equivalents at end of period (1) $ 72,117 $ 24,409

_______________________________

(1) Cash and cash equivalents include $ 16.0 million, $ 13.8 million, $ 13.2 million, and $ 10.2 million of cash and cash equivalents that were included in current assets held for sale as of September 30, 2020, December 31, 2019, September 30, 2019, and December 31, 2018, respectively.

See notes to condensed consolidated financial statements (unaudited).

Notes to Condensed Consolidated Financial Statements

June 30, 2020

September 30, 2020

Amounts in thousands, except per share data

1 unchanged sentence

Nature of Business

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.

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 primarily for the aerospace and defense, electrical, automotive, medical, and general industrial markets.

As used in this Quarterly Report on Form 10-Q (this “Quarterly Report”), the terms “NN,” the “Company,” “we,” “our,” or “us” refer to NN, Inc., and its subsidiaries.

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Securities and Exchange Commission (the “SEC”) on March 16, 2020.

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 and six months ended June 30, 2020 and 2019;

financial position as of June 30, 2020, and December 31, 2019;

and cash flows for the six months ended June 30, 2020 and 2019, on a basis consistent with our audited consolidated financial statements other than the adoption of new accounting standards (see Accounting Standards Recently Adopted section below).

Historical periods presented reflect reclassifications for discontinued operations (see Note 2).

Historical periods also reflect revisions that we disclosed in our 2019 Annual Report (see Note 3).

financial position as of September 30, 2020, and December 31, 2019;

and cash flows for the nine months ended September 30, 2020 and 2019, on a basis consistent with our audited consolidated financial statements other than the adoption of new accounting standards (see Accounting Standards Recently Adopted section below).

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.

2 unchanged sentences

These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes included in the 2019 Annual Report.

The results for the three and six months ended June 30, 2020, are not necessarily indicative of results for the year ending December 31, 2020, or any other future periods.

The results for the three and nine months ended September 30, 2020, are not necessarily indicative of results for the year ending December 31, 2020, or any other future periods.

Except for per share data or as otherwise indicated, all U.S.

1 unchanged sentence

In November 2019, we initiated a strategic review to evaluate a broad range of operational, financial, and strategic options to reduce leverage and enhance shareholder value, and we retained external advisors to assist in this effort.

The strategic options we are evaluating include further cost savings and cash generation initiatives, more efficient capital deployment, changes to our debt and equity structure to improve financial flexibility and liquidity, and the sale of part or all of NN, among others.

The strategic options we have evaluated included further cost savings and cash generation initiatives, more efficient capital deployment, changes to our debt and equity structure to improve financial flexibility and liquidity, and the sale of part or all of NN, among others.

As discussed in our 2019 Annual Report, on December 11, 2019, we issued Series B Convertible Preferred Stock (“Preferred Stock”) for net proceeds of $ 95.7 million and used a portion of the proceeds to repay amounts due at that time on our Senior Secured Revolver.

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During this period, we are required to maintain minimum liquidity levels, provide certain financial and other information, and take certain other action as specified in the amendment.

Failure to maintain the required minimum liquidity levels or satisfy other requirements set forth in the amendment would allow the revolving credit lenders, the Senior Secured Term loan lenders, and the Incremental Term Loan lenders to cause amounts due under our credit facility to become immediately due and payable and would have a material, adverse impact on our financial position.

aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the Condensed Consolidated Financial Statements are issued.

Failure to maintain the required minimum liquidity levels or satisfy other requirements set forth in the amendment would allow the revolving credit lenders, the Senior Secured Term loan lenders, and the Incremental Term Loan lenders to cause amounts outstanding under our credit facility to become immediately due and payable and would have a material, adverse impact on our financial position.

In August 2020, we entered into an agreement to sell our Life Sciences business (see Note 2).

The sale closed on October 6, 2020, at which time we received cash proceeds of $ 757.2 million.

We immediately prepaid $ 700.0 million in the aggregate on the Senior Secured Term Loan and the Incremental Term Loan.

We also paid in full the outstanding balance on the Senior Secured Revolver.

In August 2020, we amended our Credit Agreement to obtain the lenders’ consent to the sale of the Life Sciences business, subject to certain terms and conditions.

In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the Condensed Consolidated Financial Statements are issued.

We rely on cash flow generated from operations and available borrowings under our Senior Secured Revolver to fund our working capital and other operating and investing needs.

Our ability to borrow under the Senior Secured Revolver is based on our continued compliance with the minimum liquidity requirements and, for periods beginning in the fourth quarter of 2020, the financial leverage ratio covenant, as defined, which become more restrictive over time and upon the occurrence of a qualified sale transaction.

Our ability to borrow under the Senior Secured Revolver is based on our continued compliance with the minimum liquidity requirements and, for periods beginning in the fourth quarter of 2020, the financial leverage ratio covenant, as defined, which became more restrictive upon the occurrence of a qualified sale transaction, which occurred on October 6, 2020.

The full extent of the effect of the coronavirus (“COVID-19”) pandemic on our customers, our supply chain and our business cannot be reasonably assessed at this time although we expect our full year 2020 results of operations to be adversely affected.

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If there are differences between these estimates and actual results, our consolidated financial statements may be materially affected.

Based on available borrowing capacity of the Senior Secured Revolver, as well as cash flows expected to be generated from operations and investing activities, we anticipate that we may not be able to maintain compliance with the existing financial leverage ratio covenant for the next twelve months.

If we are unable to comply with our financial leverage ratio covenant, then the revolving credit lenders, the Senior Secured Term Loan lenders, and the Incremental Term Loan lenders could take action to cause amounts due under our credit facility to become due and payable unless we are able to amend such covenants or otherwise refinance our debt.

Our ability to amend our covenants or refinance our debt is dependent upon several factors, and therefore there can be no assurance that we would be successful in these efforts.

If we are unable to access future borrowings or be required to pay amounts due under our credit facilities prior to their normal maturity dates, this would have a material impact to our financial position.

Accordingly, we believe there is substantial doubt about our ability to continue as a going concern for the twelve-month period following the date of this Quarterly Report.

Based on available borrowing capacity of the Senior Secured Revolver, the reduction in debt service costs as a result of the debt prepayment with net proceeds from the sale of the Life Sciences business in October 2020, and cash flows expected to be generated from operations and investing activities, we anticipate that our cash and cash equivalents are sufficient to support our operations and meet our obligations, and that we will be able to maintain compliance with the existing financial leverage ratio covenant for the next twelve months from issuance of these financial statements.

Accordingly, we believe that the conditions that raised substantial doubt about our ability to continue as a going concern as disclosed in our Quarterly Report for the period ended June 30, 2020, have been resolved.

Accounting Standards Recently Adopted

2 unchanged sentences

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which modifies the measurement of expected credit losses on certain financial instruments and the timing of when such losses are recorded.

In November 2019, the SEC issued SAB No.

In November 2019, the SEC issued Staff Accounting Bulletin (“SAB”) No.

119, codified in ASC Topic 326, Financial Instruments-Credit Losses, which provides guidance on accounting of credit losses.

15 unchanged sentences

GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform.

Among other things, for all types of hedging relationships, the guidance allows an entity to change the reference rate and other critical terms related to reference rate reform without having to remeasure the value or reassess a previous accounting determination.

Among other things, for all types of hedging relationships, the guidance allows an entity to change the reference rate and other critical terms related

to reference rate reform without having to remeasure the value or reassess a previous accounting determination.

The amendments in this guidance should be applied on a prospective basis and, for companies with a fiscal year ending December 31, are effective from January 1, 2020, through December 31, 2022.

We adopted this guidance effective January 1, 2020.

When the transition occurs, we expect to apply this expedient to our existing interest rate swap that references LIBOR, and to any other new transactions that reference LIBOR or another reference rate that is discontinued, through December 31, 2022.

When the transition occurs, we expect to apply this expedient to new transactions that reference LIBOR or another reference rate that is discontinued, through December 31, 2022.

The adoption of this ASU is not expected to have a material impact on our consolidated financial statements.

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We are currently evaluating the impact on our financial statements and related disclosures.

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, (“ASU 2020-06”) which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity.

Specifically, ASU 2020-06 simplifies accounting for convertible instruments by removing major separation models required under current U.S.

In addition, ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exception.

Further, for the diluted earnings-per-share calculation, the new guidance requires entities to use the if-converted method for all convertible instruments and generally requires entities to include the effect of share settlement for instruments that may be settled in cash or shares, among other things.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

Early adoption is permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

Either the full or modified retrospective adoption method is allowed.

We are currently evaluating the impact on our financial statements and related disclosures.

Discontinued Operations

In August 2020, we entered into a Stock Purchase Agreement (the “SPA”) with affiliates of American Securities LLC for the sale of our Life Sciences business for an aggregate purchase price of up to $ 825 million, which includes a $ 755 million cash base purchase price and a potential earnout payment of up to $ 70 million.

The cash base purchase price was subject to certain adjustments and was payable at the closing of the transaction, which occurred on October 6, 2020.

See Note 19 for more information about the closing of the transaction.

The earnout payment is subject to the performance of the Life Sciences business during the year ending December 31, 2022, measured by Adjusted EBITDA targets, as defined by the SPA.

The Life Sciences business includes facilities that are engaged in the production of a variety of components, assemblies, and instruments, such as surgical knives, bioresorbable implants, surgical staples, cases and trays, orthopaedic implants and tools, laparoscopic devices, and drug delivery devices for the orthopaedics and medical/surgical end markets.

The sale of the Life Sciences business furthers management’s strategy to improve liquidity and creates the financial flexibility to pursue key growth areas in the Mobile Solutions and Power Solutions segments.

In accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations, the operating results of the Life Sciences business are classified as discontinued operations.

The presentation of discontinued operations includes revenues and expenses of the discontinued operations and will also include any gain on the disposition of the business, all net of tax, as one line item on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

The Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for all periods presented have been revised to reflect this presentation.

Accordingly, the results of the Life Sciences business have been excluded from continuing operations and segment results for all periods presented in the condensed consolidated financial statements and the accompanying notes unless otherwise stated.

The Condensed Consolidated Statements of Cash Flows include cash flows of the Life Sciences business in each line item unless otherwise stated.

The following table presents the results of operations of the discontinued operations.

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Net sales $ 68,525 $ 93,438 $ 223,944 $ 269,981

Cost of sales (exclusive of depreciation and amortization shown separately below) 50,444 64,420 158,538 186,694

Selling, general and administrative expense 6,164 8,550 20,189 25,917

Depreciation and amortization 12,030 11,337 35,731 35,418

Goodwill impairment — — 146,757 —

Other operating expense (income), net 24 ( 94 ) 20 ( 114 )

Income (loss) from operations ( 137 ) 9,225 ( 137,291 ) 22,066

Interest expense 12,248 10,928 37,857 33,663

Loss on extinguishment of debt and write-off of debt issuance costs 1,388 — 1,388 2,391

Other expense (income), net ( 234 ) ( 535 ) ( 325 ) 21

Loss from discontinued operations before costs of disposal and benefit for income taxes ( 13,539 ) ( 1,168 ) ( 176,211 ) ( 14,009 )

Benefit for income taxes 39,954 149 59,598 2,159

Income (loss) from discontinued operations before costs of disposal 26,415 ( 1,019 ) ( 116,613 ) ( 11,850 )

Costs of disposal of discontinued operations (1) ( 6,598 ) — ( 7,956 ) —

Benefit for income taxes on disposal costs 513 — 603 —

Income (loss) from discontinued operations, net of tax $ 20,330 $ ( 1,019 ) $ ( 123,966 ) $ ( 11,850 )

_______________________________

(1) Represents legal, accounting, and other incremental direct costs related to the sale of the Life Sciences business that were incurred prior to the closing of the sale.

Our credit facility required us to use proceeds from the sale of the Life Sciences business to prepay a portion of our existing debt.

We paid $ 700 million in the aggregate on our term loans as described in Note 10.

The prepayment was applied to debt in accordance with the prepayment provisions of the credit agreement immediately after the transaction closed on October 6, 2020.

Average quarterly interest rates were multiplied by the required prepayment amounts to calculate interest expense to be reclassified to discontinued operations for all periods presented.

Write-offs of credit facility debt issuance costs were allocated to discontinued operations by multiplying the ratio of the required prepayment amounts as a percentage of total outstanding principal by the total write-off charges in each period.

Write-offs of credit facility debt issuance costs that have been allocated to discontinued operations are presented in the “Loss on extinguishment of debt and write-off of debt issuance costs” line the table above.

The following table summarizes the amount of interest expense related to the credit facility that has been reclassified to discontinued operations.

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Interest on debt $ 11,060 $ 10,217 $ 34,410 $ 31,490

Amortization of debt issuance costs 1,215 812 3,692 2,478

Capitalized interest and other ( 27 ) ( 101 ) ( 245 ) ( 305 )

Total interest expense of discontinued operations $ 12,248 $ 10,928 $ 37,857 $ 33,663

The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations for each of the periods presented.

September 30, 2020 December 31, 2019

Cash and cash equivalents $ 15,986 $ 13,792

Accounts receivable, net 37,465 48,318

Inventories 49,646 51,644

Other current assets 3,042 3,246

Total current assets 106,139 117,000

Property, plant and equipment, net 114,364 118,536

Operating lease right-of-use assets 24,199 20,044

Goodwill 197,353 344,316

Intangible assets, net 188,584 211,847

Other non-current assets 261 311

Total non-current assets 524,761 695,054

Total assets held for sale (1) $ 630,900 $ 812,054

Accounts payable $ 11,362 $ 16,367

Accrued salaries, wages and benefits 15,709 14,844

Income tax payable 218 344

Current portion of operating lease liabilities 2,768 2,364

Other current liabilities 5,962 7,627

Total current liabilities 36,019 41,546

Deferred tax liabilities 55,728 61,338

Operating lease liabilities, net of current portion 22,333 18,405

Other non-current liabilities 6,752 4,456

Total non-current liabilities 84,813 84,199

Total liabilities held for sale (1) $ 120,832 $ 125,745

_______________________________

(1) As of September 30, 2020, all assets and liabilities held for sale are classified as current on the Condensed Consolidated Balance Sheet because they were expected to be sold within twelve months.

The following table presents the significant noncash items and cash paid for capital expenditures of discontinued operations for each period presented.

Nine Months Ended September 30,

Depreciation and amortization $ 35,731 $ 35,418

Goodwill impairment 146,757 —

Amortization of debt issuance costs 3,692 2,478

Loss on extinguishment of debt and write-off of debt issuance costs 1,388 2,391

Acquisition of property, plant and equipment 7,626 16,358

Right-of-use assets obtained in exchange for new finance lease liabilities 695 1,208

Right-of-use assets obtained in exchange for new operating lease liabilities (1) 6,174 115

_______________________________

(1) Includes new leases, renewals, and modifications.

Prior Periods' Financial Statement Revisions

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In connection with such revision, we also corrected for other immaterial misstatements.

In connection with the filing of this Quarterly Report, we have revised the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), Changes in Stockholders’ Equity, and Cash Flows for the six months ended June 30, 2019, and the related notes to revise for those misstatements that impacted such period.

We will revise the remaining 2019 previously issued quarterly financial statements in connection with future 2020 filings on Form 10-Q.

The following table presents the effect of the correction of the misstatements and the resulting revision on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Three Months Ended June 30, 2019

As Originally Reported Adjustment As Revised

In connection with the filing of this Quarterly Report, we have revised the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), Changes in Stockholders’ Equity, and Cash Flows for the three and nine months ended September 30, 2019, and the related notes to revise for those misstatements that impacted such period.

The following tables present the effect of the correction of the misstatements and the resulting revision on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as well as the effect of recasting the prior periods for the Life Sciences discontinued operations (see Note 2).

Three Months Ended September 30, 2019

As Originally Reported Adjustment Discontinued Operations Adjustment As Revised

Cost of sales (exclusive of depreciation and amortization) $ 160,816 $ 258 $ ( 64,420 ) $ 96,654

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Loss before (provision) benefit for income taxes and share of net income from joint venture ( 7,159 ) ( 258 ) 1,168 ( 6,249 )

Net income (loss) ( 6,697 ) ( 586 ) ( 7,283 )

Foreign currency translation gain (loss) ( 1,434 ) ( 63 ) ( 1,497 )

Comprehensive income (loss) ( 15,093 ) ( 649 ) ( 15,742 )

Basic net income (loss) per share $ ( 0.16 ) $ ( 0.01 ) $ ( 0.17 )

Diluted net income (loss) per share $ ( 0.16 ) $ ( 0.01 ) $ ( 0.17 )

Six Months Ended June 30, 2019

As Originally Reported Adjustment As Revised

Loss from continuing operations ( 5,597 ) ( 258 ) 1,019 ( 4,836 )

Net loss ( 5,597 ) ( 258 ) — ( 5,855 )

Foreign currency translation loss ( 11,448 ) 270 — ( 11,178 )

Comprehensive loss ( 17,988 ) 12 — ( 17,976 )

Basic loss from continuing operations per common share $ ( 0.13 ) $ ( 0.01 ) $ 0.02 $ ( 0.12 )

Basic net loss per common share $ ( 0.13 ) $ ( 0.01 ) $ — $ ( 0.14 )

Diluted loss from continuing operations per common share $ ( 0.13 ) $ ( 0.01 ) $ 0.02 $ ( 0.12 )

Diluted net loss per common share $ ( 0.13 ) $ ( 0.01 ) $ — $ ( 0.14 )

Nine Months Ended September 30, 2019

As Originally Reported Adjustment Discontinued Operations Adjustment As Revised

Cost of sales (exclusive of depreciation and amortization) $ 485,598 $ 1,762 $ ( 186,694 ) $ 300,666

Income (loss) from operations 16,371 ( 1,762 ) ( 22,066 ) ( 7,457 )

Loss before (provision) benefit for income taxes and share of net income from joint venture ( 22,545 ) ( 1,504 ) ( 24,049 )

Net income (loss) ( 25,297 ) ( 1,504 ) ( 26,801 )

Foreign currency translation gain (loss) ( 172 ) ( 4 ) ( 176 )

Comprehensive income (loss) ( 36,287 ) ( 1,508 ) ( 37,795 )

Basic net income (loss) per share $ ( 0.60 ) $ ( 0.04 ) $ ( 0.64 )

Diluted net income (loss) per share $ ( 0.60 ) $ ( 0.04 ) $ ( 0.64 )

Loss before provision for income taxes and share of net income from joint venture ( 29,704 ) ( 1,762 ) 14,009 ( 17,457 )

Loss from continuing operations ( 30,894 ) ( 1,762 ) 11,850 ( 20,806 )

Net loss ( 30,894 ) ( 1,762 ) — ( 32,656 )

Foreign currency translation loss ( 11,620 ) 266 — ( 11,354 )

Comprehensive loss ( 54,275 ) ( 1,496 ) — ( 55,771 )

Basic loss from continuing operations per common share $ ( 0.74 ) $ ( 0.04 ) $ 0.28 $ ( 0.50 )

Basic net loss per common share $ ( 0.74 ) $ ( 0.04 ) $ — $ ( 0.78 )

Diluted loss from continuing operations per common share $ ( 0.74 ) $ ( 0.04 ) $ 0.28 $ ( 0.50 )

Diluted net loss per common share $ ( 0.74 ) $ ( 0.04 ) $ — $ ( 0.78 )

The following table presents the effect of the correction of the misstatements on the Condensed Consolidated Statements of Changes in Stockholders’ Equity.

As Originally Reported Adjustment As Revised

As of and for the three months ended June 30, 2019

As of and for the three months ended September 30, 2019

Additional paid-in capital $ 513,268 $ ( 11,762 ) $ 501,506

Net income (loss) ( 6,697 ) ( 586 ) ( 7,283 )

Net loss ( 5,597 ) ( 258 ) ( 5,855 )

Accumulated deficit ( 98,888 ) 7,690 ( 91,198 )

Foreign currency translation gain (loss) ( 1,434 ) ( 63 ) ( 1,497 )

Accumulated other comprehensive income (loss) ( 42,615 ) 307 ( 42,308 )

Foreign currency translation loss ( 11,448 ) 270 ( 11,178 )

Accumulated other comprehensive loss ( 55,006 ) 577 ( 54,429 )

Total stockholders' equity 359,797 ( 3,495 ) 356,302

As of and for the six months ended June 30, 2019

As of and for the nine months ended September 30, 2019

Additional paid-in capital $ 513,268 $ ( 11,762 ) $ 501,506

Net income (loss) ( 25,297 ) ( 1,504 ) ( 26,801 )

Net loss ( 30,894 ) ( 1,762 ) ( 32,656 )

Accumulated deficit ( 98,888 ) 7,690 ( 91,198 )

Foreign currency translation gain (loss) ( 172 ) ( 4 ) ( 176 )

Accumulated other comprehensive income (loss) ( 42,615 ) 307 ( 42,308 )

Foreign currency translation loss ( 11,620 ) 266 ( 11,354 )

Accumulated other comprehensive loss ( 55,006 ) 577 ( 54,429 )

Total stockholders' equity 359,797 ( 3,495 ) 356,302

The following table presents the effect of the correction of the misstatements on the Condensed Consolidated Statements of Cash Flows.

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

As Originally Reported Adjustment As Revised

Net income (loss) $ ( 25,297 ) $ ( 1,504 ) $ ( 26,801 )

Deferred income taxes ( 6,762 ) ( 1,331 ) ( 8,093 )

Net loss $ ( 30,894 ) $ ( 1,762 ) $ ( 32,656 )

Changes in operating assets and liabilities, net of acquisitions:

Inventories ( 5,794 ) 969 ( 4,825 )

Income taxes receivable and payable, net 315 1,331 1,646

Other 11,078 793 11,871

Segment Information

Management has concluded that:

Life Sciences, which is focused on growth in the medical end market, primarily in the orthopaedics and medical/surgical end markets;

Mobile Solutions, which is focused on growth in the general industrial and

automotive end markets;

and Power Solutions, which is focused on growth in the electrical and aerospace and defense end markets, constitute our operating segments.

Life Sciences, Mobile Solutions, and Power Solutions are considered operating segments as each engages in business activities for which it earns revenues and incurs expenses, discrete financial information is available for each, and this is the level at which the chief operating decision maker reviews discrete financial information for purposes of allocating resources and assessing performance.

The following tables present results of operations by reportable segment.

Sciences Mobile

Our business has historically been aggregated into the following three reportable segments:

• Mobile Solutions, which is focused on growth in the general industrial and automotive end markets;

• Power Solutions, which is focused on growth in the electrical and aerospace and defense end markets;

• Life Sciences, which is focused on growth in the medical end market, primarily in the orthopaedics and medical/surgical end markets and was sold on October 6, 2020.

These divisions have historically been considered our three operating segments as each engages in business activities for which it earns revenues and incurs expenses, discrete financial information is available for each, and this is the level at which the chief operating decision maker reviews discrete financial information for purposes of allocating resources and assessing performance.

See Note 2 and Note 19 for information regarding the sale of the Life Sciences business on October 6, 2020.

The results of the Life Sciences business are classified as discontinued operations for all periods in the condensed consolidated financial statements and accompanying notes unless otherwise stated.

Accordingly, results of the Life Sciences business are not included in the tabular presentation below.

The following tables present results of continuing operations by reportable segment.

Solutions Power

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Consolidations Total

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Net sales $ 70,371 $ 43,415 $ ( 25 ) (a) $ 113,761

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Interest expense ( 6,873 )

Loss before benefit for income taxes and share of net loss from joint venture $ ( 26,021 )

Three Months Ended June 30, 2019

Loss from continuing operations before income taxes and share of net income from joint venture $ ( 8,211 )

Three Months Ended September 30, 2019

Net sales $ 73,071 $ 47,430 $ ( 42 ) (a) $ 120,459

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Interest expense ( 3,805 )

Loss before provision for income taxes and share of net income from joint venture $ ( 6,503 )

Sciences Mobile

Other ( 633 )

Loss from continuing operations before income taxes and share of net income from joint venture $ ( 6,249 )

Solutions Power

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Consolidations Total

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Net sales $ 181,292 $ 127,307 $ ( 93 ) (a) $ 308,506

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Other ( 211 )

Loss before provision for income taxes and share of net income from joint venture $ ( 289,550 )

Six Months Ended June 30, 2019

Loss from continuing operations before income taxes and share of net income from joint venture $ ( 133,730 )

Nine Months Ended September 30, 2019

Net sales $ 230,590 $ 148,480 $ ( 232 ) (a) $ 378,838

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Other ( 1,171 )

Loss before benefit for income taxes and share of net income from joint venture $ ( 24,049 )

Loss from continuing operations before income taxes and share of net income from joint venture $ ( 17,457 )

_______________________________

(a) Includes elimination of intersegment transactions occurring during the ordinary course of business.

The following table presents total assets by reportable segment as of June 30, 2020, and December 31, 2019.

June 30, 2020 December 31, 2019

Life Sciences $ 637,927 $ 811,526

The following table presents total assets by reportable segment as of September 30, 2020, and December 31, 2019.

September 30, 2020 December 31, 2019

Mobile Solutions $ 369,939 $ 373,256

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Total $ 1,316,209 $ 1,541,984

As of September 30, 2020, and December 31, 2019, one customer represented 12 % and 10 %, respectively, of consolidated accounts receivable from continuing operations.

Amounts due from this customer are primarily related to Mobile Solutions.

Inventories are comprised of the following amounts:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Raw materials $ 21,238 $ 34,816

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Total inventories $ 63,718 $ 67,078

The following table shows changes in the carrying amount of goodwill by reportable segment.

Sciences Power

Solutions Total

The following table shows changes in the carrying amount of goodwill.

Balance as of December 31, 2019 $ 94,779

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Impairments ( 92,942 )

Balance as of June 30, 2020 $ 196,467 $ — $ 196,467

As of June 30, 2020, and December 31, 2019, no goodwill was recorded in the Mobile Solutions reportable segment.

Balance as of September 30, 2020 $ —

As of December 31, 2019, all goodwill related to the Power Solutions reportable segment, and no goodwill was recorded in the Mobile Solutions reportable segment.

During the first quarter of 2020, our market capitalization declined to a level that was less than the net book value of our stockholders’ equity.

The decline in market capitalization was a triggering event that caused us to perform a goodwill impairment analysis as of March 31, 2020.

The goodwill impairment analysis required significant judgments to calculate the fair value for each of Life Sciences and Power Solutions, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term growth rate for each operating segment, and determination of weighted average cost of capital.

Our forecasts used in the goodwill impairment analysis reflect our expectations of declines in sales resulting from COVID-19.

The goodwill impairment analysis required significant judgments to calculate the fair value for the Power Solutions reporting unit, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term growth rate for each operating segment, and determination of weighted average cost of capital.

Our forecasts used in the goodwill impairment analysis reflected our expectations of declines in sales resulting from COVID-19.

Significant assumptions and estimates are involved in the application of the discounted cash flow model to forecast operating cash flows, including market growth and market share, sales volumes and prices, costs to produce, discount rate, and estimated capital needs.

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Assumptions in estimating future cash flows are subject to a high degree of judgment and complexity.

Changes in assumptions and estimates may affect the fair value of goodwill and could result in impairment charges in future periods.

Management’s judgment used in the assessment of fair value is more significant under the current market conditions and economic uncertainty created by COVID-19.

The carrying values of the Life Sciences and Power Solutions reporting units exceeded their estimated fair values as of the March 31, 2020, analysis.

As a result of our analysis, we recorded an impairment loss on goodwill of $ 146.8 million and $ 92.9 million for Life Sciences and Power Solutions, respectively, to the “Goodwill impairment” line on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Life Sciences goodwill as of June 30, 2020, was $ 196.5 million.

In conjunction with the goodwill impairment test performed during the first quarter of 2020, Life Sciences goodwill was impaired by $ 146.8 million, resulting in the carrying value of the reporting unit being equal to its fair value as of the date of the assessment.

If our assessment of the relevant facts and circumstances changes, or if the actual performance falls short of expected results, an additional impairment charge will be required.

An impairment of goodwill may also lead us to record an impairment of other intangible assets.

The carrying value of finite-lived intangible assets for the Life Sciences group as of June 30, 2020, was $ 196.3 million.

The carrying value of the Power Solutions reporting unit exceeded the estimated fair value as of the March 31, 2020, analysis.

As a result of our analysis, we recorded an impairment loss on goodwill of $ 92.9 million to the “Goodwill impairment” line on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

As of September 30, 2020, there is no remaining goodwill balance.

Intangible Assets, Net

The following table shows changes in the carrying amount of intangible assets, net, by reportable segment.

Sciences Mobile

Solutions Power

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Amortization ( 2,516 ) ( 8,245 ) ( 10,761 )

Balance as of June 30, 2020 $ 196,338 $ 30,739 $ 79,500 $ 306,577

Balance as of September 30, 2020 $ 29,900 $ 76,752 $ 106,652

Intangible assets are tested for impairment when changes in circumstances indicate the carrying value of those assets may not be recoverable.

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Balance as of December 31, 2019 $ 21,755

Share of earnings (loss) 656

Foreign currency translation loss ( 307 )

Balance as of June 30, 2020 $ 22,104

Share of earnings 1,792

Foreign currency translation gain 600

Balance as of September 30, 2020 $ 24,147

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 of $ 16.6 million against our investment in the JV.

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It is reasonably possible that material deviation of future performance from the estimates used in the March 31, 2020, impairment test could result in additional impairment to our investment in the JV in subsequent periods.

We recognized sales to the JV of less than $ 0.1 million and less than $ 0.1 million during the three and six months ended June 30, 2020, respectively, and less than $ 0.1 million and $ 0.1 million during the three and six months ended June 30, 2019, respectively.

We recognized sales to the JV of less than $ 0.1 million and $ 0.1 million during the three and nine months ended September 30, 2020, respectively, and less than $ 0.1 million and $ 0.1 million during the three and nine months ended September 30, 2019, respectively.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted.

Among other provisions, the CARES Act allows for the carryback of certain tax losses and favorably impacts the deductibility of interest expense and depreciation.

The CARES Act had a material impact on our financial statements and has been accounted for in the benefit/provision for income taxes for the six months ended June 30, 2020.

Our effective tax rate was 12.9 % and 6.6 % for the three and six months ended June 30, 2020, respectively, and ( 8.9 )% and ( 11.7 )% for the three and six months ended June 30, 2019, respectively.

The 2020 year-to-date effective tax rate differs from the U.S.

The CARES Act had a material impact on our financial statements and has been accounted for in the benefit/provision for income taxes for the nine months ended September 30, 2020.

Our effective tax rate for continuing operations was 106.1 % and 5.9 % for the three and nine months ended September 30, 2020, respectively, and 18.2 % and ( 21.2 )% for the three and nine months ended September 30, 2019, respectively.

The 2020 year-to-date effective tax rate for continuing operations differs from the U.S.

federal statutory tax rate of 21 % primarily due to the impact of the impairment of nondeductible goodwill which is treated as a permanent difference.

The year-to-date effective tax rate was also impacted by the CARES Act and the anticipated withholding taxes which would be due upon repatriation of the unremitted earnings of foreign subsidiaries.

The effective tax rate for the three months ended June 30, 2020, was primarily impacted by the effect of the impairment of nondeductible goodwill on the estimated annual effective tax rate and the impact of the minimum tax on global intangible low-tax income (“GILTI”).

The year-to-date effective tax rate was also impacted by the CARES Act, the anticipated withholding taxes which would be due upon repatriation of the unremitted earnings of foreign subsidiaries, and the impact of losses in jurisdictions where it is more likely than not that a tax benefit will not be realized.

The effective tax rate for the three months ended September 30, 2020, was primarily impacted by the effect of the impairment of nondeductible goodwill on the estimated annual effective tax rate and a change in the estimated impact of the CARES Act.

The 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, as well as the minimum tax on GILTI.

The effective tax rate for the three months ended June 30, 2019, was primarily impacted by changes in the full year forecast book income (loss) within each jurisdiction in which we operate.

The effective tax rate for the three months ended September 30, 2019, was primarily impacted by changes in the full year forecast book income (loss) within each jurisdiction in which we operate.

During the three months ended September 30, 2020, we realized a tax benefit in discontinued operations related to estimated tax in excess of book outside basis in a subsidiary held for sale.

The related deferred tax asset is not included in current assets held for sale given it will be retained and settled by NN, Inc.

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 October 19, 2022 (the

“Incremental Term Loan”);

a term loan with a face amount of $ 300.0 million, maturing on October 19, 2022 (the “Incremental Term Loan”);

and a revolving line of credit with a face amount of $ 75.0 million, maturing on July 20, 2022 (the “Senior Secured Revolver”).

The credit facility is collateralized by all of our assets.

The following table presents debt balances as of June 30, 2020, and December 31, 2019.

June 30, 2020 December 31, 2019

The following table presents debt balances as of September 30, 2020, and December 31, 2019.

September 30, 2020 December 31, 2019

Senior Secured Term Loan $ 522,000 $ 526,313

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_______________________________

(1) In addition to this amount, costs of $ 2.4 million and $ 3.0 million related to the Senior Secured Revolver are recorded in other non-current assets as of June 30, 2020, and December 31, 2019, respectively.

We capitalized interest costs of $ 0.2 million and $ 0.5 million in the three months ended June 30, 2020 and 2019, respectively, and $ 0.5 million and $ 1.1 million in the six months ended June 30, 2020 and 2019, respectively, related to construction in progress.

(1) Excludes $ 1.0 million and $ 0.2 million of equipment loans directly attributable to the Life Sciences business which have been reclassified to liabilities held for sale as of September 30, 2020, and December 31, 2019, respectively.

(2) As of September 30, 2020, includes $ 474.3 million of Senior Secured Term Loan principal and $ 225.7 million of Incremental Term Loan principal that is classified as current because of management’s expectation that proceeds from the liquidation of assets held for sale will be required to retire the obligation within twelve months as required by the credit agreement (see Note 2).

Also includes $ 9.0 million of outstanding borrowings on the Senior Secured Revolver as of September 30, 2020, which represents the excess over the $ 50.0 million available capacity that will be in effect twelve months after the balance sheet date.

(3) In addition to this amount, costs of $ 2.1 million and $ 3.0 million related to the Senior Secured Revolver are recorded in other non-current assets as of September 30, 2020, and December 31, 2019, respectively.

We capitalized interest costs of less than $ 0.1 million and $ 0.3 million in the three months ended September 30, 2020 and 2019, respectively, and $ 0.2 million and $ 1.2 million in the nine months ended September 30, 2020 and 2019, respectively, related to construction in progress.

In August 2020, we entered into an agreement to sell our Life Sciences business (see Note 2).

The sale closed on October 6, 2020, at which time we received cash proceeds of $ 757.2 million.

We immediately prepaid $ 700.0 million in the aggregate on the Senior Secured Term Loan and the Incremental Term Loan.

We also paid in full the outstanding balance on the Senior Secured Revolver.

The prepayment was applied to debt in accordance with the prepayment provisions of the credit agreement immediately after the transaction closed on October 6, 2020.

See Note 2 for a description of the methodology for allocating debt-related costs in historical periods to discontinued operations.

Senior Secured Term Loan

Outstanding borrowings under the Senior Secured Term Loan bear interest at one-month LIBOR (subject to a 0.75 % floor) plus an applicable margin of 5.75 %.

At June 30, 2020, the Senior Secured Term Loan bore interest at 6.50 %.

At September 30, 2020, the Senior Secured Term Loan bore interest at 6.50 %.

Incremental Term Loan

Outstanding borrowings under the Incremental Term Loan bear interest at one-month LIBOR plus an applicable margin of 5.75 %.

At June 30, 2020, the Incremental Term Loan bore interest of 5.93 %.

At September 30, 2020, the Incremental Term Loan bore interest of 5.90 %.

Senior Secured Revolver

Outstanding borrowings under the Senior Secured Revolver bear interest on a variable rate structure with borrowings bearing interest at either one-month LIBOR plus an applicable margin of 4.00 % or the prime lending rate plus an applicable margin of 3.00 %.

At June 30, 2020, the weighted average interest rate on outstanding borrowings under the Senior Secured Revolver was 4.18 %.

Outstanding borrowings under the Senior Secured Revolver bear interest on a variable rate structure at either 1) one-month LIBOR plus an applicable margin of 4.00 % or 2) the prime lending rate plus an applicable margin of 3.00 %.

At September 30, 2020, the weighted average interest rate on outstanding borrowings under the Senior Secured Revolver was 4.11 %.

We pay a commitment fee of 0.50 % for unused capacity under the Senior Secured Revolver.

We had $ 62.5 million outstanding under the Senior Secured Revolver at June 30, 2020.

Total capacity under the Senior Secured Revolver was $ 75.0 million as of June 30, 2020, with $ 0.7 million available for future borrowings after reductions for outstanding letters of credit and outstanding borrowings as of June 30, 2020.

We had $ 59.0 million outstanding under the Senior Secured Revolver at September 30, 2020.

Total capacity under the Senior Secured Revolver was $ 75.0 million as of September 30, 2020, with $ 1.4 million available for future borrowings after reductions for outstanding letters of credit and outstanding borrowings as of September 30, 2020.

Debt Amendments

In July 2020, we amended our Credit Agreement to waive compliance with the financial leverage ratio covenant for the second and third quarters of 2020.

During this period, we are required to maintain minimum liquidity levels, provide certain financial and other information, and take certain other action as specified in the amendment.

We were in compliance with all requirements under our credit facility as of June 30, 2020.

During this period, we are required to maintain minimum liquidity levels, provide certain financial

and other information, and take certain other action as specified in the amendment.

Failure to maintain the required minimum liquidity levels or satisfy other requirements set forth in the amendment would allow the revolving credit lenders, the Senior Secured Term loan lenders, and the Incremental Term Loan lenders to cause amounts outstanding under our credit facility to become immediately due and payable and would have a material, adverse impact on our financial position.

In August 2020, we amended our Credit Agreement to obtain the lenders’ consent to the sale of the Life Sciences business, subject to certain terms and conditions.

The amendment required a minimum of $ 675.0 million in cash proceeds from the sale.

All cash proceeds, less certain allowable costs, were required by the amendment to be used to prepay the Senior Secured Term Loan and the Incremental Term Loan.

The amendment also required a minimum $ 15.0 million payment on the Senior Secured Revolver and reduced total capacity to $ 60.0 million immediately after the sale of the Life Sciences business.

The capacity will decrease to $ 50.0 million on June 30, 2021.

The amendment requires cash in excess of $ 35.0 million on the last day of each month to be used to pay down the Senior Secured Revolver.

Liquidity thresholds were amended so that the threshold decreases commensurate with any principal payment on the Senior Secured Revolver.

We were in compliance with all requirements under our credit facility as of September 30, 2020.

We capitalized a total of $ 0.4 million in new debt issuance costs related to the July 2020 and August 2020 amendments.

Costs related to the Senior Secured Term Loan and the Incremental Term Loan are recorded as a direct reduction to the carrying amount of the associated long-term debt.

Costs related to the Senior Secured Revolver are recorded in other non-current assets.

Additionally, $ 1.5 million of unamortized debt issuance costs were written off in the nine months ended September 30, 2020, in connection with the July 2020 and August 2020 amendments.

See Note 2 for a description of the methodology for allocating amortization and write-offs of debt issuance costs in historical periods to discontinued operations.

Interest Rate Swap

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Refer to Note 18 for further discussion of the interest rate swap agreement.

The following table contains supplemental cash flow information related to leases.

Six Months Ended

The following table contains supplemental cash flow information related to leases of continuing operations.

Nine Months Ended

September 30,

Cash paid for amounts included in the measurement of lease liabilities

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In March 2020, the operating lease for the manufacturing facility commenced and requires us to pay a total of approximately $ 27.5 million base rent payments over the lease term of 15 years.

We will begin making rent payments in the third quarter of 2020.

We began making rent payments in the third quarter of 2020.

In March 2020, we amended the lease of our corporate headquarters building to exit over half of the previously leased space and reduce annual base rent payments by approximately $ 1.3 million over the remaining lease term which ends in 2030.

The amendment was accounted for as a lease modification, and the remeasurement of the lease resulted in an $ 8.1 million decrease in the operating lease right-of-use (“ROU”) asset, a $ 10.5 million decrease in the noncurrent portion of the operating lease liability, and a $ 0.6 million decrease in the current portion of the operating lease liability.

The $ 3.0 million difference between the change in the operating lease ROU asset and the operating lease liabilities was recognized in “Other operating (income) expense, net,” on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

In connection with the discontinued use of the previously leased space, we also recognized a $ 4.4 million termination charge and a $ 2.9 million impairment charge on the associated leasehold improvements, all of which were also recognized in “Other operating (income) expense, net.”

The $ 3.0 million difference between the change in the operating lease ROU asset and the operating lease liabilities was recognized in “Other operating expense (income), net,” on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

In connection with the discontinued use of the previously leased space, we also recognized a $ 4.4 million termination charge and a $ 2.9

million impairment charge on the associated leasehold improvements, all of which were also recognized in “Other operating expense (income), net.”

During the second quarter of 2020 and as part of our overall plan to improve liquidity during the COVID-19 pandemic, we negotiated with certain lessors to defer rent payments on leased buildings.

In total, $ 0.8 million of operating lease payments are being deferred over a period ranging from April 2020 to December 2020 and will be repaid over a period ranging from June 2020 through December 2022.

In total, $ 0.5 million of operating lease payments for continuing operations are being deferred over a period ranging from April 2020 to December 2020 and will be repaid over a period ranging from June 2020 through December 2022.

The deferral of rent payments did not result in a substantial change in total lease payments over the individual lease terms.

We have elected to apply lease accounting relief announced by the FASB in April 2020 and have treated these lease concessions as if they existed in the original contracts rather than applying lease modification accounting.

The net impact on cash flows from operating activities on the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020, was $ 0.4 million in cash savings.

Restructuring and Integration

We incurred no new restructuring and integration charges for the six months ended June 30, 2020.

During the six months ended June 30, 2020, we made cash payments of $ 0.2 million for restructuring costs.

As of June 30, 2020, we had $ 0.3 million accrued for severance costs associated with restructuring and integration projects.

We expect to pay this balance over the next 0.9 years.

The net impact on cash flows from operating activities on the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020, was $ 0.6 million in cash savings which includes $ 0.4 million related to continuing operations.

Commitments and Contingencies

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Management believes the indemnification would include amounts owed for the tax, interest, and penalties related to this matter.

Accordingly, we don’t expect to incur a loss related to this matter even in the event of an unfavorable decision and, therefore, have not accrued an amount for the remaining matters as of June 30, 2020.

Securities Offering Matter

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The Company is unable at this time to determine whether the outcome of the litigation would have a material impact on the Company’s financial position, results of operations, or cash flows.

All Other Legal Matters

Other Legal Matters

On October 26, 2020, Corre Opportunities Qualified Master Fund, LP, and Corre Horizon Fund, LP, filed a complaint in the Chancery Court of the State of Delaware against the Company.

The complaint alleges that the Company’s sale of its Life

Sciences business without obtaining the prior consent of the plaintiffs was a breach of the terms of the Series B Preferred Stock.

The complaint seeks unspecified monetary damages and other relief.

The Company believes the complaint and allegations to be without merit and intends to vigorously defend itself against these actions.

The Company is unable at this time to determine whether the outcome of the litigation would have a material impact on the Company’s financial position, results of operations, or cash flows.

All other legal proceedings are of an ordinary and routine nature and are incidental to our operations.

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Deemed dividends adjust retained earnings (or in the absence of retained earnings, additional paid-in capital).

As of June 30, 2020, the carrying value of the Preferred Stock shares was $ 98.7 million which included $ 6.0 million of accumulated unpaid and deemed dividends.

The following table presents the change in the Preferred Stock carrying value during the six months ended June 30, 2020.

Six Months Ended June 30, 2020

As of September 30, 2020, the carrying value of the Preferred Stock shares was $ 101.8 million which included $ 9.1 million of accumulated unpaid and deemed dividends.

The following table presents the change in the Preferred Stock carrying value during the nine months ended September 30, 2020.

Nine Months Ended September 30, 2020

Beginning balance $ 93,012

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Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or services.

Three Months Ended June 30, 2020

Sciences Mobile

Three Months Ended September 30, 2020

Solutions Power

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Germany 1,400 132 — 1,532

Switzerland 2,590 618 2 — 3,210

Poland 1,342 4 — 1,346

Other 6,174 2,908 — 9,082

Total net sales $ 70,371 $ 43,415 $ ( 25 ) $ 113,761

Three Months Ended June 30, 2019

Sciences Mobile

Three Months Ended September 30, 2019

Solutions Power

6 unchanged sentences

Germany 1,768 17 — 1,785

Switzerland 3,509 1,153 25 — 4,687

Poland 1,371 5 — 1,376

Other 6,562 2,884 — 9,446

Total net sales $ 73,071 $ 47,430 $ ( 42 ) $ 120,459

Six Months Ended June 30, 2020

Sciences Mobile

Nine Months Ended September 30, 2020

Solutions Power

6 unchanged sentences

Germany 4,401 261 — 4,662

Switzerland 5,622 1,549 23 — 7,194

Poland 3,441 11 — 3,452

Other 18,204 8,644 — 26,848

Total net sales $ 181,292 $ 127,307 $ ( 93 ) $ 308,506

Six Months Ended June 30, 2019

Sciences Mobile

Nine Months Ended September 30, 2019

Solutions Power

6 unchanged sentences

Germany 4,490 54 — 4,544

Switzerland 6,775 2,512 41 — 9,328

Poland 4,868 14 — 4,882

Other 21,960 11,664 — 33,624

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Balance at January 1, 2020 $ 797

Balance at June 30, 2020 $ 3,105

Revenue recognized during the six months ended June 30, 2020, from amounts included in deferred revenue at the beginning of the period for performance obligations satisfied or partially satisfied during the period, was $ 1.6 million.

Balance at September 30, 2020 933

Revenue recognized during the nine months ended September 30, 2020, from amounts included in deferred revenue at the beginning of the period for performance obligations satisfied or partially satisfied during the period, was $ 0.3 million.

Deferred revenue is reported in the “Other current liabilities” line on the Condensed Consolidated Balance Sheets.

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 June 30, 2020, unless our contracts meet one of the practical expedients.

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 September 30, 2020, unless our contracts meet one of the practical expedients.

Our contracts met the practical expedient for a performance obligation that is part of a contract that has an original expected duration of one year or less.

Sales Concentration

We recognized sales from a single customer of $ 20.0 million, or 13 % of consolidated net sales, during the three months ended June 30, 2020, and $ 23.0 million, or 10 % of consolidated net sales, during the three months ended June 30, 2019.

We recognized sales from this customer of $ 45.5 million, or 13 % of consolidated net sales, during the six months ended June 30, 2020, and $ 45.1 million, or 10 % of consolidated net sales, during the six months ended June 30, 2019.

Revenues from this customer are in our Life Sciences and Power Solutions groups.

We recognized sales from a single customer of $ 12.2 million, or 10 % of consolidated net sales, during the three months ended September 30, 2019.

We recognized sales from this customer of $ 39.0 million, or 10 % of consolidated net sales, during the nine months ended September 30, 2019.

Revenues from this customer are in our Mobile Solutions segment and were less than 10 % of consolidated net sales, during the nine months ended September 30, 2020.

Share-Based Compensation

Share-based compensation cost is recognized in the “Selling, general and administrative expense” line in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) except for $( 0.2 ) million and $ 0.1 million, attributable to discontinued operations for the three months ended September 30, 2020 and 2019, respectively, and $ 0.2 million and $ 0.3 million attributable to discontinued operations for the nine months ended September 30, 2020 and 2019, respectively.

The following table lists the components of share-based compensation expense by type of award.

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

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Performance share units 340 334 898 991

Change in estimate of share-based award vesting ( 577 ) ( 1,275 ) ( 577 ) ( 1,275 )

Share-based compensation expense $ 858 $ ( 124 ) $ 3,565 $ 1,855

Stock Options

During the six months ended June 30, 2020, we granted options to purchase 158,700 shares to certain key employees.

The weighted average grant date fair value of the options granted during the six months ended June 30, 2020, was $ 4.76 per share.

During the nine months ended September 30, 2020, we granted options to purchase 158,700 shares to certain key employees.

The weighted average grant date fair value of the options granted during the nine months ended September 30, 2020, was $ 4.76 per share.

The fair value of our options cannot be determined by market value because they are not traded in an open market.

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Expected volatility 52.80 %

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 expected term is derived from using the simplified method of determining stock option terms as described under SAB 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.

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The volatility rate is derived by a mathematical formula utilizing daily closing price data.

The following table presents stock option activity for the six months ended June 30, 2020.

The following table presents stock option activity for the nine months ended September 30, 2020.

Number of Options

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(per share) Weighted-

Term (years) Aggregate

Term Aggregate

Outstanding at January 1, 2020 775 $ 13.24

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Forfeited or expired ( 60 ) 15.00

Outstanding at June 30, 2020 890 $ 12.50 5.7 $ — (1)

Exercisable at June 30, 2020 600 $ 13.92 4.0 $ — (1)

Outstanding at September 30, 2020 874 $ 12.43 5.5 years $ — (1)

Exercisable at September 30, 2020 589 $ 13.85 3.8 years $ — (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 June 30, 2020, was greater than the exercise price of any individual option grant.

The intrinsic value is the amount by which the closing market price of our stock at September 30, 2020, was greater than the exercise price of any individual option grant.

Restricted Stock

During the six months ended June 30, 2020, we granted 460,255 shares of restricted stock to non-executive directors, officers and certain other key employees.

The shares of restricted stock granted during the six months ended June 30, 2020, vest pro-rata generally over three years for officers and certain other key employees and over one year for non-executive directors and certain key employees.

During the nine months ended September 30, 2020, we granted 460,255 shares of restricted stock to non-executive directors, officers and certain other key employees.

The shares of restricted stock granted during the nine months ended September 30, 2020, vest pro-rata generally over three years for employees and over one year for non-executive directors and certain key employees.

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 six months ended June 30, 2020, was $ 9.35 per share.

Total grant-date fair value of restricted stock that vested in the six months ended June 30, 2020, was $ 1.0 million.

The following table presents the status of unvested restricted stock awards as of June 30, 2020, and changes during the six months then ended.

The weighted average grant date value of restricted stock granted in the nine months ended September 30, 2020, was $ 9.35 per share.

Total grant-date fair value of restricted stock that vested in the nine months ended September 30, 2020, was $ 1.2 million.

The following table presents the status of unvested restricted stock awards as of September 30, 2020, and changes during the nine months then ended.

(in thousands) Weighted

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Forfeited ( 18 ) 9.32

Unvested at June 30, 2020 547 $ 9.16

Unvested at September 30, 2020 519 $ 9.28

Performance Share Units

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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 2020.

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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 presents the status of unvested PSUs as of June 30, 2020, and changes during the six months then ended.

The following table presents the status of unvested PSUs as of September 30, 2020, and changes during the nine months then ended.

Nonvested TSR Awards Nonvested ROIC Awards

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Forfeited ( 19 ) 11.43 ( 21 ) 12.88

Nonvested at June 30, 2020 185 $ 10.53 215 $ 11.04

Nonvested at September 30, 2020 185 $ 11.55 215 $ 10.04

Accumulated Other Comprehensive Income

1 unchanged sentence

Foreign Currency Translation Interest rate swap Income taxes (1) Total

Balance at March 31, 2020 $ ( 49,501 ) $ ( 25,463 ) $ 5,911 $ ( 69,053 )

Balance at June 30, 2020 $ ( 48,507 ) $ ( 23,662 ) $ 5,493 $ ( 66,676 )

Other comprehensive income (loss) before reclassifications 6,712 27 ( 6 ) 6,733

1 unchanged sentence

Net current-period other comprehensive income (loss) 6,712 4,127 ( 958 ) 9,881

Balance at September 30, 2020 $ ( 41,795 ) $ ( 19,535 ) $ 4,535 $ ( 56,795 )

Balance at June 30, 2019 $ ( 31,490 ) $ ( 13,915 ) $ 3,097 $ ( 42,308 )

Balance at March 31, 2019 $ ( 29,993 ) $ ( 4,960 ) $ 1,104 $ ( 33,849 )

Other comprehensive income (loss) before reclassifications ( 11,178 ) ( 1,556 ) 375 ( 12,359 )

Amounts reclassified from AOCI to interest expense (2) — 306 ( 68 ) 238

Net current-period other comprehensive income (loss) ( 11,178 ) ( 1,250 ) 307 ( 12,121 )

Balance at June 30, 2019 $ ( 31,490 ) $ ( 13,915 ) $ 3,097 $ ( 42,308 )

Balance at September 30, 2019 $ ( 42,668 ) $ ( 15,165 ) $ 3,404 $ ( 54,429 )

Foreign Currency Translation Interest rate swap Income taxes (1) Total

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Net current-period other comprehensive income (loss) ( 6,636 ) ( 7,301 ) 1,696 ( 12,241 )

Balance at June 30, 2020 $ ( 48,507 ) $ ( 23,662 ) $ 5,493 $ ( 66,676 )

Balance at September 30, 2020 $ ( 41,795 ) $ ( 19,535 ) $ 4,535 $ ( 56,795 )

Balance at December 31, 2018 $ ( 31,314 ) $ — $ — $ ( 31,314 )

Other comprehensive income (loss) before reclassifications ( 11,354 ) ( 15,471 ) 3,472 ( 23,353 )

Amounts reclassified from AOCI to interest expense (2) — 306 ( 68 ) 238

Net current-period other comprehensive income (loss) ( 11,354 ) ( 15,165 ) 3,404 ( 23,115 )

Balance at June 30, 2019 $ ( 31,490 ) $ ( 13,915 ) $ 3,097 $ ( 42,308 )

Balance at September 30, 2019 $ ( 42,668 ) $ ( 15,165 ) $ 3,404 $ ( 54,429 )

_______________________

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Net loss $ ( 21,748 ) $ ( 7,283 ) $ ( 269,939 ) $ ( 26,801 )

Income (loss) from continuing operations $ 1,640 $ ( 4,836 ) $ ( 124,003 ) $ ( 20,806 )

Preferred Stock cumulative dividends and deemed dividends ( 3,139 ) — ( 9,133 ) —

Numerator for basic and diluted net loss per common share (1) $ ( 24,791 ) $ ( 7,283 ) $ ( 275,933 ) $ ( 26,801 )

Numerator for basic and diluted income (loss) from continuing operations per common share (1) ( 1,499 ) ( 4,836 ) ( 133,136 ) ( 20,806 )

Income (loss) from discontinued operations, net of tax (Note 2) 20,330 ( 1,019 ) ( 123,966 ) ( 11,850 )

Numerator for basic and diluted undistributed net loss per common share (1) $ 18,831 $ ( 5,855 ) $ ( 257,102 ) $ ( 32,656 )

Weighted average common shares outstanding, basic and diluted 42,202 42,038 42,170 42,013

Per common share net loss:

Basic income (loss) from continuing operations per common share $ ( 0.04 ) $ ( 0.12 ) $ ( 3.16 ) $ ( 0.50 )

Basic income (loss) from discontinued operations per common share 0.49 ( 0.02 ) ( 2.94 ) ( 0.28 )

Basic net income (loss) per common share $ 0.45 $ ( 0.14 ) $ ( 6.10 ) $ ( 0.78 )

Diluted income (loss) from continuing operations per common share $ ( 0.04 ) $ ( 0.12 ) $ ( 3.16 ) $ ( 0.50 )

Diluted income (loss) from discontinued operations per common share 0.49 ( 0.02 ) ( 2.94 ) ( 0.28 )

Diluted net income (loss) per common share $ 0.45 $ ( 0.14 ) $ ( 6.10 ) $ ( 0.78 )

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(1) Preferred Stock does not participate in losses.

The following table presents the number of potentially dilutive securities that were excluded from the calculation of diluted net income (loss) per common share because they had an anti-dilutive effect.

The following table presents potentially dilutive securities that were excluded from the calculation of diluted net income (loss) per common share because they had an anti-dilutive effect.

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

3 unchanged sentences

25,948 837 25,948 627

Given the loss from continuing operations in the three and six months ended June 30, 2020 and 2019, all options and warrants are considered anti-dilutive and were excluded from the calculation of diluted net income (loss) per share.

Stock options excluded from the calculations of diluted net income (loss) per share had a per share exercise price ranging from $ 7.93 to $ 25.16 for the three months ended June 30, 2020, and $ 8.86 to $ 25.16 for three months ended June 30, 2019.

Stock options excluded from the calculations of diluted net income (loss) per share had a per share exercise price ranging from $ 7.93 to $ 25.16 for the six months ended June 30, 2020, and $ 8.86 to $ 25.16 for six months ended June 30, 2019.

Warrants excluded from the calculation of diluted net income (loss) per share for the three and six months ended June 30, 2020, had a per share exercise price of $ 12.00 .

Preferred Stock excluded from the calculation of diluted net income (loss) per share for the three and six months ended June 30, 2020, was calculated on an as-converted basis.

We have elected to allocate undistributed income to participating securities based on year-to-date results.

As there was no undistributed income for the nine months ended September 30, 2020, no such allocation was necessary.

In addition, given the undistributed loss from continuing operations in the three and nine months ended September 30, 2020 and 2019, all options and warrants are considered anti-dilutive and were excluded from the calculation of diluted net income (loss) per share.

Stock options excluded from the calculations of diluted net income (loss) per share had a per share exercise price ranging from $ 7.93 to $ 25.16 for the three months ended September 30, 2020, and $ 7.93 to $ 25.16 for three months ended September 30, 2019.

Stock options excluded from the calculations of diluted net income (loss) per share had a per share exercise price ranging from $ 7.93 to $ 25.16 for the nine months ended September 30, 2020, and $ 8.54 to $ 25.16 for nine months ended September 30, 2019.

Warrants excluded from the calculation of diluted net income (loss) per share for the three and nine months ended September 30, 2020, had a per share exercise price of $ 12.00 .

Preferred Stock excluded from the calculation of diluted net income (loss) per share for the three and nine months ended September 30, 2020, was calculated on an as-converted basis.

Holders of Preferred Stock will have the right to convert up to 25 % of their Preferred Stock into common shares per quarter after December 31, 2023, at a conversion price that equals a 30 -day volume weighted average price per common share.

Under certain conditions, holders of Preferred Stock may elect to convert their Preferred Stock into common shares at an earlier date after March 31, 2023, at a conversion price that equals 90 % of the volume weighted average market price per common share.

The potentially dilutive Preferred Stock in the preceding table presents the more dilutive result of these conversion prices as if the Preferred Stock were converted on June 30, 2020.

certain conditions, holders of Preferred Stock may elect to convert their Preferred Stock into common shares at an earlier date after March 31, 2023, at a conversion price that equals 90 % of the volume weighted average market price per common share.

The potentially dilutive Preferred Stock in the preceding table presents the more dilutive result of these conversion prices as if the Preferred Stock were converted on September 30, 2020.

Fair Value Measurements

7 unchanged sentences

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 June 30, 2020, the carrying values of these financial instruments approximated fair value except for long-term debt as disclosed below.

As of September 30, 2020, the carrying values of these financial instruments approximated fair value.

Derivative Financial Instruments

Certain features were bifurcated and accounted for separate from the Preferred Stock.

The following features are recorded on a combined basis as a single derivative.

Certain features were bifurcated and accounted for separately from the Preferred Stock.

The following features are recorded as derivatives.

• Leverage ratio put feature.

4 unchanged sentences

Our common stockholders approved a proposal at our 2020 annual stockholder meeting to issue common stock in excess of thresholds established by certain Nasdaq stock market rules upon the exercise of warrants or the conversion or redemption of Preferred Stock.

Because the annual stockholder meeting has already occurred, the contingent dividends feature no longer exists as of June 30, 2020.

Because the annual stockholder meeting has already occurred, the contingent dividends feature no longer exists as of September 30, 2020.

• Dividends withholding.

2 unchanged sentences

The dividends withholding feature is not clearly and closely related to the debt host.

The following tables show the liabilities measured at fair value for the Preferred Stock derivative above as of June 30, 2020, and December 31, 2019.

Fair Value Measurements as of June 30, 2020

The warrants issued with the Preferred Stock are exercisable, in full or in part, at any time prior to the seventh anniversary of their issuance at an exercise price of $ 12.00 per share, subject to customary anti-dilution adjustments in the event of future below market issuances, stock splits, stock dividends, combinations or similar events.

The following tables show the liabilities measured at fair value for the Preferred Stock derivative above as of September 30, 2020, and December 31, 2019.

Fair Value Measurements as of September 30, 2020

Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs

7 unchanged sentences

Total $ — $ — $ 2,295

The inputs for determining fair value of the Preferred Stock derivative are classified as Level 3 inputs.

Level 3 fair value is based on unobservable inputs based on the best information available.

These inputs include probability assessments of how long the Preferred Stock will remain outstanding, whether the leverage ratio threshold will be exceeded, and, as of December 31, 2019, whether approval would be obtained from common stockholders for issuance of common stock upon exercise of the Warrants and conversion or redemption of the Preferred Stock.

Inputs also include the percentage of Preferred Stock held by non-U.S.

resident holders and the applicable tax withholding rates for those holders.

The following table presents the change in the Preferred Stock derivative during the six months ended June 30, 2020.

Six Months Ended June 30, 2020

The following table presents the change in the Preferred Stock derivative during the nine months ended September 30, 2020.

Nine Months Ended September 30, 2020

Beginning balance $ 2,295

Change in fair value (1) ( 154 )

Other (2) 1,315

Ending balance $ 3,456

_______________________________

(1) Changes in the fair value are recognized in the “Other (income) expense, net” line in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

All of the change in fair value relates to the derivative liability held at June 30, 2020.

(1) Changes in the fair value are recognized in the “Other expense (income), net” line in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

All of the change in fair value relates to the derivative liability held at September 30, 2020.

(2) In 2020, we determined that certain anti-dilution provisions of the warrants require liability accounting;

therefore, we reclassified the $ 1.1 million value of the warrants recorded in Stockholders’ Equity as of December 31, 2019, to a liability during the nine months ended September 30, 2020.

The fair value of the leverage ratio put feature, the dividends withholding feature, and the contingent dividends feature utilizes unobservable inputs based on the best information available to determine the probability of the preferred stock remaining outstanding for future periods.

These inputs include probability assessments of how long the Preferred Stock will remain outstanding, whether the leverage ratio threshold will be exceeded, and, as of December 31, 2019, whether approval would be obtained from common stockholders for issuance of common stock upon exercise of the warrants and conversion or redemption of the Preferred Stock.

Inputs also include the percentage of Preferred Stock held by non-U.S.

resident holders and the applicable tax withholding rates for those holders.

The probability of the Preferred Stock remaining in future periods ranged from 50 % to 2 % as of September 30, 2020, and from 97 % to 2 % as of December 31, 2019.

The leverage ratio put feature also utilizes unobservable inputs to determine the probability of the leverage ratio put being exercisable as of March 31, 2023, which ranged from 20 % to 1 % as of September 30, 2020, and December 31, 2019.

These probabilities are determined based on management’s assessment of facts and circumstances at each reporting date.

An increase in these probabilities would result in an increase in the derivative liability fair value.

Given the Preferred Stock value changes by period as a result of dividends and redemption premiums, weighted average values for these assumptions are not meaningful.

The fair value of the warrants feature is determined using a valuation model, which utilizes unobservable inputs to determine the probability that the warrants will remain outstanding for future periods.

The probabilities ranged from 80 % to 5 % and resulted in a weighted average term of 2.35 years as of September 30, 2020.

An increase in these probabilities would result in an increase in the derivative liability fair value.

As of December 31, 2019, the warrants were classified in equity and valued using a term of 1.25 years.

Interest Rate Swap

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The interest rate swap was designated as a cash flow hedge at inception.

As of June 30, 2020, we reported a cumulative $ 18.2 million loss, net of tax, in accumulated other comprehensive income related to the interest rate swap.

The following tables present the liabilities measured at fair value on a recurring basis for the interest rate swap as of June 30, 2020, and December 31, 2019.

Fair Value Measurements as of June 30, 2020

As of September 30, 2020, we reported a cumulative $ 15.0 million loss, net of tax, in accumulated other comprehensive income related to the interest rate swap.

The following tables present the liabilities measured at fair value on a recurring basis for the interest rate swap as of September 30, 2020, and December 31, 2019.

Fair Value Measurements as of September 30, 2020

Description Quoted Prices in Active Markets for Identical Assets

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Counterparty to this derivative contract is a highly rated financial institution which we believe carries only a minimal risk of nonperformance.

As of June 30, 2020, the aggregate fair value of our Senior Secured Term Loan and Incremental Term Loan is approximately $ 677.7 million, compared to the net carrying amount of $ 760.9 million.

The fair value of these term loans is based on recently completed market transactions and is primarily classified as Level 2 within the fair value hierarchy.

The fair value of our outstanding fixed-rate debt included in the “International lines of credit and other loans” line item within Note 9 to these Notes to Condensed Consolidated Financial Statements was $ 14.1 million and $ 9.8 million as of June 30, 2020, and December 31, 2019, respectively.

Fixed Rate Debt

The fair value of our outstanding fixed-rate debt included in the “International lines of credit and other loans” line item within Note 10 to these Notes to Condensed Consolidated Financial Statements was $ 12.8 million and $ 9.6 million as of September 30, 2020, and December 31, 2019, respectively.

These fair values represent Level 2 under the three-tier hierarchy described above.

The carrying value of this fixed-rate debt was $ 14.1 million and $ 9.8 million as of June 30, 2020 and December 31, 2019, respectively.

Subsequent Event

In July 2020, we amended our Credit Agreement to waive compliance with the financial leverage ratio covenant for the second and third quarters of 2020.

During this period, we are required to maintain minimum liquidity levels, provide certain financial and other information, and take certain other action as specified in the amendment.

The carrying value of this fixed-rate debt was $ 12.8 million and $ 9.6 million as of September 30, 2020 and December 31, 2019, respectively.

Subsequent Events

Divestiture of Life Sciences Business

The sale of our Life Sciences business closed on October 6, 2020.

We received cash proceeds at closing of $ 757.2 million.

The purchase price is subject to customary post-closing adjustments and is expected to be finalized in the first quarter of 2021.

We prepaid $ 700.0 million in the aggregate on the Senior Secured Term Loan and the Incremental Term Loan immediately following the sale.

We also paid in full the outstanding balance on the Senior Secured Revolver.

We expect to recognize a gain on sale of greater than $ 100 million, net of income taxes, in the fourth quarter of 2020.

Under the terms of a transition services agreement, we are providing certain support services for up to 180 days from the closing date of the sale.

Senior Secured Revolver

On October 6, 2020, the total borrowing capacity of the Senior Secured Revolver was reduced to $ 60.0 million from $ 75.0 million, and we repaid the entire principal balance outstanding.

Discontinuation of Hedge Accounting

In connection with the prepayment of debt on October 6, 2020, with proceeds from the sale of our Life Sciences business, the outstanding balance of our variable rate debt fell below the $ 700.0 million notional amount of the interest rate swap contract.

After the prepayment, a portion of the hedged interest payments were no longer probable of occurring, and the hedging relationship on this portion was no longer highly effective.

Therefore, part of the interest rate swap no longer qualified for hedge accounting after the debt prepayment.

After the discontinuation of hedge accounting, changes in the fair value of this portion of the swap will be recognized in earnings rather than in accumulated other comprehensive income.

During the fourth quarter of 2020, the accumulated loss in accumulated other comprehensive income related to the hedged interest payments that are no longer probable of occurring will be reclassified to earnings.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements