UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest
event reported): June 30, 2008
NN,
INC.
(Exact name of registrant as specified in its
charter)
| Delaware | 0-23486 | 62-1096725 |
|
(State
or other jurisdiction of incorporation)
|
(Commission
File Number)
|
(IRS Employer
Identification No.)
|
|
2000 Waters Edge Drive
Johnson City, Tennessee
|
37604 | |
|
(Address of
principal executive offices)
|
(Zip
Code)
|
Registrant's telephone number, including area
code: (423)743-9151
Check the appropriate box below if
the Form 8-K filing is intended to simultaneously satisfy the obligation of the
registrant under any of the following provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17CFT
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17CFT 240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFT
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13c-4(c) under the Exchange Act (17CFT
240.13c-4(c))
ITEM 2.02 RESULTS OF OPERATIONS AND
FINANCIAL CONDITIONS
Published as Exhibit 99.1 is NN Inc.'s press release
dated July 31, 2008 regarding the earnings for second quarter
2008.
ITEM 9.01 FINANCIAL STATEMENTS AND
EXHIBITS
The following exhibit is furnished pursuant to Item 2.02, is not considered
"filed" under the Securities Exchange Act of 1934, as amended, and shall not be
incorporated by reference into any of the previous or future filings of NN, Inc.
under the Securities Act of 1933, as amended, or the Exchange Act.
Exhibit:
Exhibit
Number Description of Exhibit
99.1
Press Release of NN, Inc. dated July 31, 2008.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
| NN, INC. | |||
|
Date:
July 31, 2008
|
By:
|
/s/ William C. Kelly, Jr. | |
| Name : William C. Kelly, Jr. | |||
| Title : Vice President and Chief Administrative Officer | |||
EXHIBIT
99.1
RE: NN,
Inc.
2000
Waters Edge Drive
Johnson
City, TN 37604
FOR
FURTHER INFORMATION:
|
AT
THE
COMPANY
|
AT
FINANCIAL RELATIONS BOARD
|
| Will Kelly | Marilynn Meek |
| Vice President and Chief Administrative Officer | (General info) |
| (423) 743-9151 | 212-827-3773 |
FOR
IMMEDIATE RELEASE
July 31,
2008
NN,
INC. REPORTS RECORD SECOND QUARTER 2008 RESULTS
|
·
|
Second
Quarter 2008 Revenues Increased 13.9% to $122.2
million
|
|
·
|
Earnings
per Share of $0.57 Include $0.26 per Share in Positive One Time
Items
|
|
·
|
Second
Quarter 2008 Income from Operations Rose 72% to $0.31 per
Share
|
Johnson City, Tenn, July 31, 2008
– NN, Inc. (Nasdaq: NNBR) today reported its financial results for the
second quarter ended June 30, 2008. Net income for the second quarter
and first half of 2008 includes a gain on the sale of surplus land and a one
time adjustment to taxes related to a change in Italian tax
laws. Results for the second quarter and first six months of 2007
include certain restructuring and other one time
charges. Additionally, the financial statements for the second
quarter and first six months of 2007 reflect the restatement of the Company’s
June 30, 2007 financial statements. These statements were restated in
February of 2008 to correct an error in assumptions used to test the impairment
of a customer contract intangible asset under SFAS 144. Refer to the
Company’s filed June 30, 2007 and September 30, 2007 10-Q/A’s for further
discussion.
Net sales
for the second quarter of 2008 were $122.2 million, an increase of $14.9
million, or 13.9% from net sales of $107.3 million for the same period of
2007. The increase was primarily due to the positive effect of
currency exchange of $10.4 million (+9.7%). Net volume gains of $4.5 million
(+4.2%) in the core metal bearing components business also contributed to the
increase in net sales.
Net
income for the 2008 second quarter was $9.2 million or $0.57 per diluted share
as compared to a net loss for the second quarter of 2007 of $10.4 million, or
$0.61 per diluted share. Net income for the second quarter of 2008
includes approximately $3.0 million, or $0.19 per diluted share, in after-tax
gains on the sale of surplus land in The Netherlands and a one-time adjustment
to taxes of approximately $1.1 million, or $0.07 per diluted share that relates
to a change in Italian tax law. Excluding these items, net
1
income
from operations for the second quarter of 2008 was $5.0 million or $0.31 per
diluted share, up 61% and 72%, respectively from the $3.1 million and $0.18 per
diluted share from operations in the second quarter 2007. The 2007
second quarter results include the recording of approximately $13.4 million, or
$0.79 per diluted share in after-tax restructuring and other one time
charges. Excluding these charges, net income from operations for the
2007 second quarter was $3.1 million or $0.18 per diluted share.
Net sales
for the first six months of 2008 were $243.8 million, up $28.5 million, or 13.2%
as compared to $215.2 million for the same period of 2007. This
increase is mainly due to the positive effect of currency translation of $18.7
(+ 8.7%) million and net volume increases of $10.2 million (+ 4.8%) that were
partially offset by unfavorable price/mix issues of $0.4 million
(-0.2%).
Net
income for the first six months of 2008 was $14.3 million, or $0.89 per diluted
share compared to a net loss of $6.6 million, or $0.39 per diluted share for the
same period of 2007. The results of the first six months of 2008
include the recording of approximately $3.0 million, or $0.19 per diluted share,
in after-tax gains on the sale of surplus land in The
Netherlands. Additionally, net income includes the recording of a
one-time, after-tax adjustment related to a change in Italian tax law of
approximately $1.1 million or $0.07 per diluted share. Excluding the
recording of these two items, net income from operations for the first half of
2008 was $10.1 million or $0.63 per diluted share, up 48% and 58% respectively
from the same period of 2007. The first six months of 2007 results
include approximately $13.4 million, or $0.79 per diluted share in after-tax
restructuring and other one time charges. Excluding the restructuring
and other one time charges, net income for the first six months of 2007 was $6.8
million or $0.40 per diluted share.
As a
percentage of net sales, cost of products sold for the second quarter of 2008
was 79.6% compared to 80.0% recorded in the prior year. The 2008
year-to-date cost of products sold of 79.5% was flat as compared to the same
period last year. For both the quarter and the first six months of
2008, significant inflation cost increases in manufacturing costs, labor and
energy have been more than offset by cost reductions associated with our Level 3
program.
Selling,
general and administrative expenses were $10.0 million or 8.2% of net sales for
the second quarter of 2008 as compared to $9.6 million, or 8.9% of net sales for
the second quarter of 2007. Selling, general and administrative
expenses for the first six months of 2008 of 8.3% of net sales decreased as
compared to 8.8% of net sales for the same period in 2007.
James H.
Dorton, Vice President and Chief Financial Officer, commented, “During the
second quarter we continued to benefit from improved performance at three
operations, Whirlaway, Slovakia and China, that experienced profitability
problems in 2007. Each of these operations recorded improved
operating margins and profitability as compared to the prior
year. This improvement has resulted mainly from operational
improvements at all three locations as well as increases in production volumes
in Slovakia and China. Additionally, our core Metal Bearing Components
operations continue to perform well and are running slightly ahead of our
business plan through the first half of the year. Our Plastics and
Rubber operations had lower than expected sales and earnings due to the
continued reduction in North American automotive demand.”
2
Mr.
Dorton continued, “In the second quarter, we continued to focus on specific
working capital improvement initiatives. We have made good progress
on reaching our goals and believe these initiatives will further strengthen our
balance sheet and improve cash flow. During the first half of the
year, we did not repurchase any of the Company’s shares under our previously
announced stock repurchase plan.”
Roderick
R. Baty, Chairman and Chief Executive Officer, commented, “Given the current
global economic uncertainty, we are encouraged by the strong results from our
operations in both the second quarter and the first six months of 2008. The
demand from our customers for the second quarter continued to reflect strong
global industrial end markets in both North America and Europe. Automotive
demand in Europe was at healthy levels and essentially consistent with the first
quarter of the year. As a result, our core Metal Bearing Components operations
in both the U.S. and Europe experienced good performance, exceeding our
beginning of the year forecast for both revenue and earnings. Our Level 3
program continued to deliver excellent results, offsetting significant global
inflation we experienced in energy and steel related costs. In North America,
our Rubber, Plastics and Precision Metal operations were negatively impacted by
the continuing reductions in North American automotive demand during the second
quarter.”
Mr. Baty
concluded, “Looking forward, we anticipate overall good levels of industrial end
market demand in North America and Europe continuing for the remainder of
2008. However, we will experience the impact of a significant
acceleration of reduced North American automotive demand for the last half of
2008. In addition, European automotive demand is forecasted to weaken over the
last half of 2008, although not at the current rate of decline seen in North
America. Given these global economic factors combined with our normal
seasonality during the third quarter, we anticipate lower results than we
experienced in the first half of the year, but total year results that exceed
our previously communicated guidance of $0.90 to $0.95 per diluted
share.”
NN, Inc.
manufacturers and supplies high precision metal bearing components, industrial
plastic and rubber products and precision metal components to a variety of
markets on a global basis. Headquartered in Johnson City, Tennessee,
NN has 14 manufacturing plants in the United States, Western Europe, Eastern
Europe and China. NN, Inc. had sales of US $421 million in
2007.
Except for specific historical
information, many of the matters discussed in this press release may express or
imply projections of revenues or expenditures, statements of plans and
objectives or future operations or statements of future economic performance.
These, and similar statements are forward-looking statements concerning matters
that involve risks, uncertainties and other factors which may cause the actual
performance of NN, Inc. and its subsidiaries to differ materially from those
expressed or implied by this discussion. All forward-looking
information is provided by the Company pursuant to the safe harbor established
under the Private Securities Litigation Reform Act of 1995 and should be
evaluated in the context of these factors. Forward-looking statements generally
can be identified by the use of forward-looking terminology such as
“assumptions”, “target”, “guidance”, “outlook”, “plans”, “projection”, “may”,
“will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”,
“potential” or “continue” (or the negative or other derivatives of each of these
terms) or similar terminology. Factors which could materially affect actual
results include, but are not limited to: general economic conditions and
economic conditions in the industrial sector, inventory levels, regulatory
compliance costs and the Company's ability to manage these costs, start-up costs
for new operations, debt reduction, competitive influences, risks that current
customers will commence or increase captive production, risks of capacity
underutilization, quality issues, availability and price of raw materials,
currency and other risks associated with international trade, the Company’s
dependence on certain major customers, the successful implementation of the
global growth plan including development of new products and consummation of
potential acquisitions and other risk factors and cautionary statements listed
from time to time in the Company’s periodic reports filed with the Securities
and Exchange Commission, including, but not limited to, the Company’s Annual
Report on 10-K for the fiscal year ended December 31, 2007.
Financial
Tables Follow
3
NN,
Inc. Consolidated Statements of Income
(In
thousands, except per share amounts)
(Unaudited)
|
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
||||||||||||||
|
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
|
Net
sales
|
$ | 122,240 | $ | 107,302 | $ | 243,781 | $ | 215,246 | ||||||||
|
Cost
of products sold (exclusive of
depreciation
shown separately below)
|
97,248 | 85,929 | 193,741 | 171,010 | ||||||||||||
|
Selling,
general and administrative
|
10,011 | 9,558 | 20,220 | 18,983 | ||||||||||||
|
Depreciation
and amortization
|
6,387 | 5,658 | 12,650 | 11,180 | ||||||||||||
|
Restructuring
and asset impairment charges
|
-- | 13,336 | -- | 13,336 | ||||||||||||
|
Loss
(gain) on disposal of assets
|
(4,018 | ) | (6 | ) | (4,159 | ) | (11 | ) | ||||||||
|
Income
(loss) from operations
|
12,612 | (7,173 | ) | 21,329 | 748 | |||||||||||
|
Interest
expense, net
|
1,268 | 1,630 | 2,810 | 3,325 | ||||||||||||
|
Other
(income) expense, net
|
(284 | ) | (22 | ) | (419 | ) | 3 | |||||||||
|
Income
(loss) before provision for income taxes
|
11,628 | (8,781 | ) | 18,938 | (2,580 | ) | ||||||||||
|
Provision
for income taxes
|
2,455 | 1,584 | 4,665 | 4,030 | ||||||||||||
|
Net
income (loss)
|
$ | 9,173 | $ | (10,365 | ) | $ | 14,273 | $ | (6,610 | ) | ||||||
|
Diluted
income per common share
|
$ | 0.57 | $ | (0.61 | ) | $ | 0.89 | $ | (0.39 | ) | ||||||
|
Weighted
average diluted shares
|
16,054 | 17,028 | 15,978 | 17,031 | ||||||||||||
4
NN,
Inc.
Condensed
Balance Sheets
(In
thousands)
(Unaudited)
|
|
June
30,
2008
|
December
31,
2007
|
||||||
|
Assets
|
||||||||
|
Current
Assets:
|
||||||||
|
Cash
|
$ | 14,273 | $ | 13,029 | ||||
|
Accounts
receivable, net
|
82,390 | 65,566 | ||||||
|
Inventories,
net
|
56,454 | 51,821 | ||||||
|
Other
current assets
|
8,406 | 7,608 | ||||||
|
Total
current assets
|
161,523 | 138,024 | ||||||
|
Property,
plant and equipment, net
|
167,075 | 161,008 | ||||||
|
Goodwill
and intangible assets, net
|
40,436 | 39,471 | ||||||
|
Other
assets
|
10,469 | 11,575 | ||||||
|
Total
assets
|
$ | 379,503 | $ | 350,078 | ||||
|
Liabilities
and Stockholders’ Equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 53,306 | $ | 51,124 | ||||
|
Accrued
salaries and wages
|
16,807 | 15,087 | ||||||
|
Current
portion of long-term debt
|
7,624 | 11,851 | ||||||
|
Other
liabilities
|
7,520 | 6,194 | ||||||
|
Total
current liabilities
|
85,257 | 84,256 | ||||||
|
Deferred
income taxes
|
17,579 | 18,682 | ||||||
|
Long-term
notes payable and related party debt
|
103,172 | 100,193 | ||||||
|
Other
|
17,995 | 16,904 | ||||||
|
Total
liabilities
|
224,003 | 220,035 | ||||||
|
Total
stockholders’ equity
|
155,500 | 130,043 | ||||||
|
Total
liabilities and stockholders’ equity
|
$ | 379,503 | $ | 350,078 | ||||
5
NN,
Inc.
Reconciliation
of Non-GAAP to GAAP Financial Measures
(Unaudited)
|
|
Three
Months Ended
June
30, 2008
|
Six
Months Ended
June
30, 2008
|
||||||||||||||
|
|
In
Thousands
|
Diluted
Earnings
Per
Share
|
In
Thousands
|
Diluted
Earnings
Per
Share
|
||||||||||||
|
Net
Income
|
$ | 9,173 | $ | 0.57 | $ | 14,273 | $ | 0.89 | ||||||||
|
After-tax
gain related to sale of land
|
(2,995 | ) | (0.19 | ) | (2,995 | ) | (0.19 | ) | ||||||||
|
Italian
tax adjustment, net
|
(1,142 | ) | (0.07 | ) | (1,142 | ) | (0.07 | ) | ||||||||
|
Net
income excluding restructuring and other one
time charges
|
$ | 5,036 | $ | 0.31 | $ | 10,136 | $ | 0.63 | ||||||||
|
Three
Months Ended
June
30, 2007
|
Six
Months Ended
June
30, 2007
|
|||||||||||||||
|
In
Thousands
|
Diluted
Earnings
Per
Share
|
In
Thousands
|
Diluted
Earnings
Per
Share
|
|||||||||||||
|
Net
Loss
|
$ | (10,365 | ) | $ | (0.61 | ) | $ | (6,610 | ) | $ | (0.39 | ) | ||||
|
After-tax
restructuring and other one time charges
|
13,420 | 0.79 | 13,420 | 0.79 | ||||||||||||
|
Net
income excluding restructuring and other one
time charges
|
$ | 3,055 | $ | 0.18 | $ | 6,810 | $ | 0.40 | ||||||||
6