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): March 31, 2009
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 March 31, 2009 regarding the results for fourth
quarter and full year ended December 31, 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 March 31, 2009.
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: March
31, 2009
|
By:
|
/s/ William C. Kelly, Jr. | |
| Name : William C. Kelly, Jr. | |||
| Title : Vice President and Chief Administrative Officer | |||
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
March 31,
2009
NN,
INC. REPORTS 2008 FOURTH QUARTER AND FULL YEAR RESULTS;
AMENDS
AND REVISES CREDIT FACILITY
2008
FOURTH QUARTER AND FULL YEAR RESULTS INCLUDE $45.6 MILLION IN PRE-TAX, $32.2
MILLION IN AFTER-TAX WRITE-OFFS OF GOODWILL AND OTHER INTANGIBLE ASSETS, OTHER
TANGIBLE ASSETS, AND RESTRUCTURING COSTS
Johnson City, Tenn, March 31,
2009 – NN, Inc. (Nasdaq: NNBR) today reported its financial results for
the fourth quarter and year ended December 31, 2008. Net sales for
the fourth quarter of 2008 were $76.2 million, down $30.8 million or 28.8% from
$107.0 million for the same period of 2007. Approximately $30.0
million of the decrease was attributed to the reduced demand for the Company’s
products caused by a continued deterioration in global economies and automotive
and industrial end markets. Foreign currency translations had an
additional negative impact of $5.4 million. These decreases were
partially offset by positive pricing, principally as a result of a raw material
pass through of $4.6 million.
During
the fourth quarter, the Company recorded non-operating charges of $45.6 million
pre-tax, $32.2 million after-tax, or $1.98 per diluted share. These
charges are composed of restructuring and impairment charges of $42.1 million
pre-tax, $28.1 million after-tax, or $1.73 per diluted share, accelerated
depreciation for assets no longer in use (included in depreciation and
amortization) of $3.5 million pre-tax, $2.5 million after-tax, or $0.15 per
diluted share and an adjustment to deferred tax assets resulting in a negative
after-tax impact of $1.7 million or $0.10 per diluted share. The
restructuring and impairment charges are as follows:
|
·
|
A
non-cash charge of $30.0 million pre-tax, $19.3 million after-tax, or
$1.18 per diluted share, for impairment of goodwill of acquisitions from
earlier periods.
|
|
·
|
The
impairment of intangible assets of $5.6 million pre-tax, $3.4 million
after-tax, or $0.21 per diluted
share.
|
|
·
|
The
impairment of certain fixed assets of $2.8 million pre-tax, $1.7 million
after-tax, or $0.11 per diluted
share.
|
|
·
|
Cash
restructuring charges of $2.2 million pre-tax, $2.2 million after-tax or
$0.14 per diluted share related to the previously announced closure of the
Kilkenny, Ireland plant and non-cash impairment of the Kilkenny plant
assets of $1.4 million pre-tax, $1.4 million after-tax, or $0.09 per
diluted share.
|
1
Including
all of the non-operating charges mentioned above, the net loss for the fourth
quarter of 2008 was $34.9 million, or $2.14 per diluted share as compared to net
income of $5.0 million, or $0.31 per diluted share for the same period in
2007. Excluding the non-operating items, the net loss for the fourth
quarter was $2.6 million, or $0.16 per diluted share as compared to net income
of $4.0 million, or $0.24 per diluted share for the fourth quarter of 2007 which
excludes the reversal of restructuring costs of $1.1 million pre-tax, $1.1
million after-tax or $0.07 per diluted share.
Net sales
for the full year 2008 were $424.8 million, up $3.5 million or 0.8% compared to
$421.3 million for 2007. Favorable currency translation accounted for
$17.5 million and raw material pass through and price increases accounted for
$8.5 million of the increase. Offsetting these positive factors was
the net negative impact of reduced demand for the Company’s products in the
fourth quarter.
Net loss
for the full year of 2008 was $17.6 million, or $1.11 per diluted share as
compared to a net loss of $1.2 million, or $0.07 per diluted share for the full
year of 2007. Net income for the full year 2008, excluding
non-operating items, was $10.5 million, or $0.66 per diluted
share. The non-operating items for 2008 include the above items and
other non-operating items from the second quarter of 2008 which include the
after-tax gain on the sale of surplus land in the Netherlands of $3.0 million or
$.19 per diluted share and a one-time positive tax adjustment of $1.1 million,
or $0.07 per diluted share related to a change in Italian tax
law. This compares to net income, excluding non-operating items for
the full year of 2007 of $12.4 million, or $0.74 per diluted share which
excludes $13.6 million, or $0.81 per diluted share of impairment charges due
mainly to the restructuring of our European operations discussed
above.
As a
percentage of net sales, cost of products sold was 88.1% in the fourth quarter
of 2008 compared to 80.1% in the fourth quarter of 2007, reflecting the
de-leveraging impact of the sudden reduction in revenue experienced in the
fourth quarter of 2008. For the full year 2008 and 2007, cost of
products sold as a percentage of net sales was 81.1% and 80.0%,
respectively.
Selling,
general and administrative expenses for the fourth quarter of 2008 were $6.1
million, or 8.0% of net sales as compared to $9.1 million, or 8.5% for the same
period in 2007. The decrease was mainly due to a reduction in
salaries and the elimination of discretionary spending. For the full
year 2008, selling, general and administrative expenses were $36.1 million or
8.5% of net sales as compared to $36.5 million, or 8.7% of net sales in 2007.
James H.
Dorton, Vice President and Chief Financial Officer, commented, “Since we
reported record revenues and earnings for the first nine months of 2008, the
global business environment has deteriorated significantly. In
response, we immediately began to take action and announced the following
initiatives to protect our liquidity position and enhance our cash
flow:
|
·
|
the
closing of our Kilkenny Ireland operating
facility;
|
|
·
|
the
closing of our Hamilton Ohio operating
facility;
|
|
·
|
the
temporary suspension of our regular quarterly
dividend;
|
|
·
|
reduction
of more than 25% of our global
employment;
|
|
·
|
reduction
of capital expenditures;
|
|
·
|
elimination
of all discretionary spending and
|
|
·
|
reductions
in salaries and fees of between 10% and 20% for our board of directors,
executive officers and all salaried employees throughout the
organization.
|
2
These
measures allowed us to remain cash flow positive for the fourth quarter and to
pay down approximately $13.2 million in debt for the quarter and approximately
$13.7 million in debt for the year.”
Mr.
Dorton continued, “On March 13, 2009, we revised and amended our current
revolving credit facility with Key Bank as the administrative
agent. At that time, we also amended the terms of the agreement of
our $40.0 million private placement notes. These facilities were
amended to change certain financial covenants to reflect the current economic
and business conditions and to assure the availability of credit for
NN. The $90 million revised syndicated credit agreement which expires
in September 2011 provides for the borrowing of available funds by the Company’s
domestic and European subsidiaries and is collateralized by assets of the
Company in addition to pledges of stock and guarantees of our domestic and
foreign subsidiaries. The loan agreements contain customary covenants
including restrictions on payments for dividends, capital expenditures and stock
repurchases. The revolving loan agreement carries an interest
rate of LIBOR plus 4% and the private placement notes carry an interest rate of
8.5%. ”
Mr.
Roderick Baty, Chairman and Chief
Executive Officer,
commented, “For the first nine months of 2008, we experienced strong customer
demand in industrial end markets in both North America and
Europe. Improved operating performance at our Whirlaway Ohio,
Slovakia and China facilities began to positively affect financial
results. During the same time, our Level 3 program continued to
deliver excellent cost reduction results to the bottom line. As a
result, our core Metal Bearing Components operations in both the U.S. and Europe
recorded excellent results for the nine month period which exceeded our
beginning of the year forecast for both revenue and earnings. In
September we experienced an abrupt and major reduction in customer demand in
Europe as the result of a continued deterioration in global economies and
automotive and industrial end markets. As a result, the fourth
quarter proved to be very challenging for both us and our
industry. We expect these conditions to continue well into 2009 and
we will continue to take the necessary steps to manage through this difficult
period. We are focusing our efforts on cash flow management and
maximization which will insure we protect the strength of our balance sheet and
the financial flexibility to operate effectively with an expected lower level of
business.”
Mr. Baty,
concluded, “Given the current uncertainty of the global economy and the
resulting lack of visibility regarding the future demand outlook, it is
extremely difficult to provide meaningful earnings guidance. Therefore, we are
currently unable to provide revenue or earnings guidance for 2009. We can say
that that during the first quarter of 2009 we have experienced a dramatic
reduction in demand compared to the first quarter of 2008. Revenue in the
first quarter of 2009 is also expected to be significantly lower than the level
of revenue we reported in the fourth quarter of 2008.”
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 12 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.
3
NN,
Inc.
Condensed
Statements of Income
(In
Thousands, except per diluted share amounts)
(Unaudited)
; Three
Months
Ended Twelve Months
Ended
&
#160;
December
31, December
31,
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Net
sales
|
$ | 76,189 | $ | 107,027 | $ | 424,837 | $ | 421,294 | ||||||||
|
Cost
of products sold (exclusive of
depreciation
shown separately below)
|
67,159 | 85,748 | 344,685 | 337,024 | ||||||||||||
|
Selling,
general and administrative
|
6,116 | 9,067 | 36,068 | 36,473 | ||||||||||||
|
Depreciation
and amortization
|
9,097 | 6,045 | 27,981 | 22,996 | ||||||||||||
|
(Gain)Loss
on disposal of assets
|
15 | (48 | ) | (4,138 | ) | (71 | ) | |||||||||
|
Restructuring
and impairment costs
|
42,065 | (1,062 | ) | 42,065 | 13,636 | |||||||||||
|
Income
(Loss) from operations
|
(48,263 | ) | 7,277 | (21,824 | ) | 11,236 | ||||||||||
|
Interest
expense, net
|
1,135 | 1,552 | 5,203 | 6,373 | ||||||||||||
|
Other
(income) expense
|
(40 | ) | (236 | ) | (850 | ) | (386 | ) | ||||||||
| Income (Loss) before provision for income taxes | (49,358 | ) | 5,961 | (26,177 | ) | 5,249 | ||||||||||
|
Provision
for income taxes
|
(14,494 | ) | 922 | (8,535 | ) | 6,422 | ||||||||||
| Net income (Loss) | $ | (34,864 | ) | $ | 5,039 | $ | (17,642 | ) | $ | (1,173 | ) | |||||
|
Diluted
income(Loss) per common share
|
$ | (2.14 | ) | $ | 0.31 | $ | (1.11 | ) | $ | (0.07 | ) | |||||
|
Weighted
average diluted shares
|
16,268 | 16,280 | 15,895 | 16,749 | ||||||||||||
4
NN,
Inc.
Condensed
Balance Sheets
(In
Thousands)
(Unaudited)
|
December
31,
2008
|
December
31,
2007
|
|||||||
|
Assets
|
||||||||
|
Current
Assets:
|
||||||||
|
Cash
|
$ | 11,052 | $ | 13,029 | ||||
|
Accounts
receivable, net
|
50,484 | 65,566 | ||||||
|
Inventories,
net
|
53,173 | 51,821 | ||||||
|
Other
current assets
|
9,912 | 7,608 | ||||||
|
Total
current assets
|
124,621 | 138,024 | ||||||
|
Property,
plant and equipment, net
|
145,690 | 161,008 | ||||||
|
Goodwill
and intangible assets, net
|
11,006 | 48,750 | ||||||
|
Other
assets
|
2,723 | 2,296 | ||||||
|
Total
assets
|
$ | 284,040 | $ | 350,078 | ||||
|
Liabilities
and Stockholders’ Equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 39,415 | $ | 51,124 | ||||
|
Accrued
salaries and wages
|
12,745 | 15,087 | ||||||
|
Current
portion of long-term debt
|
6,916 | 11,851 | ||||||
|
Other
liabilities
|
4,279 | 6,194 | ||||||
|
Total
current liabilities
|
63,355 | 84,256 | ||||||
|
Deferred
income taxes
|
4,939 | 18,682 | ||||||
|
Long-term
notes payable
|
90,172 | 100,193 | ||||||
|
Other
|
15,815 | 16,904 | ||||||
|
Total
liabilities
|
174,281 | 220,035 | ||||||
|
Total
stockholders’ equity
|
109,759 | 130,043 | ||||||
|
Total
liabilities and stockholders’ equity
|
$ | 284,040 | $ | 350,078 | ||||
5
NN,
Inc.
Reconciliation
of Non-GAAP to GAAP Financial Measures
(Unaudited)
|
Three
Months Ended
December
31, 2008
|
Year
Ended
December
31, 2008
|
|||||||||||||||
|
In Thousands
|
Diluted
Earnings
Per
share
|
In Thousands
|
Diluted
Earnings
Per
share
|
|||||||||||||
|
Net
Income (Loss)
|
$ | (34,864 | ) | $ | (2.14 | ) | $ | (17,642 | ) | $ | (1.11 | ) | ||||
|
After-tax
impairment of goodwill
|
19,258 | 1.18 | 19,258 | 1.21 | ||||||||||||
|
After-tax
impairment of other intangible assets
|
3,448 | 0.21 | 3,448 | 0.22 | ||||||||||||
|
After-tax
write-off of tangible assets
|
1,696 | 0.11 | 1,696 | 0.11 | ||||||||||||
|
After-tax
restructuring costs for plant closing
|
2,247 | 0.14 | 2,247 | 0.14 | ||||||||||||
|
After-tax
impairment of assets of closed plant
|
1,447 | 0.09 | 1,447 | 0.09 | ||||||||||||
|
After-tax
adjustment to deferred taxes
|
1,663 | 0.10 | 1,663 | 0.10 | ||||||||||||
|
After-tax
accelerated depreciation for assets no longer in use
|
2,488 | 0.15 | 2,488 | 0.16 | ||||||||||||
|
After-tax
gain on sale of land
|
-- | -- | (2,995 | ) | (0.19 | ) | ||||||||||
|
After-tax
Italian tax adjustment
|
-- | -- | (1,142 | ) | (0.07 | ) | ||||||||||
|
Net
income excluding restructuring and impairment costs
|
$ | (2,617 | ) | $ | (0.16 | ) | $ | 10,468 | $ | 0.66 | ||||||
|
Three
Months Ended
December
31, 2007
|
Year
Ended
December
31, 2007
|
|||||||||||||||
|
In
Thousands
|
Diluted
Earnings
Per share
|
In
Thousands
|
Diluted
Earnings
Per share
|
|||||||||||||
|
Net
Income (Loss)
|
$ | 5,039 | $ | 0.31 | $ | (1,173 | ) | $ | (0.07 | ) | ||||||
|
After-tax
restructuring and impairment costs
|
(1,062 | ) | (0.07 | ) | 13,621 | 0.81 | ||||||||||
|
Net
income excluding restructuring and impairment
costs
|
$ | 3,977 | $ | 0.24 | $ | 12,448 | $ | 0.74 | ||||||||
Management
feels the presentation of non-GAAP information provides the reader with a better
understanding of operational results.
###
6