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): August 5, 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 August 5, 2009 regarding the results for the
second quarter ended June 30, 2009.
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 August 5, 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: August
5, 2009
|
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
August 5,
2009
NN,
INC. REPORTS SECOND QUARTER 2009 RESULTS
|
·
|
First
Six Months Revenues Down 53%
|
|
·
|
Second
Quarter and First Six Months Results Include $5.5 Million Deferred Tax
Charge
|
|
·
|
Cash
Flow Aided by Working Capital Reductions of $10.9 Primarily Attributed to
Inventory Reductions of $17.1
Million
|
Johnson City, Tenn, August 5, 2009
– NN, Inc. (Nasdaq: NNBR) today reported its financial results for the
second quarter ended June 30, 2009. Net sales for the second quarter
of 2009 were $57.1 million, a decrease of $65.2 million, or 53.3% from net sales
of $122.2 million for the same period of 2008. Approximately $61.1
million of the decrease was attributable to the continuing global recession and
supply chain inventory destocking in automotive and industrial end
markets. The negative effect of currency translation accounted for
the remainder of the decrease.
The
Company reported a net loss for the second quarter of $13.5 million or $(0.83)
per diluted share compared to net income of $9.2 million, or $0.57 per diluted
share for the second quarter of 2008. The net loss for the second
quarter included a valuation allowance of $5.5 million, or $(0.34) per diluted
share on the full value of recorded deferred tax assets which related to
operating losses incurred by our U.S. operations. The Company
determined that these tax benefits would more than likely not be utilized based
on higher than originally anticipated second quarter and cumulative 2009 losses
at these units. 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 favorable adjustment
to taxes of approximately $1.1 million, or $0.07 per diluted share that relates
to a change in Italian tax law.
1
Net sales
for the first six months of 2009 were $115.0 million compared to $243.8 million
for the same period of 2008, a decrease of $128.8 million, or
52.8%. Approximately $122.1 million of the decrease was attributable
to reduced demand for the Company’s products caused by the continuing global
recession. The negative effect of currency translation accounted for
an additional $8.2 million of the decrease which was partially offset by
favorable price/mix issues of $1.5 million.
The
Company reported a net loss for the first six months of 2009 of $23.0 million,
or $(1.41) per diluted share compared to net income of $14.3 million, or $0.89
per diluted share for the same period of 2008. The results for the
first six months of 2009 include after-tax restructuring charges of $0.6
million, or $0.04 per diluted share. These charges were related to
the previously announced closure of our Kilkenny, Ireland and Hamilton, Ohio
facilities. Also included in the second quarter was the effect of the
above mentioned recording of a valuation allowance on deferred taxes of $5.5
million, or $(0.34) per diluted share. The results for the first six
months of 2008 included 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 included the recording of a
one-time, favorable after-tax adjustment related to a change in Italian tax law
of approximately $1.1 million or $0.07 per diluted share.
James H.
Dorton, Vice President and Chief Financial Officer commented, “Selling, general
and administrative expenses were $6.4 million or 11.2% of net sales for the
second quarter of 2009, compared to $10.0 million, or 8.2% of net sales for the
second quarter of 2008. Selling, general and administrative expenses
for the first six months of 2009 were $13.3 million or 11.6% of net sales,
compared to $20.2 million, or 8.3% of net sales for the same period in
2008. The deleveraging associated with our drastic reductions in
volume has affected our SG&A expenses as a percent of revenue. However, it
is important to note that while these costs as a percentage of sales have
increased from the respective periods in 2008, we have been able to
significantly reduce actual expenses by $3.6 million and $6.9 million,
respectively for the three and six month periods. This reduction was
attributed to salary reductions and reduced discretionary spending cuts of $3.1
million and $5.9 million for the respective periods and $0.5 million and $1.0
million, respectively due to the effects of foreign currency exchange
rates.”
As a
percentage of net sales, cost of products sold for the second quarter of 2009
was 94.9% compared to 79.6% recorded in the prior year. The 2009
year-to-date cost of products sold was 95.8% compared to 79.5% for the same
period last year.
Mr.
Dorton, continued, “For the second quarter and the first half of this year, we
continued to experience the effects of the abrupt and extraordinary reductions
in demand we first experienced in the fourth quarter of 2008. The
increase in our cost of goods sold as a percentage of net sales reflected the
impact of the deleveraging of production efficiencies, mainly in fixed costs and
variable compensation, due to the significant drop in volume we have experienced
in the current year. However, from the beginning of 2009, we have
reduced company wide annual expenses by a total of $52 million through a series
of actions including employment reductions, salary reductions, plant closures,
fixed overhead and SG&A spending reductions. These cost
reductions coupled with annualized cash conservation actions totaling $18
million have also allowed us to significantly reduce our net income and cash
flow break even points.
2
“Further,
we have reduced working capital by $10.9 million since the beginning of the
year. This decrease in working capital was due primarily to our
initiative to aggressively reduce inventory levels, which we have reduced by
$17.1 million, or 32% since the beginning of the year. Year-to-date,
our cash flow was a negative $6.1 million which includes $3.2 million of non
operating cash expenditures associated with our credit facility restructuring in
the first quarter. For the second quarter, we were cash flow positive
by approximately $1.0 million. Essentially our cash flow performance
is very close to our stated beginning of the year goal of cash flow
neutrality. We will continue to review our business for further cost
and cash conservation actions given the current level of business.”
Mr.
Dorton concluded, “In the second quarter we determined that it was most
appropriate to temporarily classify all of our outstanding debt as a current
liability. This determination was made due to the fact that certain
of the financial covenants have not yet been determined beyond the first quarter
of 2010. We will continue to assess this situation until such
time that definitive covenant levels are determined. Also during the
quarter, we recorded a $5.5 million charge to deferred taxes which were
associated with operating losses, primarily in our U.S.
operations. We anticipate reviewing the recoverability of these
deferred tax benefits in future quarters”
Roderick
R. Baty, Chairman and Chief Executive Officer, commented, “During the first half
of this year, we have experienced reduced sales of our products of approximately
53% as compared to the same period of 2008. We anticipate that
reduction in end market sales accounted for approximately two-thirds of the
decrease and that inventory destocking from our customers amounted to an
additional one-third of the decrease. Revenues in June and our most
recent customer ordering patterns reflect incremental improvement in comparison
to the first half results of 2009. Recent positive economic news
associated with global automotive and industrial demand is
encouraging. In addition, we have experienced a slowing in our
customer’s inventory destocking programs. While these are positive
signs, the pace of the recovery prompts us to continue to aggressively pursue
additional cost reductions and look for opportunities to maximize our cash
flow.”
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 $425 million in
2008.
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, risks related to our ability to obtain favorable terms
with respect to financial covenants from our lenders 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,
2008.
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,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Net
sales
|
$ | 57,088 | $ | 122,240 | $ | 115,009 | $ | 243,781 | ||||||||
|
Cost
of products sold (exclusive of
depreciation
shown separately below)
|
54,149 | 97,248 | 110,203 | 193,741 | ||||||||||||
|
Selling,
general and administrative
|
6,419 | 10,011 | 13,313 | 20,220 | ||||||||||||
|
Depreciation
and amortization
|
5,200 | 6,387 | 10,518 | 12,650 | ||||||||||||
|
Restructuring
and asset impairment charges
|
79 | -- | 672 | -- | ||||||||||||
|
Gain
on disposal of assets
|
(42 | ) | (4,018 | ) | (27 | ) | (4,159 | ) | ||||||||
|
Income
(loss) from operations
|
(8,717 | ) | 12,612 | (19,670 | ) | 21,329 | ||||||||||
|
Interest
expense, net
|
1,848 | 1,268 | 2,886 | 2,810 | ||||||||||||
|
Reduction
of unamortized debt issue cost
|
-- | -- | 604 | -- | ||||||||||||
|
Other
Income, net
|
(5 | ) | (284 | ) | (125 | ) | (419 | ) | ||||||||
|
Income
(loss) before provision (benefit) for income taxes
|
(10,560 | ) | 11,628 | (23,035 | ) | 18,938 | ||||||||||
|
Provision
(benefit) for income taxes
|
2,906 | 2,455 | (45 | ) | 4,665 | |||||||||||
|
Net
income (loss)
|
$ | (13,466 | ) | $ | 9,173 | $ | (22,990 | ) | $ | 14,273 | ||||||
|
Diluted
income per common share
|
$ | (0.83 | ) | $ | 0.57 | $ | (1.41 | ) | $ | 0.89 | ||||||
|
Weighted
average diluted shares
|
16,268 | 16,054 | 16,268 | 15,978 | ||||||||||||
4
NN,
Inc.
Condensed
Balance Sheets
(In
thousands)
(Unaudited)
|
June
30,
2009
|
December
31,
2008
|
|||||||
|
Assets
|
||||||||
|
Current
Assets:
|
||||||||
|
Cash
|
$ | 7,060 | $ | 11,052 | ||||
|
Accounts
receivable, net
|
44,267 | 50,484 | ||||||
|
Inventories,
net
|
36,028 | 53,173 | ||||||
|
Other
current assets
|
9,357 | 9,912 | ||||||
|
Total
current assets
|
96,712 | 124,621 | ||||||
|
Property,
plant and equipment, net
|
139,650 | 145,690 | ||||||
|
Goodwill,
net
|
9,048 | 8,908 | ||||||
|
Other
assets
|
4,045 | 4,821 | ||||||
|
Total
assets
|
$ | 249,455 | $ | 284,040 | ||||
|
Liabilities
and Stockholders’ Equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 26,373 | $ | 39,415 | ||||
|
Accrued
salaries and wages
|
10,240 | 12,745 | ||||||
|
Current
portion of long-term debt
|
98,838 | 6,916 | ||||||
|
Other
liabilities
|
6,781 | 4,279 | ||||||
|
Total
current liabilities
|
142,232 | 63,355 | ||||||
|
Deferred
income taxes
|
4,126 | 4,939 | ||||||
|
Long-term
notes payable, net of current portion
|
-- | 90,172 | ||||||
|
Other
|
15,743 | 15,815 | ||||||
|
Total
liabilities
|
162,101 | 174,281 | ||||||
|
Total
stockholders’ equity
|
87,354 | 109,759 | ||||||
|
Total
liabilities and stockholders’ equity
|
$ | 249,455 | $ | 284,040 | ||||
5