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): November 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 November 5, 2009 regarding the results for the
third quarter ended September 30, 2009. The
attached press release includes the following non-GAAP measures: Net (loss)
excluding restructuring and other special charges and net income excluding
restructuring and other special charges.
These
non-GAAP measures are not in accordance with, or an alternative for, generally
accepted accounting principles and may be different from non-GAAP measures used
by other companies. In addition, these non-GAAP measures are not based on any
comprehensive set of accounting rules or principles. We believe that non-GAAP
measures have limitations in that they do not reflect all of the amounts
associated with our results of operations as determined in accordance with GAAP
and that these measures should only be used to evaluate our results of
operations in conjunction with the corresponding GAAP measures.
Our
management uses financial information that does not include (a) after- tax
restructuring charges related to restructuring efforts at the Veenendaal, The
Netherlands facility, (b) after-tax charges related to the closure of our
Kilkenny, Ireland and Hamilton, Ohio facilities, (c) the recording of a
valuation allowance on deferred taxes, (d) after-tax gain on the sale of surplus
land in The Netherlands and (e) an Italian tax adjustment.
We use
these non-GAAP financial measures in making operating decisions because we
believe the measures provide meaningful supplemental information regarding our
core operational performance. We use these measures to help make
budgeting and spending decisions. Further, these non-GAAP financial measures
facilitate management’s internal comparisons to our historical operating
results.
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 November 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: November
5, 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
November
5, 2009
NN,
INC. REPORTS THIRD QUARTER 2009 RESULTS
|
·
|
Excluding
the Impact of Currency, Third Quarter Revenues Improve 13.1% Sequentially
over Second Quarter
|
|
·
|
Third
Quarter Results Include $2.9 Million in After-Tax Restructuring Charges
Associated with Restructuring Efforts at Veenendaal, The Netherlands
Facility
|
|
·
|
Working
Capital Reductions of $23.3 Million Contribute to Positive Cash Flow For
The Year
|
Johnson City, Tenn.,
November 5, 2009 – NN, Inc. (Nasdaq: NNBR) today reported
its financial results for the third quarter and nine months ended September 30,
2009. Net sales for the third quarter of 2009 were $66.1 million, a
decrease of $38.8 million or 37%, compared to net sales for the third quarter of
2008 of $104.9 million. Approximately $34.6 million of the decrease
was due to the continuing effects of the global recession in the automotive and
industrial end markets. The negative effect of currency exchange and
price/mix issues accounted for the remainder. Sequentially, third
quarter net sales improved $9.0 million over second quarter net sales of which
$1.5 million was related to the impact of currency. Excluding the
impact of currency, revenues were up 13.1% as compared to second quarter
results.
Net loss
for the third quarter of 2009 was $9.0 million, or $(0.55) per diluted share
compared to net income of $2.9 million, or $0.18 per diluted share for the third
quarter of 2008. The results of the third quarter of 2009 include the recording
of approximately $2.9 million, net of taxes, or $0.18 per diluted share in
restructuring charges taken at the Veenendaal, The Netherlands
facility. Excluding these restructuring charges, net loss would have
been $5.9 million or $(0.37) per diluted share.
Net sales
for the first nine months of 2009 were $181.1 million, a decrease of $167.5
million, or 48% compared to net sales of $348.6 million for the first nine
months of 2008. Approximately $156.8 million of the decrease was
attributed to decreased demand for the Company’s products caused by the
continuing global recession. The negative effect of currency exchange
and price/mix issues accounted for the remainder of the decrease.
Net loss
for the first nine months of 2009 was $32.0 million, or $(1.97) per diluted
share, compared to net income for the first nine months of 2008 of $17.2
million, or $1.08 per diluted share. Included in the results for the first nine
months of 2009 were the following items:
|
·
|
After-tax
restructuring charges of $2.9 million or $0.18 per diluted share related
to restructuring efforts at the Veenendaal, The Netherlands
facility.
|
|
·
|
After-tax
charge of $0.8 million or $0.05 per diluted share related to the
previously announced closure of our Kilkenny, Ireland and Hamilton, Ohio
facilities.
|
|
·
|
The
effect of the recording of a valuation allowance on deferred taxes of $5.5
million, or $0.34 per diluted share which related to operating losses
incurred by our U.S. operations.
|
Excluding
these items, net loss for the first nine months of 2009 would have been $22.8
million or $(1.40) per diluted share.
The
results for the first nine months of 2008 included the following
items:
|
·
|
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.
|
|
·
|
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.
|
Excluding
theses items, net income would have been $13.1 million or $0.82 per diluted
share.
As a
percentage of net sales, cost of products sold for the third quarter of 2009 was
89.2% compared to 79.9% recorded for the prior year period. The cost
of products sold for the first nine months of 2009 was 93.4% compared to 79.6%
for the same period last year.
Selling,
general and administrative (SG&A) expenses were $6.5 million, or 9.8% of net
sales for the third quarter of 2009, a decrease of $3.2 million compared to $9.7
million or 9.3% of net sales for the third quarter of 2008. For the
first nine months of 2009, selling, general and administrative expenses were
$19.8 million, or 10.9% of net sales, a decrease of $10.2 million compared to
$30.0 million, or 8.6% of net sales for the same period in 2008.
James H.
Dorton, Vice President and Chief Financial Officer commented, “Through the first
nine months of 2009, we continued to experience the negative effects of the
global economic recession. The sudden and extraordinary reductions in
customer demand for our products that began in the fourth quarter of 2008 have
been unprecedented. The deleveraging associated with these drastic
reductions negatively affected our SG&A and cost of products sold as a
percentage of sales. During the third quarter, we began to see
improvement in these margins and although we are far from realizing our historic
profitability levels, we are encouraged by the positive
improvement.”
Mr.
Dorton continued, “Since the beginning of 2009, we have reduced total company
wide expenses on an annualized basis by approximately $55 million. We
have been able to realize these reductions through a series of actions including
employment reductions, salary reductions, plant closures, fixed overhead and
SG&A spending reductions. Also in the third quarter, we finalized
a plan to restructure employment at our Veenendaal, The Netherlands
facility. For this restructuring, we recorded a special after-tax
charge of $2.9 million. The expected payback for this action is
estimated to be less than one year. These cost reductions coupled
with annualized cash conservation actions which total approximately $18 million
have allowed us to significantly reduce our net income and cash flow break even
points. Further, we have reduced working capital (net of cash and
debt) by $23.3 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 decreased by $20.2 million, or 38% since the
beginning of the year.
“Our
beginning of the year goal for cash flow was to remain neutral for the
year. At the end of the third quarter, we exceeded this goal as
year-to-date cash flow was positive by $3.2 million which also included $3.3
million of non-operating cash expenditures associated with our credit facility
restructuring in the first quarter. We were also able to pay down
debt by $2.7 million by the end of the third quarter.”
Mr.
Dorton concluded, “As we disclosed in the prior quarter of this year, we
classified all of our outstanding debt as a current liability since certain of
our financial bank covenants had not yet been determined beyond March 31,
2010. In the fourth quarter of this year, we will begin the process
with our bank group of determining the definitive covenant levels that will be
in effect beyond the first quarter of 2010; consequently, we continued the
classification of our outstanding debt as a current liability in the third
quarter.”
Roderick
R. Baty, Chairman and Chief Executive Officer, commented, “In our second quarter
earnings release, we stated that we were encouraged by recent positive economic
news associated with global automotive and industrial demand. At that
time, our June revenues and the most recent customer ordering patterns began to
reflect incremental improvement compared to our first half
results. During the third quarter, we continued to experience these
positive signs of recovery. Sequentially our third quarter net sales
of $66.1 million were $9.0 million, or 15.8% higher than the $57.1 million in
net sales recorded for the second quarter. This increase is
especially noteworthy because we usually experience a significant decrease in
our third quarter net sales due to seasonality factors, especially in our
European operations. During the latter portion of the third quarter,
we experienced a 28% increase in annualized revenue run rates as compared to the
second quarter of this year. This level of improvement has continued
into the fourth quarter which gives us optimism for the fourth quarter and the
second half of 2009 versus the first half results we experienced.”
“While we
are encouraged by our third quarter results, we remain cautious as to the rate
of the economic recovery and increase in demand for our
products. Specifically, the vast majority of our demand and revenue
improvement has occurred in our customers’ automotive end markets in North
America, Europe and Asia. A significant portion of this improvement
is associated with the conclusion of supply chain destocking activities and
government incentive programs in the U.S. and Europe. While our
customers’ industrial end markets show no evidence of further deterioration, we
have not seen evidence of improvement in industrial demand or lessening of the
destocking effect for the third quarter. Given the current
environment, our efforts to further reduce costs and enhance liquidly are
ongoing.”
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 $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 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 Form 10-K for the fiscal year ended December 31, 2008.
(Financial
Tables Follow)
NN,
Inc.
Condensed
Statements of Income
(In
Thousands, except per share amounts)
(Unaudited)
&
#160;
60;
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
|
2009
|
2008 |
2009
|
2008
|
|||||||||||||
|
Net
sales
|
$ | 66,110 | $ | 104,866 | $ | 181,119 | $ | 348,647 | ||||||||
|
Cost
of products sold (exclusive of
depreciation
shown separately below)
|
58,981 | 83,784 | 169,184 | 277,526 | ||||||||||||
|
Selling,
general and administrative
|
6,465 | 9,732 | 19,779 | 29,952 | ||||||||||||
|
Depreciation
and amortization
|
5,255 | 6,234 | 15,773 | 18,884 | ||||||||||||
|
(Gain)
loss on disposal of assets
|
(13 | ) | 6 | (41 | ) | (4,153 | ) | |||||||||
|
Restructuring
and impairment costs
|
4,070 | -- | 4,742 | -- | ||||||||||||
|
Income
(loss) from operations
|
(8,648 | ) | 5,110 | (28,318 | ) | 26,438 | ||||||||||
|
Interest
expense, net
|
1,833 | 1,259 | 4,719 | 4,068 | ||||||||||||
|
Reduction
of unamortized debt issue cost
|
-- | -- | 604 | -- | ||||||||||||
|
Other
income, net
|
(11 | ) | (391 | ) | (135 | ) | (810 | ) | ||||||||
|
Income
(loss) before provision for income
taxes
|
(10,470 | ) | 4,242 | (33,506 | ) | 23,180 | ||||||||||
|
Provision
(benefit) for income taxes
|
(1,487 | ) | 1,295 | (1,532 | ) | 5,960 | ||||||||||
|
Net
income (loss)
|
$ | (8,983 | ) | $ | 2,947 | $ | (31,974 | ) | $ | 17,220 | ||||||
|
Diluted
income (loss) per common share
|
$ | (0.55 | ) | $ | 0.18 | $ | (1.97 | ) | $ | 1.08 | ||||||
|
Weighted
average diluted shares
|
16,268 | 16,391 | 16,268 | 15,996 | ||||||||||||
NN,
Inc.
Condensed
Balance Sheets
(In
Thousands)
(Unaudited)
|
September
30,
2009
|
December
31,
2008
|
|||||||
|
Assets
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
|
$ | 11,540 | $ | 11,052 | ||||
|
Accounts
receivable, net
|
46,804 | 50,484 | ||||||
|
Inventories,
net
|
33,445 | 53,173 | ||||||
|
Other
current assets
|
9,606 | 9,912 | ||||||
|
Total
current assets
|
101,395 | 124,621 | ||||||
|
Property,
plant and equipment, net
|
137,728 | 145,690 | ||||||
|
Goodwill
and intangible assets, net
|
11,148 | 11,006 | ||||||
|
Other
assets
|
2,429 | 2,723 | ||||||
|
Total
assets
|
$ | 252,700 | $ | 284,040 | ||||
|
Liabilities
and Stockholders’ Equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 32,544 | $ | 39,415 | ||||
|
Accrued
salaries and wages
|
15,207 | 12,745 | ||||||
|
Current
portion of long-term debt
|
94,034 | 6,916 | ||||||
|
Other
liabilities
|
8,294 | 4,279 | ||||||
|
Total
current liabilities
|
150,079 | 63,355 | ||||||
|
Deferred
income taxes
|
4,374 | 4,939 | ||||||
|
Long-term
debt
|
-- | 90,172 | ||||||
|
Other
|
16,341 | 15,815 | ||||||
|
Total
liabilities
|
170,794 | 174,281 | ||||||
|
Total
stockholders’ equity
|
81,906 | 109,759 | ||||||
|
Total
liabilities and stockholders’ equity
|
$ | 252,700 | $ | 284,040 | ||||
NN,
Inc.
Reconciliation
of Non-GAAP to GAAP Financial Measures
(Unaudited)
|
Three
Months Ended
September
30, 2009
|
Nine
Months Ended
September
30, 2009
|
|||||||||||||||
|
In
Thousands
|
Diluted
Earnings Per Share
|
In
Thousands
|
Diluted
Earnings Per Share
|
|||||||||||||
|
Net
Income (Loss)
|
$ | (8,983 | ) | $ | (0.55 | ) | $ | (31,974 | ) | $ | (1.97 | ) | ||||
|
After-tax
restructuring costs for plant closing
|
119 | 0.01 | 792 | 0.05 | ||||||||||||
|
Valuation
allowance on deferred taxes, net
|
-- | -- | 5,478 | 0.34 | ||||||||||||
|
After-tax
restructuring charges for Veenendaal facility
|
2,924 | 0.18 | 2,924 | 0.18 | ||||||||||||
|
Net
(loss) excluding restructuring and other special
charges
|
$ | (5,940 | ) | $ | (0.37 | ) | $ | (22,780 | ) | $ | (1.40 | ) | ||||
|
Three
Months Ended
September
30, 2008
|
Nine
Months Ended
September
30, 2008
|
|||||||||||||||
|
In
Thousands
|
Diluted
Earnings Per Share
|
In
Thousands
|
Diluted
Earnings Per Share
|
|||||||||||||
|
Net
Income
|
$ | 2,947 | $ | 0.18 | $ | 17,220 | $ | 1.08 | ||||||||
|
After-tax
gain related to sale of land
|
-- | -- | (2,995 | ) | (0.19 | ) | ||||||||||
|
Italian
tax adjustment, net
|
-- | -- | (1,142 | ) | (0.07 | ) | ||||||||||
|
Net
income excluding restructuring and other special
charges
|
$ | 2,947 | $ | 0.18 | $ | 13,083 | $ | 0.82 | ||||||||