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, 2010
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, 2010 regarding the results for the year
ended December 31, 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 costs and impairment of assets for plant closing, (b) after-tax
adjustment to deferred tax valuation allowance (c) after-tax
accelerated depreciation for assets no longer in use, and (d)
after-tax write-off of capitalized loan costs.
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 March 31, 2010.
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: April
1, 2010
|
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,
2010
NN,
INC. REPORTS 2009 FOURTH QUARTER AND FULL YEAR RESULTS
|
·
|
Forecasting
revenues of $315 million to $335 million for 2010, representing growth of
approximately 25% over 2009.
|
|
·
|
Anticipate
capital expenditures of $16.7 million in 2010 to support growth
initiatives, mainly at the Precision Metal Components
Division.
|
Johnson City, Tenn, March 31,
2010 – NN, Inc. (Nasdaq: NNBR) today reported its financial results for
the fourth quarter and year ended December 31, 2009. Net sales for
the fourth quarter of 2009 were $78.3 million, up $2.1 million or 2.7% from
$76.2 million for the same period of 2008. Approximately $1.5 million of the
increase was due to increased sales volumes associated with increased global
automotive and industrial demand. Foreign currency translation had an
additional positive impact of $4.3 million. These increases were
partially offset by unfavorable mix issues of $3.0 million and the pass through
of approximately $0.7 million in reduced raw material costs.
Net loss
for the fourth quarter of 2009 was $3.4 million or $(0.21) per diluted share
compared to a net loss of $34.9 million or $(2.14) per diluted share for the
fourth quarter of 2008. The results for the fourth quarter of 2008
included $32.2 million, or $1.98 per diluted share in after-tax non-operating
charges. Excluding these charges, net loss would have been $2.6
million, or $(0.16) per diluted share. The results for the fourth
quarter of 2009 included non-operating charges of $1.5 million net of tax, or
$0.09 per diluted share. Excluding these charges, the net loss would
have been $1.9 million or $(0.12) per diluted share. These charges
were composed of:
|
·
|
restructuring
and impairment charges of $0.2 million pre-tax and after-tax, or $0.01 per
diluted share;
|
|
·
|
accelerated
depreciation for assets no longer in use (included in depreciation and
amortization) of $0.3 million pre-tax and after-tax, or $0.02 per diluted
share;
|
|
·
|
an
adjustment to the deferred tax valuation allowance resulting in a negative
after-tax impact of $0.9 million or $0.06 per diluted
share.
|
Net sales
for the full year were $259.4 million, down $165.5 million or 38.9% compared to
$424.8 million for the full year of 2008. Reduced demand for the
Company’s products due to the global recession accounted for approximately
$155.8 million of the decrease. Foreign currency translation had a
negative impact of $8.3 million and the negative effect of the pass through of
reduced raw material cost of $1.4 million accounted for the remainder of the
difference.
Net loss
for the full year of 2009 was $35.3 million, or $(2.17) per diluted share
compared to a net loss of $17.6 million, or $(1.11) per diluted share for the
comparable period last year. Excluding non-operating items, net
income was $10.5 million, or $0.66 per diluted share in 2008. Net
loss for the full year of 2009, excluding non-operating items, was $23.3
million, or $(1.43) per diluted share. These charges were composed
of:
|
·
|
restructuring
and impairment charges of $5.0 million pre-tax, $4.0 million after-tax, or
$0.24 per diluted share;
|
|
·
|
accelerated
depreciation for assets no longer in use (included in depreciation and
amortization) of $0.3 million pre-tax and after-tax, or $0.02 per diluted
share;
|
|
·
|
an
adjustment to deferred tax assets resulting in a negative after-tax impact
of $7.1 million or $0.44 per diluted
share;
|
|
·
|
write
–off of capitalized loan costs of $0.6 million pre-tax and after-tax, or
$0.04 per diluted share.
|
As a
percentage of net sales, cost of products sold was 84.7% in the fourth quarter
of 2009 compared to 88.1% in the fourth quarter of 2008. The
improvement in margin was due to permanent reductions in production costs from
plant closings and lower labor and discretionary spending. For the
full year 2009 and 2008, cost of products sold as a percentage of net sales was
90.8% and 81.1%, respectively reflecting the deleveraging impact of the sudden
reduction in revenue that began in the fourth quarter of 2008.
James H.
Dorton, Vice President and Chief Financial Officer, commented, “Selling, general
and administrative expenses for the fourth quarter of 2009 were $7.5 million, or
9.6% of net sales, compared to $6.1 million, or 8.0% for the same period in
2008. The increase was due mainly to the timing of the reversal of
the 2008 full year bonus of $1.2 million. It was determined in the
fourth quarter that the majority of bonuses for 2008 would not be paid, thus an
adjustment was made in the fourth quarter for the full year
amount. For the full year of 2009, selling, general and
administrative expenses were $27.3 million or 10.5% of net sales, compared to
$36.1 million, or 8.5% of net sales in 2008. The deleveraging
associated with the drastic reductions in volume that we experienced affected
our SG&A expenses as a percentage of revenues. However, while
these costs as a percentage of sales have increased from the respective periods
in 2008, we have significantly reduced expenses by $8.0 million for the twelve
month period by aggressively reducing costs and conserving cash.”
Mr.
Dorton continued, “On March 9, 2010, we announced that we concluded the process
of revising and amending our previously amended revolving credit facility with
Key Bank as the administrative agent. We also amended the terms of
the agreement of our private placement notes with Prudential
Capital. These amendments were necessary to establish new financial
covenants and to replace those that were due to expire within
2010. The new covenants, which will be in effect through the
expiration of the revolving credit facility in September 2011, reflect improving
economic conditions and the resulting expected improvements in our financial
results and outlook. Currently, we have approximately $59.0 million
outstanding under the revolving credit facility and $28.6 million outstanding
under the senior notes. These agreements carry a revised interest
rate of LIBOR plus 4.75% and 8.5%, respectively.
“These
amended credit facilities, along with the positive cash flow from operations we
expect to generate in 2010 will help to assure we have the availability of
capital to fund our growth strategies in 2010 and beyond. In 2009, in
an effort to conserve cash, we spent only $3.3 million in
capital. However, in 2010, we plan to spend approximately $16.7
million, of which approximately 65% will be used to fund growth initiatives at
our Precision Metal Components Division. The balance of the
expenditures will be to fund growth programs at our other divisions and for
maintenance needs. As a result of these capital expenditures, we will
increase debt by approximately $10 million for the full year of
2010. In the past year, we have received commitments for five major
programs of new business awards for our Whirlaway operation totaling $20 million
to $30 million in annual business beginning in 2011.”
Roderick
R. Baty, Chairman
and Chief Executive Officer, commented, “2009 was a very
difficult year, however, our management team and employees showed remarkable
resolve in facing the economic crisis and taking what were many times painful
measures. Since the fourth quarter of 2008 when the crisis began, we
have made dramatic cost reductions including the elimination of all
discretionary spending, a reduction in employment by 28%, reduced work schedules
in all of our global operations, the elimination of bonuses, voluntary
management and salaried employee pay cuts and wage freezes. These
actions along with the suspension of dividend payments and capital spending cuts
reduced our annual costs and cash requirements by approximately $64 million and
$98 million, respectively. These savings had the effect of
significantly reducing our net income and cash flow breakeven points and allowed
us to pay down over $10 million in debt during the year. These steps have
allowed us to emerge from the crisis a stronger, leaner company and will provide
us with improved profitability as we enter into 2010.”
“As we
have discussed throughout 2009, in the fourth quarter of 2008, our business
began to decline at an accelerated rate following record performance for both
revenues and earnings for the first nine months. In June of last
year, we began to experience incremental improvement in customer ordering
patterns and have continued to experience positive signs of economic recovery
through the third and fourth quarters of 2009. Sequentially, our
third and fourth quarter sales have improved 15.8% and 18.5%,
respectively.”
Mr. Baty,
concluded, “I would like to thank all of our global employees for the major
sacrifices they made during 2009 to help ensure a healthy future for
NN. We are encouraged by the recent positive economic events and the
improvements in annualized revenues we have experienced in the second half of
2009. These improvements have continued into the first quarter of
2010 and give us a guarded level of optimism for the full year. We
are currently forecasting 2010 revenues to be in the range of $315 million to
$335 million which represents a 25% growth over fiscal year 2009. We
look forward to the challenges and opportunities of 2010.”
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 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.
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,
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| Net sales | $ | 78,264 | $ | 76,189 | $ | 259,383 | $ | 424,837 | ||||||||
|
Cost
of products sold (exclusive of depreciation
shown separately below)
|
66,282 | 67,159 | 235,466 | 344,685 | ||||||||||||
| Selling, general and administrative | 7,495 | 6,116 | 27,273 | 36,068 | ||||||||||||
| Depreciation and amortization | 6,412 | 9,097 | 22,186 | 27,981 | ||||||||||||
| (Gain) Loss on disposal of assets | 534 | 15 | 493 | (4,138 | ) | |||||||||||
| Restructuring and impairment costs | 235 | 42,065 | 4,977 | 42,065 | ||||||||||||
| Income (Loss) from operations | (2,694 | ) | (48,263 | ) | (31,012 | ) | (21,824 | ) | ||||||||
| Interest expense, net | 1,641 | 1,135 | 6,359 | 5,203 | ||||||||||||
| Other (income) expense | (217 | ) | (40 | ) | 253 | (850 | ) | |||||||||
| Income (Loss) before provision for income taxes | (4,118 | ) | (49,358 | ) | (37,624 | ) | 26,177 | ) | ||||||||
| Provision for income taxes | (758 | ) | (14,494 | ) | (2.290 | ) | (8,535 | ) | ||||||||
| Net income (Loss) | $ | (3,360 | ) | $ | (34,864 | ) | $ | (35,334 | ) | $ | (17,642 | ) | ||||
| Diluted income (Loss) per common share | $ | (0.21 | ) | $ | (2.14 | ) | $ | (2.17 | ) | $ | (1.11 | ) | ||||
| Weighted average diluted shares | 16,268 | 16,268 | 16,268 | 15,895 | ||||||||||||
NN,
Inc.
Condensed
Balance Sheets
(In
Thousands)
(Unaudited)
|
December
31, 2009
|
December
31,
2008
|
|||||||
|
Assets
|
||||||||
|
Current
Assets:
|
||||||||
|
Cash
|
$ | 8,744 | $ | 11,052 | ||||
|
Accounts
receivable, net
|
49,412 | 50,484 | ||||||
|
Inventories,
net
|
33,275 | 53,173 | ||||||
|
Other
current assets
|
6,852 | 9,912 | ||||||
|
Total
current assets
|
98,283 | 124,621 | ||||||
|
Property,
plant and equipment, net
|
129,715 | 145,690 | ||||||
|
Goodwill
and intangible assets, net
|
10,784 | 11,006 | ||||||
|
Other
assets
|
3,870 | 2,723 | ||||||
|
Total
assets
|
$ | 242,652 | $ | 284,040 | ||||
|
Liabilities
and Stockholders’ Equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 38,048 | $ | 39,415 | ||||
|
Accrued
salaries and wages
|
14,469 | 12,745 | ||||||
|
Current
portion of long-term debt
|
9,405 | 6,916 | ||||||
|
Other
liabilities
|
6,567 | 4,279 | ||||||
|
Total
current liabilities
|
68,489 | 63,355 | ||||||
|
Non-current
deferred income tax liability
|
3,558 | 4,939 | ||||||
|
Long-term
debt, net of current portion
|
77,558 | 90,172 | ||||||
|
Other
|
16,244 | 15,815 | ||||||
|
Total
liabilities
|
165,849 | 174,281 | ||||||
|
Total
stockholders’ equity
|
76,803 | 109,759 | ||||||
|
Total
liabilities and stockholders’ equity
|
$ | 242,652 | $ | 284,040 | ||||
NN,
Inc.
Reconciliation
of Non-GAAP to GAAP Financial Measures
(Unaudited)
|
Three
Months Ended
December
31, 2009
|
Year
Ended
December
31, 2009
|
|||||||||||||||
|
In
Thousands
|
Diluted
Earnings Per share
|
In
Thousands
|
Diluted
Earnings Per share
|
|||||||||||||
|
Net
Income (Loss)
|
$ | (3,360 | ) | $ | (0.21 | ) | $ | (35,334 | ) | $ | (2.17 | ) | ||||
|
After-tax
restructuring costs for plant closing
|
-- | -- | 3,761 | 0.23 | ||||||||||||
|
After-tax
impairment of assets of closed plant
|
235 | 0.01 | 235 | 0.01 | ||||||||||||
|
After-tax
adjustment to deferred tax valuation allowance
|
908 | 0.06 | 7,136 | 0.44 | ||||||||||||
|
After-tax
accelerated depreciation for assets no longer in use
|
341 | 0.02 | 341 | 0.02 | ||||||||||||
|
After-tax
write-off of capitalized loan costs
|
-- | -- | 604 | 0.04 | ||||||||||||
|
Net
income excluding restructuring and impairment costs
|
$ | (1,876 | ) | $ | (0.12 | ) | $ | (23,257 | ) | $ | (1.43 | ) | ||||
|
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 tax valuation allowance
|
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 | ||||||
The
Company’s management evaluates operating performance excluding unusual and/or
nonrecurring items. The Company believes excluding such items
provides a more effective and comparable measure of performance and a clearer
view of underlying trends. Since net income excluding these items is not a
measure calculated in accordance with GAAP, this should not be considered as a
substitute for other GAAP measures, including net income, as an indicator of
performance. Accordingly, net income/loss excluding the above items
is reconciled to net income/loss on a GAAP basis.
###