UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 July 25, 2001
reported) ----------------------------------------
NN, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-23485 62-1096725
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2000 Waters Edge Drive, Johnson City, Tennessee 37604
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including (423) 743-9151
area code ------------------------------------
Not applicable
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(Former name or former address, if changed since last report)
Item 5. Other Events.
On July 25, 2001, the Company issued a press release announcing its
second quarter earnings and its new long term financing arrangement. A copy
of the press release is attached as Exhibit 99.1 hereto and incorporated
herein by reference.
SIGNATURE
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.
Date: July 25, 2001
NN, INC.
By: /s/ William C. Kelly, Jr.
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William C. Kelly, Jr.,
Chief Accounting Officer
Exhibit 99.1
NEWS BULLETIN
RE: NN, INC.
FROM: 2000 Waters Edge Drive
Johnson City, TN 37604
[The Financial Relations Board Logo]
BSMG WORLDWIDE
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FOR FURTHER INFORMATION:
AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD/
BSMG Worldwide:
Will Kelly Kerry Thalheim Susan Garland
Treasurer & Manager of Investor Relations (General info) (Analyst)
(423) 743-9151 212-661-8030 212-661-8030
For Immediate Release
July 25, 2001
NN, INC. REPORTS 2001 SECOND QUARTER RESULTS
Signs $60 Million Credit Agreement
Johnson City, Tenn. - July 25, 2001 - NN, Inc. (Nasdaq: NNBR) today reported
its financial results for the second quarter ended June 30, 2001. Results for
the 2001 second quarter reflect the operations of NN Euroball ApS (Euroball),
a stand-alone joint venture company formed on July 31, 2000, the Delta Rubber
Company (Delta) acquired on February 16, 2001, as well as the operations of
Industrial Molding Corporation (IMC) acquired on July 6, 1999. Both IMC and
Delta were acquired in transactions using the purchase method of accounting.
The Company also noted that its results for the same period reflect NN's
joint venture interests in Jiangsu General Ball & Roller (formed in March
2000) and NN-Arte (a joint venture formed in August 2000).
Net sales for the second quarter of 2001 were $47,350,000 up 85% compared to
$25,643,000 for the same period of 2000. Net income of $3,506,000 reflects a
$1,602,000 after-tax gain on insurance proceeds from the fire in the NN
Erwin, Tennessee facility in March 2000. Excluding this gain, net income
totaled $1,904,000, or $0.12 per share, down 15% from $2,242,000, or $0.15
per share for the 2000 second quarter.
Net sales for the first half of 2001 were $97,577,000, up 82% compared to
$53,645,000 in the same period of 2000. Net income of $4,954,000 reflects
the aforementioned second quarter 2001 after-tax gain on insurance proceeds
from the fire in the NN Erwin, Tennessee facility. Excluding this gain, net
income totaled $3,352,000, or $0.22 per share, down from $4,352,000 or $0.28
per share for the 2000 first half.
The Company entered into a new syndicated loan agreement on July 20, 2001
with AmSouth Bank, its primary agent, which provides for a two-year revolving
credit facility of up to $25 million and a five-year term loan of $35
million. This $60 million agreement replaces a $50 million revolving credit
facility provided by AmSouth Bank. The proceeds from the new loan facility
will be used to finance periodic working capital needs and provide long-term
financing for the February 16, 2001 acquisition of Delta.
The Company also announced that during the second quarter it determined that
the effect of an interest rate swap contract at its NN Euroball ApS
subsidiary was not recorded in its first quarter 2001 financial statements as
required under Statement of Financial Accounting Standards (SFAS) 133, which
was effective for the Company on January 1, 2001. While recording the effect
of the interest rate swap will not change the Company's reported basic
earnings of $0.10 per share for the first quarter of 2001, net income of
$1,562,000 for this period will be reduced by $114,000, which includes a
$98,000 cumulative effect of change in accounting principles. The Company
will be filing an amended March 31, 2001 Form 10-Q to reflect the adoption of
SFAS 133.
Roderick R. Baty, President and Chief Executive Officer, stated, "Our top
line growth in the second quarter of 2001 is the result of the revenue
contribution from Euroball and Delta Rubber, totaling $22.5 million and $4.5
million, respectively. This was offset somewhat by the adverse economic
conditions in our North American markets. While our European markets
experienced modest revenue growth year over year, our domestic businesses
were down an average of 11%. In light of the current economic situation, we
are focusing on cost reduction programs including reduced work schedules at
all three of our domestic operations.
"As a percentage of net sales, the gross profit margin was 25.3% in the 2001
second quarter versus 29.9% in the 2000 second quarter. This reflects
inventory reductions at our domestic ball & roller facilities as well as
volume related margin decline due to soft economic conditions. Selling,
general and administrative expense as a percentage of sales was 8.1% compared
to 9.6% in the prior year's second quarter," added Mr. Baty
"We have been through down cycles in the past and our overall objective is to
manage our business prudently through this difficult operating environment.
Toward that end, we are focusing on cost reduction programs, working capital
management, reduction in non-critical capital spending, and debt reduction.
In particular, our strong cash flows and our new acquisitions are enabling us
to pay down debt. Since the beginning of the year, we have reduced long-term
debt approximately $7.7 million excluding the financing for the acquisition
of Delta Rubber and the effect of currency. In short, we are on target with
our objective of reducing the Company's long-term debt by at least $12
million during 2001. We also continue to focus on the further integration of
all our business units and efforts to maximize the value of NN's broader
product offerings to our customers," added Mr. Baty.
"At this time, the resumption of growth in the U.S. economy continues to be
very difficult to predict and we are concerned about signs of reduced
industrial activity in Europe. If business conditions do not worsen further,
we expect that sales for the full year 2001 should reach approximately $190
million, down from our revised estimate of $200 million. This volume level
reflects a full year contribution from Euroball, the addition of Delta
Rubber, modest sales from NN-Arte and market share gains/new product programs
in our core domestic operations partially offsetting our weak domestic
markets. At these sales levels, the Company is now projecting third quarter
earnings to be between $0.13 and $0.14 per share and 2001 full year earnings
to be between $0.51 per share to $0.53 per share excluding any gains
resulting from insurance proceeds from the March 2000 fire at the Company's
Erwin, Tennessee facility.
"We believe that NN enjoys a number of fundamental strengths that will
enable us to withstand the current downturn as well as continue to grow when
business conditions improve. These strengths include our strong cash flow
and our market share position within the bearing industry. Specifically, NN
has worked diligently over the past two years to implement its strategic
growth
plan, enabling us to expand our global manufacturing base beyond North America
and expand our bearing component platform. In summary, we are well positioned as
a key component supplier to our global customers," concluded Mr. Baty.
NN, Inc. is an independent manufacturer and supplier of high quality,
precision-bearing components to both domestic and international anti-friction
bearing manufacturers and had sales of $132 million in 2000.
For More Information on NN, Inc. at no cost, via facsimile,
please call 1-800-PRO-INFO and enter stock ticker symbol - NNBR
With the exception of the historical information contained in the release,
the matters described herein contain forward-looking statements that are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements involve a number of risks and
uncertainties that may cause actual results to be materially different from
such forward-looking statements. Such factors include, among others, general
economic conditions and economic conditions in the industrial sector,
competitive influences, risks that current customers will commence or
increase captive production, risks of capacity underutilization, quality
issues, availability of raw materials, currency and other risks associated
with international trade, the Company's dependence on certain major
customers, 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, 2000.
(Financial Tables Follow)
NN, Inc.
Condensed Statement of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months (As Restated)
Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
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Net sales $47,350 $25,643 $97,577 $53,645
Cost of goods sold 35,320 17,965 73,504 38,311
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Gross profit 12,030 7,678 24,073 15,334
Selling, general and administration 3,886 2,463 7,900 4,781
Depreciation and amortization 3,386 1,723 6,696 3,568
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Income from operations 4,758 3,492 9,477 6,985
Interest expense, net 1,043 268 2,273 559
Equity in earnings of
unconsolidated affiliate 23 (53) (26) (66)
Net gain on involuntary conversion (2,542) -- (2,542) (25)
Other income (275) -- (455) --
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Income before provision for income
taxes 6,509 3,277 10,227 6,467
Provision for income taxes 2,437 1,035 4,073 2,115
Minority interest in consolidated
subsidiary 566 -- 1,102 --
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Income before cumulative effect of
change in accounting principle 3,506 2,242 5,052 4,352
Cumulative effect of change in
accounting principle, net of income tax
benefit of $112 -- -- 98 --
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Net income $3,506 $2,242 $4,954 $4,352
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Income per common share $0.23 $0.15 $0.32 $0.28
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-more-
NN, Inc.
Condensed Balance
Sheet
(In thousands)
June 30, December
31,
2001 2000
(Unaudited)
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Assets
Current assets:
Cash $6,629 $8,273
Accounts receivable, net 34,334 29,549
Inventories, net 23,523 23,742
Other current assets 3,475 1,512
Net current deferred tax asset 104 962
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Total current assets 68,065 64,038
Property, plant & equipment, net 87,057 91,693
Goodwill, net 38,815 27,865
Other non-current assets 7,627 4,212
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Total assets $201,564 $187,808
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $16,790 $17,337
Accrued salaries & wages 5,504 6,929
Income taxes payable 3,057 1,341
Payable to affiliates 2,739 1,762
Short-term notes -- 2,000
Short-term portion of long-term notes 5,250 --
Other liabilities 10,694 6,490
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Total current liabilities 44,034 35,859
Minority interest in consolidated
subsidiaries 28,095 30,257
Deferred income taxes 4,388 5,353
Long-term notes payable 59,592 50,515
Other 775 578
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Total liabilities 136,884 122,562
Total stockholders' equity 64,680 65,246
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Total liabilities and stockholders'
equity $201,564 $187,808
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