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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K/A2
(Amendment No. 2 to Form 10-K)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-23486
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NN, INC.
(Exact name of registrant as specified in its charter)
Delaware 62-1096725
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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
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Securities registered pursuant to Section 12(b) of the Act:
Title of Name of each exchange
each class on which registered
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None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |X|
The number of shares of the registrant's common stock outstanding on
March 25, 2002 was 15,340,806.
The aggregate market value of the voting stock held by non-affiliates
of the registrant at March 25, 2002, based on the closing price on the NASDAQ
National Market System on that date was approximately $158,010,302.
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Amendment No. 2
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its annual report on Form 10-K, as
amended on Form 10-K/A on April 1, 2002, by restating such portions in their
entirety as set forth in the pages attached hereto:
1. Part I, Item 1, Business,
2. Part IV, Item 14, Exhibits, Financial Statement Schedules and
Reports on Form 8-K.
Part 1
Item 1. Business
Overview
NN, Inc. (the "Company") is an independent manufacturer and supplier of
high quality, precision components to domestic and international anti-friction
bearing manufacturers, other original equipment manufactures, the automotive
industry, and other aftermarkets. The Company supplies high quality, precision
steel balls and rollers, both directly and indirectly through its sales to
bearing manufacturers, to automotive original equipment manufacturers ("OEMs")
and the automotive aftermarket, to the gas and mining industries, and to
producers of water, gas and oil well drilling bits and stainless steel valves
and pumps. Precision steel balls and rollers are critical moving parts of
anti-friction bearings, which in turn, are integral components of machines with
moving parts. In addition to balls and rollers, the Company provides
full-service design and manufacture of plastic injection molded components to
the bearing, automotive, electronic, leisure and consumer markets with an
emphasis on value-added products that take advantage of its capabilities in
product development, tool design and tight tolerance molding processes. With the
acquisition of The Delta Rubber Co. ("Delta") on February 16, 2001 the Company
now also provides precision bearing seals and other precision molded rubber
products to the bearing, automotive, industrial, agricultural, and aerospace
markets.
The Company was organized in October 1980 by a group of senior managers
of the ball and roller division of Hoover Precision Products, Inc. (formerly
Hoover Universal, Inc.), led by Richard Ennen, the Company's former Chairman.
The Company was founded in order to meet the bearings industry's need for a
dependable source of high quality, precision balls and rollers. During 2001, the
Company sold its products to over 500 customers located in over 24 different
countries. Its primary customers include AB SKF ("SKF"), FAG Kugelfisher Georg
Shafer AG ("FAG"), SNR Roulements, and the Torrington Company.
On July 4, 1999, the Company acquired substantially all of the assets
of Earsley Capital Corporation, formerly known as Industrial Molding Corporation
("IMC"). The Company currently operates the business under the name Industrial
Molding Corporation. Formed in 1947, IMC provides full-service design and
manufacture of plastic injection molded components to the bearing, automotive,
electronic, leisure and consumer markets with an emphasis on value-added
products that take advantage of its capabilities in product development, tool
design and tight tolerance molding processes. IMC operates two manufacturing
facilities in Lubbock, Texas.
On July 31, 2000, the Company formed a majority owned stand-alone
company in Europe, NN Euroball ApS ("Euroball"), for the manufacture and sale of
chrome steel balls used for ball bearings and other products. The Company owns
54% of Euroball. AB SKF and FAG Kugelfisher Georg Shafer AG, the parent
companies of SKF and FAG respectively each own 23%. As part of the transaction,
Euroball acquired the ball factories located in Pinerolo, Italy (previously
owned by SKF), Eltmann, Germany (previously owned by FAG), and Kilkenny, Ireland
(previously owned by the Company).
On August 31, 2000, the Company acquired a 51% ownership interest in NN
Mexico, LLC ("NN Mexico"), a Delaware limited liability company. NN Mexico holds
a 100% ownership interest in NN Arte, a manufacturer of plastic components
located in Guadalajara, Mexico.
On February 16, 2001, the Company acquired of all of the outstanding
stock of The Delta Rubber Company ("Delta"), a Connecticut corporation, for
$22.5 million in cash. Delta provides high quality engineered bearing seals and
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other precision-molded rubber products to bearing and other original equipment
manufacturers. Delta operates two facilities in Danielson, Connecticut.
On September 11, 2001, the Company announced the closing of its
Walterboro, South Carolina ball manufacturing facility effective December 2001.
The closing was made as part of the Company's strategy to redistribute its
global production in order to better utilize capacity and serve the needs of its
worldwide customers. The precision ball production of the Walterboro facility
has been fully absorbed by the Company's remaining U.S. ball and roller
manufacturing facilities located in Erwin and Mountain City, Tennessee. The
Company recorded before tax charges associated with the closing of $1.9 million.
This amount includes a $1.1 million before-tax charge for the recording of
impairment on the Company's manufacturing facility located in Walterboro, South
Carolina and $0.8 million related to employee severance costs. These amounts are
reflected as restructuring and impairment costs in the accompanying Consolidated
Statements of Income. The building along with certain machinery and equipment
are held for sale as of December 31, 2001. These assets have an aggregate net
book value of $4.3 million. The financial results of this operation have been
reflected in the Balls and Rollers Segment. See Note 10 of the Notes to
Consolidated Financial Statements for additional financial information.
Effective December 21, 2001, the Company sold its minority interest in
Jiangsu General Ball & Roller Company, LTD, a Chinese ball and roller
manufacturer located in Rugao City, Jiangsu Province, China. To effect the
transaction, the Company sold its 50% ownership in NN General, LLC, which owns a
60% interest in the Jiangsu joint venture to its partner, General Bearing
Corporation for cash of $0.6 million and notes of $3.3 million. The notes are
due on December 21, 2006 with annual installments of $0.2 million. The notes
bear interest at average LIBOR (1.88% at December 31, 2001) plus 1.5%. In 2001,
the Company recorded a non-cash after-tax loss on sale of the investment in this
joint venture of $144,000.
For managerial and financial analysis purposes, management views the
Company's operations in three segments. The domestic ball and roller operations
of Erwin, Tennessee and Mountain City, Tennessee ("Domestic Ball and Roller
Segment"), the Euroball facilities of Kilkenny, Ireland, Eltmann, Germany and
Pinerolo, Italy ("Euroball Segment") and the "Plastics Segment" which consists
of IMC, Delta Rubber and NN Arte.
Products
At its ball and roller facilities in Erwin, Tennessee and Mountain
City, Tennessee, the Company produces and sells high quality, precision steel
balls in sizes ranging in diameter from 3/16 of an inch to 2 1/2 inches and
rollers in a limited variety of sizes. At its Euroball facilities, the Company
produces and sells high quality steel balls in sizes ranging from 1/8 of an inch
to 12 1/2 inches in diameter. The Company produces and sells balls in a variety
of grades ranging from grade 3 to grade 1000 and rollers in a variety of grades
ranging from grade 50 to grade 1000. The grade number for a ball or a roller
indicates the degree of spherical or cylindrical precision of the ball or
roller; for example, grade 3 balls are manufactured to within three millionths
of an inch of roundness and grade 50 rollers are manufactured to within fifty
millionths of an inch of roundness. At its Domestic Ball and Roller Segment,
sales of steel balls accounted for approximately 92%, 92% and 89% of the
segment's net sales in 1999, 2000 and 2001, respectively. Sales of rollers
accounted for the balance of the segment's sales in these years.
Precision Steel Balls. The Company manufactures high quality, precision
balls in three different types of steel: 52100 steel, 440C stainless steel and
S2 rock bit steel. Each of the different types of steel has unique
characteristics that make it suitable for particular applications.
During 2001, approximately 98% of the balls produced by the Company's
domestic ball and roller operations were made from 52100 steel ("52100 Steel").
100% of the balls produced by the Company's Euroball joint venture were made
from 52100 Steel. See also "Business--Raw Materials." The 52100 Steel balls have
a high degree of hardness and provide excellent resistance to wear and
deformation. The 52100 Steel balls are used primarily by manufacturers of
anti-friction ball bearings where precise spherical and tolerance accuracy are
required. The Company produces and sells 52100 Steel balls in eleven grades
ranging from grade 1000 to grade 3 (highest precision), and in sizes ranging in
diameter from 1/8 of an inch to 12 1/2 inches. The primary grades of the 52100
Steel balls are grade 16, grade 10, and grade 5 and grade 3.
Precision Steel Rollers. The Company manufactures rollers at its Erwin,
Tennessee facility in three types of steel: 52100 Steel, 440C stainless steel
and S2 rock bit steel. Rollers are the primary components of anti-friction
bearings, which are subjected to heavy load conditions. The Company's roller
products are used primarily for applications similar to those of its ball
product lines, plus hydraulic pumps and motors.
3
Bearing Seals. Delta manufactures and sells a wide range of precision
bearing seals. Delta utilizes a variety of compression, transfer and injection
molding processes and adhesion technologies to create rubber to metal bonded
bearing seals. The seals are used in applications for automotive, industrial,
agricultural, mining and aerospace markets. In 2001, 45% of Delta's sales were
to the automotive industry.
Precision Plastic Components. IMC manufactures and sells a wide range
of plastic molded products through its two facilities in Lubbock, Texas. IMC's
products can be classified into three primary market segments - bearing
retainers, automotive under the hood components and other precision components
which include automotive components, electronic instrument cases and precision
electronic connectors and lenses as well as a variety of other specialized
parts.
Bearing Retainers. IMC manufactures and sells high precision plastic
retainers for ball and roller bearings used in a wide variety of applications,
including industrial automotive products. During 2001, sales of bearing
retainers accounted for approximately 38% of IMC's sales.
Automotive Components. IMC manufacturers and sells high precision
plastic automotive under the hood parts. These parts utilize high performance
engineered polymers that draw upon IMC's ability to mold highly technical
dimension parts. These components include hydraulic cylinders, clutch systems,
seat belts, gears and transmission components. During 2001, sales of automotive
parts accounted for approximately 33% of IMC's sales.
Other. IMC also manufactures and sells a variety of high precision
molded parts including plastic instrument cases, precision end connectors and
lenses for fiber optics as well as other specialized parts. During 2001, sales
for these items accounted for 29% of IMC's sales.
NN Arte manufactures and sells a variety of precision and molded
components including gearing, gearing assemblies and automotive components to
office automation manufacturers and the automotive industry.
Research and Development. The amounts spent on research and development
activities by the Company during each of the last three fiscal years are not
material.
Sales and Marketing
The Company markets balls and rollers in the United States and abroad
primarily through seven salaried sales employees. Additional internal sales
employees handle customer orders and provide sales support.
The Plastics Segment markets its products through commissioned sales
representatives or directly through salaried marketing and sales employees.
Additional internal customer service employees handle customer orders and
provide sales and design support. Additionally, certain engineers and
manufacturing employees provide sales and design support due to the technical
nature of the products.
The following table presents a breakdown of the Company's net sales
for fiscal years 1999 through 2001:
(In Thousands)
2001 2000 1999
------------ ------------ ------------
Domestic Ball and Roller
Segment $52,692 $67,637 $67,736
29.3% 51.2% 79.4%
Euroball Segment 86,719 33,988 --
48.1% 25.7% --
Plastics Segment 40,740 30,504 17,558
22.6% 23.1% 20.6%
------------ ------------ ------------
Total $ 180,151 $ 132,129 $85,294
============ ============ ============
100% 100% 100%
============ ============ ============
The Company's marketing strategy relative to the Domestic Ball and
Roller Segment is to increase its share of the domestic and international market
for bearing components by offering a wide variety of high quality, precision
balls and rollers to existing and prospective customers on a timely basis and in
a cost-effective manner. In marketing its products, the Company has focused its
efforts on bearing manufacturers with their
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own ball and/or roller manufacturing capabilities. The Company's sales staff
traditionally emphasizes the potential quality advantages and cost savings
associated with the outsourcing of such bearing manufacturers' needs by
purchasing precision components from the Company instead of manufacturing such
components internally.
The Plastics Segment's marketing strategy is to increase its share of
the market by offering custom manufactured, high quality, precision parts in a
cost-effective manner. This strategy focuses on relationships with key customers
that require technically difficult parts, which enable the Plastics Segment to
take advantage of its strengths in product development, tool design and tight
tolerance molding processes. The Plastics Segment has historically focused on
the North American market. However, management believes certain synergies exist
between its various segments that will allow the Company to further penetrate
the North American market as well as broaden its European and Asian presence by
working with the Company's global customer base.
The Company's arrangements with its domestic customers typically
provide that payments are due within 30 days following the date of shipment of
goods. With respect to foreign customers, payments generally are due within 90
to 120 days following the date of shipment in order to allow for additional
freight time and customs clearance. For customers that participate in the
Company's inventory management program, sales are recorded when the customer
uses the product. See "Business -- Customers" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
Customers
During 2001, the Company's ten largest customers accounted for
approximately 73% of its consolidated net sales. Sales to various U.S. and
foreign divisions of SKF, which is one of the largest bearing manufacturers in
the world, accounted for approximately 35% of net sales in 2001 and sales to FAG
accounted for approximately 19% of net sales in 2001. None of the Company's
other customers accounted for more than 5% of its net sales in 2001.
During 2001, the Domestic Ball and Roller Segment sold its products to
more than 500 customers located in more than 20 different countries.
Approximately 50% of ball and roller net sales in 2001 were to customers outside
the United States. Sales to the Domestic Ball & Roller Segment's top ten
customers accounted for approximately 74% of the segments' net sales in 2001.
Sales to SKF and FAG accounted for approximately 35% and 14% of the segment's
net sales in 2001 respectively. Sales to SKF and FAG are made pursuant to the
terms of the sales agreements which expire in 2006.
During 2001, the Euroball Segment sold its products to more than 40
customers located in 28 different countries. Approximately 87% of its net sales
in 2001 were to customers within Europe. Sales to the segment's top ten
customers accounted for approximately 94% of the segment's net sales in 2001.
Sales to SKF and FAG accounted for approximately 49% and 27% of the segment's
net sales in 2001, respectively. Sales to SKF and FAG are made pursuant to the
terms of sales agreements which expire in 2006.
During 2001, the Plastics Segment sold its products to more than 100
customers located in more than 10 different countries. Approximately 8% of
plastic net sales were to customers outside the United States. Sales to the
segment's top ten customers accounted for approximately 74% of the segments' net
sales in 2001. See Note 4 of the Notes to Consolidated Financial statements for
additional financial information.
See Note 10 of the Notes to Financial Statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Results of Operations" for additional segment financial information. In both the
foreign and domestic markets, the Company principally sells its products
directly to manufacturers and not to distributors.
The Company ordinarily ships its products directly to customers within
60 days, and in some cases, during the same calendar month, of the date on which
a sales order is placed. Accordingly, the Company generally has an insignificant
amount of open (backlog) orders from customers at month end. Certain of the
Company's customers have entered into contracts with the Company pursuant to
which they have agreed to purchase all of their requirements of specified balls
and rollers and plastic molded products from the Company, but under which they
are not obligated to purchase any specific amounts. While firm orders generally
are received only monthly, the Company normally is aware of reasonably
anticipated future orders well in advance of the placement of a firm order.
Certain agreements are in effect with some of the Company's largest customers,
which provide for targeted, annual cost adjustments that may be offset by
material cost fluctuations. The Company has installed a computerized, bar coded
inventory management system with most of its major ball and roller customers
pursuant to which the Company, through a direct computer link, automatically
monitors the customer's ball and roller inventories. This system permits the
Company to determine on a day-to-day basis the amount of balls and/or rollers
5
remaining in a customer's inventory. When such inventories fall below certain
levels, the Company automatically ships additional goods. The Company follows
industry practice in handling its inventory, which is a first in, first out
policy.
Employees
As of December 31, 2001, the Company had 1,316 full-time employees of
whom 1,173 were engaged in production/maintenance. Of these 1,316 employees, 235
were employed at the Domestic Ball and Roller Segment facilities, 677 at the
Euroball Segment, 399 at the Plastics Segment and 5 are considered Corporate.
Only the employees in the Eltmann, Germany and Pinerolo, Italy plants are
unionized and we have never experienced any involuntary work stoppages. The
Company believes that relations with its employees are good.
Competition
The precision ball and roller industry is intensely competitive, and
many of the Company's competitors have greater financial resources than the
Company. The Company's primary domestic competitor is Hoover Precision Products,
Inc., a division of Tsubakimoto Precision Products Co. Ltd. The Company's
primary foreign competitors are Amatsuji Steel Ball Manufacturing Company, Ltd.
and Tsubakimoto Precision Products Co. Ltd.
The Company believes that competition within the precision ball and
roller market is based principally on quality, price and the ability to
consistently meet customer delivery requirements. Management believes that the
Company's competitive strengths are its precision manufacturing capabilities,
its reputation for consistent quality and reliability, and the productivity of
its workforce.
The markets for IMC's and NN Arte's products are intensely competitive.
Since the industry is currently very fragmented, IMC and NN Arte must compete
with numerous companies in each of their marketing segments. Many of these
companies have substantially greater financial resources than the Company and
many currently offer competing products nationally and internationally. IMC's
primary competitor in the bearing retainer segment is Nakanishi Manufacturing
Corporation. Domestically, Nypro, Inc. and Key Plastics are the main competitors
in the automotive segment. NN Arte primarily competes with various suppliers in
Mexico.
The Company believes that competition within the plastic injection
molding industry is based principally on quality, price, design capabilities and
speed of responsiveness and delivery. Management believes that IMC's competitive
strengths are product development, tool design and fabrication and tight
tolerance molding processes, as well as its reputation in the marketplace as a
quality producer of technically difficult products.
The markets for Delta's products are also intensely competitive. The
bearing seal market is comprised of approximately six major competitors that
range from small privately held companies to Fortune 500 global enterprises.
Bearing seal manufacturers compete on the design, service, quality and price.
Delta's primary competitors in the United States bearing seal market are
Freindenburg-NOK, Chicago Rawhide Industries and Trostel, LTD.
Raw Materials
The primary raw material used by the Company in its Domestic Ball and
Roller Segment and Euroball Segment is 52100 Steel. During 2001, approximately
98% and 100% of the steel used by these two segments, respectively, was 52100
Steel. The Company's other steel requirements include type 440C stainless steel
and type S2 rock bit steel. The Domestic Ball and Roller Segment purchases
substantially all of its 52100 Steel requirements from foreign mills because of
the lack of domestic producers of such steel at the quality level required by
the Company. The principal suppliers of 52100 Steel to the Domestic Ball and
Roller Segment are Daido Steel (America) Inc., Shinso American Corporation,
Lucchini USA Inc. and Ohio Star Forge Co. The Euroball Segment purchases all of
its 52100 Steel requirements from European mills. The principal supplier of
52100 Steel to the Euroball Segment is Ascometal France. The other steel
requirements of the Company also are purchased principally from foreign steel
manufacturers. There are a limited number of suppliers of the 52100 Steel that
the Company uses in its Domestic Ball and Roller and Euroball Segments. The
Company believes that if any of its current suppliers were unable to supply
52100 Steel to the Company, it would be able to obtain its 52100 Steel
requirements from alternate sources. The Company cannot provide assurances that
it would not face higher costs or production interruptions as a result of
obtaining 52100 Steel from alternate sources.
The Company allocates its steel purchases among suppliers on the basis
of price and quality. Generally, the Domestic Ball & Roller Segment does not
enter into written supply agreements with its suppliers or commit itself to
6
maintain minimum monthly purchases of steel, except for the consignment
arrangements among Ascometal and Euroball (see Note 14). The Company's pricing
arrangements with its suppliers typically are subject to adjustment once every
six months. The price of 52100 Steel decreased approximately 0.9% in 2000 and
0.9% in 2001 in the Domestic Ball and Roller Segment. In the Euroball Segment,
the Company experienced price increases for 52100 Steel of approximately 2.5% in
2000 and 1.9% in 2001.
Because 52100 Steel is principally produced by foreign manufacturers,
the Company's operating results would be negatively affected in the event that
the U.S. or European governments imposes any significant quotas, tariffs or
other duties or restrictions on the import of such steel or if the United States
dollar decreases in value relative to foreign currencies. On March 6, 2002, the
U.S. government adopted legislation that imposed certain tariffs on the import
of certain foreign produced steel into the United States. The Company continues
to evaluate the impacts of this legislation, but believes, at this time any
impact to the Company's operations or financial conditions will be immaterial.
The primary raw materials used by IMC and NN Arte are engineered
resins. Injection grade nylon is utilized in bearing retainers, gears,
automotive and other industrial products. The Company purchases substantially
all of its resin requirements from domestic manufacturers and suppliers. The
majority of these suppliers are international companies with resin manufacturing
facilities located throughout the world. The Company experienced price increases
for engineered resins of approximately 1.6% in 2000 and 4.3% in 2001.
Delta uses certified vendors to provide a customer mix of proprietary
rubber compounds. Delta also procures metal stampings from several domestic
suppliers. The Company experienced price increases for Delta's raw materials of
approximately 2.5% in 2000 and 2.5% in 2001.
The Company bases purchase decisions on price, quality and service.
Generally, the Company does not enter into written supply contracts with its
suppliers or commit itself to maintain minimum monthly purchases of resins. The
pricing arrangements with its suppliers typically can be adjusted at anytime.
Patents, Trademarks and Licenses
The Company does not own any U.S. or foreign patents, trademarks or
licenses that are material to its business. The Company does rely on certain
data and processes, including trade secrets and know-how, and the success of its
business depends, to some extent, on such information remaining confidential.
Each executive officer of the Company is subject to a non-competition and
confidentiality agreement that seeks to protect this information.
Seasonal Nature of Business
Historically, due to a substantial portion of sales to foreign
customers, seasonality has been a factor for the Company in that some foreign
customers typically cease their production activities during the month of
August.
Environmental Compliance
The Company's operations and products are subject to extensive federal,
state and local regulatory requirements both domestically and abroad relating to
pollution control and protection of the environment. The Company maintains a
compliance program to assist in preventing and, if necessary, correcting
environmental problems. Based on information compiled to date, management
believes that the Company's current operations are in substantial compliance
with applicable environmental laws and regulations, the violation of which would
have a material adverse effect on the Company. There can be no assurance,
however, that currently unknown matters, new laws and regulations, or stricter
interpretations of existing laws and regulations will not materially affect the
Company's business or operations in the future. More specifically, although
management believes that the Company disposes of its wastes in material
compliance with applicable environmental laws and regulations, there can be no
assurance that the Company will not incur significant liabilities in the future
in connection with the clean-up of waste disposal sites.
In the past, the Company has incurred certain expenses in complying
with applicable environmental laws associated with the removal of four
underground storage tanks containing kerosene and waste oil, the remediation of
soil and groundwater contamination resulting from a leak in one of the tanks,
and the closing of a sludge disposal area at one of its ball and roller
facilities. The remediation project is now complete, but the Company has certain
ongoing monitoring responsibilities. The amounts expended by the Company in
connection with this remediation project have not been material,
7
and based upon information currently available to the Company, management does
not believe that the future costs associated with the project will have a
material adverse effect on the Company's results of operations or financial
condition.
Executive Officers of the Registrant
The executive officers of the Company consist of the following
persons:
Name Age Position
---- --- --------
Roderick R. Baty 48 Chairman of the Board, Chief Executive
Officer, President and Director
Frank T. Gentry, III 46 Vice President - Manufacturing
Robert R. Sams 44 Vice President - Market Services
David L. Dyckman 37 Vice President - Corporate Development
and Chief Financial Officer
William C. Kelly, Jr. 43 Treasurer, Secretary and Chief
Accounting Officer
Biographical Information. Set forth below is certain additional
information with respect to each executive officer of the Company.
Roderick R. Baty was elected Chairman of the Board in September 2001
and continues to serve as Chief Executive Officer and President. He has served
as President and Chief Executive Officer since July 1997. He joined the Company
in July 1995 as Vice President and Chief Financial Officer and was elected to
the Board of Directors in 1995. Prior to joining the Company, Mr. Baty served as
President and Chief Operating Officer of Hoover Precision Products from 1990
until January 1995, and as Vice President and General Manager of Hoover
Precision Products from 1985 to 1990.
Frank T. Gentry, III, was originally appointed Vice President -
Manufacturing in August 1995. Mr. Gentry is responsible for the global
operations of the Ball and Roller and Euroball Segments. Mr. Gentry's
responsibilities include purchasing, inventory control and transportation. Mr.
Gentry joined the Company in 1981 and held various production control positions
within the Company from 1981 to August 1995.
Robert R. Sams joined the Company in 1996 as Plant Manager of the
Mountain City, Tennessee facility. In 1997, Mr. Sams served as Managing Director
of the Kilkenny facility and in 1999 was elected to the position of Vice
President - Market Services. Prior to joining the Company, Mr. Sams held various
positions with Hoover Precision Products from 1980 to 1994 and most recently as
Vice President of Production for Blum, Inc. from 1994 to 1996.
David L. Dyckman was appointed Vice President of Corporate Development
and Chief Financial Officer in April 1998. Prior to joining the Company, Mr.
Dyckman served from January 1997 until April 1998 as Vice President--Marketing
and International Sales for the Veeder-Root Division of the Danaher Corporation.
From 1987 until 1997, Mr. Dyckman held various positions with Emerson Electric
Company including General Manager and Vice President of the Gearing Division of
Emerson's Power Transmission subsidiary.
William C. Kelly, Jr. joined the Company in 1993 as Assistant Treasurer
and Manager of Investor Relations. In July 1994, Mr. Kelly was elected to serve
as the Company's Chief Accounting Officer, and in February 1995, was elected
Treasurer and Assistant Secretary. In March 1999 he was elected Secretary of the
Company. Prior to joining the Company, Mr. Kelly served from 1988 to 1993 as a
Staff Accountant and as a Senior Auditor with the accounting firm of
PricewaterhouseCoopers LLP.
8
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)1. Financial Statements
The following financial statements of the Company were included in Part
II, Item 8 of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001, as amended on Form 10-K/A.
Report of Independent Auditors for the years ended December 31, 2001
and December 31, 2000
Report of Independent Auditors for the years ended December 31, 1999
Consolidated Balance Sheets at December 31, 2001 and 2000
Consolidated Statements of Income and Comprehensive Income for the Three Years
ended December 31, 2001
Consolidated Statements of Changes in Stockholders' Equity for the Three Years
Ended December 31, 2001
Consolidated Statements of Cash Flows for the Three Years Ended December 31, 2001
Notes to Consolidated Financial Statements
(a)3. Exhibits Required by Item 601 of Regulation S-K
3.1 Certificate of Incorporation of the Company, as amended (incorporated
by reference to Exhibit 3.1 to the Company's Registration Statement on
Form S-1--File No. 33-74694).
3.2 Bylaws of the Company, as amended (incorporated by reference to
Exhibit 3.2 to the Company's registration Statement on Form S-1 - File
No. 33-74694).
4.1 Form of Common Stock certificate (incorporated by reference to Exhibit
4 to the Company's Registration Statement on Form S-1 - File No.
33-74694).
10.1* NN Ball & Roller, Inc. Stock Incentive Plan (incorporated by
reference to Exhibit 10.1 to the Company's Registration Statement on
Form S-1 - File No. 33-74694).
10.3* $1.2 million Life Insurance Policy purchased by Mr. Ennen, the
premiums of which are paid for by the Company (incorporated by
reference to Exhibit 10.3 to the Company's Registration Statement on
Form S-1-File No. 33-74694).
10.5 Form of Confidentiality and Non-Compete Agreements for Executive
Officers of the Company (incorporated by reference to Exhibit 10.17 to
the Company's Registration Statement on Form S-1 - File No. 33-74694).
10.6 Stockholder Agreement dated February 22, 1994, among certain
stockholders of the Company (incorporated by reference to Exhibit
10.18 to the Company's Registration Statement on Form S-1 - File No.
33-74694).
10.7 Form of Indemnification Agreement for officers and directors of the
Company (incorporated by reference to Exhibit 10.19 to the Company's
Registration Statement on Form S-1 - File No. 33-74694).
10.8 Lease, dated as of September 5, 1995, between the Company and the
State of Tennessee Department of Economic and Community Development
and the County of Johnson County, Tennessee (incorporated by
9
reference to Exhibit 10.9 of the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995).
10.9 Lease, dated as of March 22, 1996, between the Company and the State
of Tennessee Department of Economic and Community Development and the
County of Johnson County, Tennessee (incorporated by reference to
Exhibit 10.10 of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995).
10.10* Stock Option Agreement, dated as of July 3, 1995, between the
Company and Roderick R. Baty (incorporated by reference to Exhibit
10.11 of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995).
10.11 Loan Agreement, dated as of July 25, 1997, between the Company and
First American National Bank (incorporated by reference to Exhibit
10.13 of the Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1997).
10.12* Employment Agreement, dated August 1, 1997, between the Company and
Roderick R. Baty (incorporated by reference to Exhibit 10.14 of the
Company's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1997).
10.13* Employment Agreement, dated May 7, 1998, between the Company and
Frank T. Gentry.
10.14* Form of Stock Option Agreement, dated December 7, 1998, between the
Company and the non-employee directors of the Company (incorporated by
reference to Exhibit 10.15 of the Company's Quarterly Report on Form
10-K for the fiscal year ended December 31, 1999).
10.15* Elective Deferred Compensation Plan, dated February 26, 1999
(incorporated by reference to Exhibit 10.16 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1999).
10.16* Amendment No. 1 dated January 21, 2002, to Employment Agreement
between the Company and Frank T. Gentry (incorporated by reference to
Exhibit 10.16 of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001).
10.17* Change of Control and Noncompetition Agreement, dated January 21,
2002, between the Company and Frank T. Gentry (incorporated by
reference to Exhibit 10.17 of the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2001).
10.18* Amendment No. 1 dated January 21, 2002, to Employment Agreement
between the Company and Roderick R. Baty (incorporated by reference to
Exhibit 10.18 of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001).
10.19* Change of Control and Noncompetition Agreement, dated January 21,
2002, between the Company and Roderick R. Baty (incorporated by
reference to Exhibit 10.19 of the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2001).
10.20* Employment Agreement dated January 21, 2002, between the Company and
Robert R. Sams (incorporated by reference to Exhibit 10.20 of the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001).
10.21* Change of Control and Noncompetition Agreement, dated January 21,
2002, between the Company and Robert R. Sams (incorporated by
reference to Exhibit 10.21 of the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2001).
10.22* Employment Agreement dated January 21, 2002, between the Company and
William C. Kelly (incorporated by reference to Exhibit 10.22 of the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001).
10
10.23* Change of Control and Noncompetition Agreement, dated January 21,
2002, between the Company and William C. Kelly (incorporated by
reference to Exhibit 10.23 of the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2001).
10.24* Employment Agreement dated January 21, 2002, between the Company and
David L. Dyckman (incorporated by reference to Exhibit 10.24 of the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001).
10.25* Change of Control and Noncompetition Agreement, dated January 21,
2002, between the Company and David L. Dyckman (incorporated by
reference to Exhibit 10.25 of the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2001).
10.26 NN Euroball, ApS Shareholder Agreement dated April 6, 2000 among NN,
Inc., AB SKF and FAG Kugelfishcher Georg Schafer AG (incorporated by
reference to Exhibit 10.26 of the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2001).
99.1 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
- --------------------
* Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
The Company filed a Form 8-K on July 25, 2001 announcing its second quarter
earnings and its new long term financing arrangement.
The Company filed a Form 8-K on September 5, 2001 announcing its Board of
Directors has named Roderick (Rock) R. Baty as the Chairman of the Board of
Directors.
The Company filed a Form 8-K on September 11, 2001 announcing its decision
to close its plant located in Walterboro, South Carolina.
The Company filed a Form 8-K on November 14, 2001 announcing that, due to
the voluntary bankruptcy of one of its customers, the Company will need to
record a third quarter 2001 reserve for approximately $400,000 pre-tax.
(c) Exhibits See Index to Exhibits (attached hereto). The Company will provide
without charge to any person, upon the written request of such person, a
copy of any of the Exhibits to this Form 10-K.
11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
By: /S/ RODERICK R. BATY
-------------------------------
Roderick R. Baty
Chairman, President and
Chief Executive Officer
Dated: November 22, 2002
12
CERTIFICATIONS
I, Roderick R. Baty, certify that:
1. I have reviewed this annual report on Form 10-K/A of NN, Inc.; and
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report.
[Item 3 is omitted because financial statements are neither contained nor
amended in this Report and Items 4, 5 and 6 omitted pursuant to the transition
provisions of Release No. 34-46427.]
Date: November 22, 2002
/s/ Roderick R. Baty
--------------------------------------------
Roderick R. Baty
Chairman, President and Chief Executive Officer
13
I, David L. Dyckman, certify that:
1. I have reviewed this annual report on Form 10-K /A of NN, Inc.; and
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report.
[Item 3 is omitted because financial statements are neither contained nor
amended in this Report and Items 4, 5 and 6 omitted pursuant to the transition
provisions of Release No. 34-46427.]
Date: November 22, 2002
/s/ David L. Dyckman
--------------------------------------------
David L. Dyckman
Chief Financial Officer
14
Index to Exhibits
99.1 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15
Exhibit 99.1
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of NN, Inc. (the "Company") on
Form 10-K/A for the annual period ended December 31, 2001, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned, in the capacities and dates indicated below, hereby certify
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that, to our knowledge: (1) The Report fully
complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and (2) The information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ Roderick R. Baty
---------------------------
Roderick R. Baty
Chairman, President and Chief
Executive Officer
/s/ David L. Dyckman
---------------------------
David L. Dyckman
Chief Financial Officer