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): July 28, 2005
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NN, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-23486 62-1096725
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(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) File Number) Identification Number)
2000 Waters Edge Drive, Johnson City, Tennessee 37604
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (423) 743-9151
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
Furnished as Exhibit 99.1 is a copy of the earnings release of NN, Inc.
reporting results for the second quarter of 2005, which was issued on July 28,
2005.
Item 9.01. Financial Statements and Exhibits
(c) 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:
Exhibits:
Exhibit
Number Description of Exhibit
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99.1 Press Release of NN, Inc. dated July 28, 2005
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.
Dated: July 28, 2005 By: /s/ William C. Kelly, Jr.
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William C. Kelly, Jr.
Secretary, Treasurer and
Chief Administrative Officer
EXHIBIT 99.1
FINANCIAL
RELATIONS BOARD
RE: NN, Inc.
2000 Waters Edge Drive
Johnson City, TN 37604
FOR FURTHER INFORMATION:
AT THE COMPANY AT FINANCIAL RELATIONS BOARD
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Will Kelly Marilynn Meek Susan Garland
Vice President and Chief Administrative Officer (General info) (Analyst info)
(423) 743-9151 212-827-3773 212-827-3775
FOR IMMEDIATE RELEASE
July 28, 2005
NN, INC. REPORTS SECOND QUARTER 2005 RESULTS
Revenues Up 12%, Earnings Per Share Up 75%
Johnson City, Tenn, July 28, 2005 - NN, Inc. (Nasdaq: NNBR) today reported its
financial results for the second quarter ended June 30, 2005. Net sales for the
second quarter of 2005 rose 11.8% to $84.2 million from $75.3 million for the
same period of 2004. Net income for the second quarter of 2005 totaled $3.6
million, or $0.21 per diluted share, compared to $2.0 million, or $0.12 per
diluted share for the second quarter of 2004, an increase of 80.0% and 75.0%
respectively.
Net sales for the first half of 2005 were $170.9 million, up 11.8%, compared to
$152.9 million for the same period of 2004. Net income for the first half of
2005 totaled $7.6 million, or $0.44 per diluted share, compared to $5.2 million,
or $0.30 per diluted share for the same period of 2004, an increase of 46.2% and
46.7% respectively.
James H. Dorton, Vice President and Chief Financial Officer, commented, "Of the
total revenue increase of $18.0 million in the first half of 2005 as compared to
the same period in 2004, volume improvements and new program share gains
accounted for $7.8 million, the impact of currency translation accounted for
$5.1 million and price increases associated with raw material pass through
accounted for the remaining $5.1 million. Our 2005 second quarter revenues
reflect slightly improving demand in both the North American and European
automotive sectors and continuing year-to-date strong industrial demand in both
markets.
"As a percentage of net sales, 2005 second quarter cost of products sold was
78.4%. These margins, though essentially flat with the second quarter of 2004
level of 78.3%, were negatively impacted by increased resin prices at our
Industrial Molding facility. Year-to-date cost of products sold was 78.2% which
continued to show improvement
over 2004 full year margins of 79.1%. This improvement was a direct result of
the cost reduction efforts generated by our Level 3 initiative.
"Selling, general and administrative expenses of $7.3 million, or 8.7% of net
sales for the second quarter of 2005 decreased $744,000 from $8.0 million, or
10.6% of net sales for the second quarter of 2004. The decrease was primarily
due to lower Sarbanes-Oxley compliance costs as compared to the prior year.
Selling, general and administrative expenses for the first half of 2005 remained
on plan at 8.7% of net sales as compared to 9.9% of net sales for the same
period in 2004.
Mr. Dorton concluded, "Debt minus cash remained relatively unchanged from the
beginning of the year. Although traditionally our working capital needs are
higher for the first half of the year, we are currently running behind our
previously announced debt reduction goal of $12.0 million to $13.0 million for
the full year of 2005. We remain committed to this goal and will take measures
in the second half of the year to aggressively manage our working capital needs
and reassess our capital expenditure plans."
Roderick R. Baty, Chairman and Chief Executive Officer, commented, "We continue
to be pleased with the start-up investments we have made in Slovakia and China,
as well as certain strategic initiatives which have positioned the Company well
for improving financial performance for the remainder of 2005 and beyond.
Mr. Baty concluded, "In total, our operations are performing at levels
established in our original business plan. We anticipate the strong overall
levels of demand we experienced during the first half of the year to continue
into the third and fourth quarters. As a result, our capacity utilization rates
should remain high for the remainder of the year. We still face concerns
regarding the volatility of steel inflation in the U.S. We will continue to
experience significant steel raw material inflation in the domestic market
during the last six months of the year. In Europe, there is a downward trend for
scrap surcharge pricing levels and we expect this trend to continue through the
remainder of 2005. In addition to the steel inflation, we have experienced
higher resin costs at our Industrial Molding operation due to historically high
oil prices. Our 2005 earnings projections include provisions for a continuing
pass through of both steel and plastic resin inflation in the form of higher
selling prices to our customers.
"Finally, currency remains an open issue with respect to our previously provided
guidance for both revenue and earnings in 2005. If the U.S. Dollar-Euro exchange
rate for the remainder of the year remains at the level in place at the end of
the second quarter, we would anticipate currency translation to negatively
affect both revenue and earnings. Our revenue estimate for the full year would
be adjusted downward by approximately $9.0 million to $328.0 million. Our
anticipated full year earnings would be impacted by approximately $0.04 per
diluted share and result in revised full year guidance of $0.86 to $0.90 per
diluted share."
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NN, Inc. manufacturers and supplies high precision bearing components consisting
of balls, rollers, seals, and retainers for leading bearing manufacturers on a
global basis. In addition, the company manufactures a variety of other plastic
components. NN, Inc. had sales of US $304 million in 2004.
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, 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, 2004.
Financial Tables Follow
3
NN, Inc.
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
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Net sales $84,166 $75,265 $ 170,881 $ 152,897
Cost of products sold (exclusive of
depreciation shown separately below) 66,005 58,937 133,670 119,326
Selling, general and administrative 7,297 8,041 14,782 15,184
Depreciation and amortization 4,130 3,969 8,303 7,918
Loss on disposal of assets 2 - 6 -
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Income from operations 6,732 4,318 14,120 10,469
Interest expense, net 1,025 932 2,008 1,824
Other (income) expense, net (168) 25 (340) (31)
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Income before provision for income taxes 5,875 3,361 12,452 8,676
Provision for income taxes 2,320 1,375 4,872 3,472
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Net income $ 3,555 $ 1,986 $ 7,580 $ 5,204
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Diluted income per common share $ 0.21 $ 0.12 $ 0.44 $ 0.30
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Weighted average diluted shares 17,328 17,177 17,252 17,176
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4
NN, Inc.
Condensed Balance Sheets
(In thousands)
(Unaudited)
June 30, December 31,
2005 2004
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Assets
Current Assets:
Cash $ 8,038 $ 10,772
Accounts receivable, net 56,933 51,597
Inventories, net 33,161 35,629
Other current assets 12,020 10,340
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Total current assets 110,152 108,338
Property, plant and equipment, net 115,214 131,169
Goodwill, net 42,044 44,457
Other assets 5,840 5,905
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Total assets $ 273,250 $ 289,869
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 38,869 $ 45,217
Accrued salaries and wages 13,944 16,332
Current portion of long-term debt 7,255 7,160
Other liabilities 6,656 5,722
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Total current liabilities 66,724 74,431
Deferred income taxes 16,760 17,857
Long-term notes payable 64,669 67,510
Other 13,009 14,931
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Total liabilities 161,162 174,729
Total stockholders' equity 112,088 115,140
Total liabilities and stockholders' equity $ 273,250 $ 289,869
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