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): February 28, 2006
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 filing obligation of the registrant under any of the following
provisions:
[
] 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 year ended December 31, 2005, which was issued
on
February 28, 2006.
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
99.1 Press
Release of NN,
Inc. dated February 28, 2006.
2
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: February 28, 2006 | By: | /s/ William C. Kelly, Jr. |
|
|
||
|
Title: Vice
President and
Chief Administrative
Officer
|
||
&#
160;
EXHIBIT 99.1
NEWS
FINANCIAL
RELATIONS BOARD
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
Susan Garland
Vice
President and Chief Administrative Officer (General
info)
(Analyst info)
(423)
743-9151 212-827-3773 212-827-3775
FOR
IMMEDIATE RELEASE
February
28, 2006
NN,
INC. REPORTS 2005 FOURTH QUARTER AND FULL YEAR RESULTS
PROVIDES
GUIDANCE FOR 2006
FULL
YEAR 2005 REVENUES UP 5.7%,
EARNINGS
PER SHARE MORE THAN DOUBLE PRIOR YEAR
Johnson
City, Tenn, February 28, 2006 - NN,
Inc.
(Nasdaq: NNBR) today reported its financial results for the fourth quarter
and
year ended December 31, 2005. Net sales for the fourth quarter of 2005 were
$75.9 million, down 3.1% from $78.3 million for the same period of 2004. Net
income for the fourth quarter totaled $5.1 million, or $0.30 per diluted share
which included a non-operating gain of $0.02 per diluted share related to the
sale of excess land at our Veenendaal, The Netherlands facility. This compares
to a net loss of $254,000, or $(0.01) per diluted share for the fourth quarter
of 2004.
Net
sales
for the year 2005 were $321.4 million, up $17.3 million or 5.7% compared to
$304.1 million for 2004. Net income for 2005 totaled $15.0 million, or $0.87
per
diluted share, compared to $7.1 million, or $0.41 per diluted share for 2004.
The $0.41 per diluted share for 2004 includes the negative impact of 2004 fourth
quarter charges of $0.15 per diluted share related to the long-term global
rationalization of the Company’s manufacturing operations.
James
H.
Dorton, Vice President and Chief Financial Officer, commented, “Of the total
revenue increase of $17.3 million for the full year, product price increases
accounted for approximately 66%, volume increases accounted for approximately
26% and the effect of currency exchange accounted for approximately 8% of the
total increase.
“As
a
percentage of net sales, cost of products sold was 75.1% in the fourth quarter
of 2005 compared to 81.8% in the fourth quarter of 2004. For the full year
2005
and 2004, cost of goods sold as a percentage of net sales was 77.4% and 79.1%,
respectively. The positive effect of price increases implemented in the second
half of the year and cost improvements associated with our Level 3 initiatives
were the main factors in the improved margins.
“Selling,
general and administrative expenses for the fourth quarter of 2005 were 9.4%
as
a percentage of net sales compared to 9.5% for the same period in 2004. For
the
full year, selling, general and administrative expenses as a percent of net
sales were 8.9% compared to 9.8% in 2004. This improvement was due mainly to
decreased Sarbanes-Oxley compliance costs and to a lesser extent decreased
Level
3 implementation costs and decreased consulting and legal costs.
“Our
operations continued to generate excellent cash flow during 2005 which allowed
us to continue to aggressively pay down debt. For the total year, we reduced
debt by approximately $12.1 million from $74.7 million at December 31, 2004
to
$62.6 million at December 31, 2005.
“We
ended
the year with a very strong fourth quarter. Strong performances from our U.S.
Ball & Roller and Industrial Molding businesses contributed significantly to
this increase. Additionally, our Level 3 initiatives are continuing to deliver
solid results and are expected to provide even stronger results in 2006 and
beyond. Our fourth quarter results also included a gain of $0.02 per diluted
share related to the sale of excess land at our Veenendaal, The Netherlands
facility. In mid-October, we revised our estimates for the full year to
approximately $325 million in revenues and earnings per share of $0.77 to $0.81
due to estimated lower volumes in Europe for the second half of the year, the
expected negative impact of currency translation and an unfavorable tax mix.
Although our total year 2005 revenues of $321 million were slightly below these
estimates, our earnings of $0.87 per diluted share exceeded our estimates.”
Roderick
R. Baty, Chairman and Chief Executive Officer, commented, “In 2005, we continued
to strategically focus on profitably growing our business by concentrating
on
opportunities to grow our core bearing component business. We made investments
in China and Slovakia that provide us with an increased geographic footprint
in
Eastern Europe and China for the expansion of our ball manufacturing
capabilities as well as provide us with opportunities to manufacture other
bearing components. Additionally, in early October of 2005 we announced the
purchase of SNR Roulements’ internal precision ball producing equipment from its
manufacturing facility in Annecy, France. This outsourcing transaction is
consistent with our strategy and provides us further opportunities to expand
existing customer relationships through our core competencies of value added
component manufacturing capabilities and service.”
Anticipated
2006 Results
Mr.
Baty
continued, “For 2006 we are forecasting relatively flat economic conditions and
continued good capacity utilization rates in the U.S. and Europe. Thus, we
are
currently estimating total year revenues for 2006 to approximate $325 million,
which is essentially flat with our 2005 revenue levels. Negatively impacting
our
year over year revenue comparisons are currency ($8.0 million) and a market
share loss with INA ($7.0 million) which we will offset by market share
improvements ($12.0 million) and the positive impact of material related selling
price increases ($6.0 million).
“We
are
currently negotiating new long-term NN Euroball supply agreements with INA
and
SKF which expire in mid 2006. In regards to these negotiations, INA has informed
us of their decision to in-source approximately $12.0 million of annual business
to their internal ball manufacturing facility in Germany. We are continuing
to
negotiate the terms of a long term supply agreement with INA. Our contract
negotiations with SKF have resulted in an agreement to extend our current
contract through the end of 2006 under existing terms and conditions.
Negotiations for a multi-year extension beyond the end of 2006 with SKF are
ongoing.
“Our
2006
business plan anticipates full year earnings to be in the range of $0.86 to
$0.92 per diluted share which are in line with 2005 earnings. These earnings
projections include the negative impact of estimated currency translation of
NN
Europe earnings, the expensing of any potential 2006 stock option awards,
increased energy costs and the start up expenses associated with our new
manufacturing facility in China. The guidance does not include the positive
earnings impact of potential acquisitions in 2006 or the earnings per share
impact of any stock repurchases under NN’s stock repurchase program. The Board
of Directors has approved a stock repurchase plan to purchase up to $10.0
million of the Company’s outstanding common stock over the next eighteen
months.”
Mr.
Baty
concluded, “Given NN’s current debt levels, we believe that a stock repurchase
plan and future acquisitions can be fully funded in the near term. At NN, we
remain committed and confident in our ability to continue the execution of
a
long-term growth strategy that includes both internal growth and growth through
acquisitions in our bearing and related component products
businesses.”
NN,
Inc.
manufactures 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 $321 million in 2005.
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, market share
improvements, the positive impact of material related selling price increases,
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
NN,
Inc.
Condensed
Statements of Income
(In
thousands, except per share amounts)
(Unaudited)
|
|
Three
Months Ended
|
Twelve Months Ended
|
|||||||
|
|
December
31,
|
December 31,
|
|||||||
|
|
2005
|
|
2004
|
|
2005
|
|
2004
|
||
|
|
|
|
|
|
|
|
|
||
|
Net
Sales
|
$
75,886
|
|
$
78,275
|
|
$
321,387
|
|
$
304,089
|
||
|
Cost
of goods sold (exclusive of depreciation
|
|
|
|
|
|
|
|
||
|
shown
separately below)
|
56,981
|
|
63,991
|
|
248,828
|
|
240,580
|
||
|
Selling,
general and administrative
|
7,103
|
|
7,445
|
|
28,606
|
|
29,755
|
||
|
Depreciation
and amortization
|
4,030
|
|
4,168
|
|
16,331
|
|
16,133
|
||
|
Loss
(gain) on disposal of fixed asset
|
(398)
|
|
828
|
|
(391)
|
|
856
|
||
|
Restructuring
and impairment costs
|
(334)
|
|
2,398
|
|
125
|
|
2,398
|
||
|
|
|
|
|
|
|
|
|
||
|
Income
(loss)from operations
|
8,504
|
|
(555)
|
|
27,888
|
|
14,367
|
||
|
|
|
|
|
|
|
|
|
||
|
Interest
expense, net
|
802
|
|
1,152
|
|
3,777
|
|
4,029
|
||
|
Other
(income) expense
|
(368)
|
|
(616)
|
|
(653)
|
|
(853)
|
||
|
|
|
|
|
|
|
|
|
||
|
Income
before provision (benefit)for income taxes
|
8,070
|
|
(1,091)
|
|
24,764
|
|
11,191
|
||
|
|
|
|
|
|
|
|
|
||
|
Provision
(benefit) for income taxes
|
2,950
|
|
(837)
|
|
9,752
|
|
4,089
|
||
|
|
|
|
|
|
|
|
|
||
|
Net
income (loss)
|
$
5,120
|
|
$
(254)
|
|
$
15,012
|
|
$
7,102
|
||
|
|
|
|
|
|
|
|
|
||
|
Diluted
income (loss) per common share
|
$
0.30
|
|
$
(0.01)
|
|
$
0.87
|
|
$
0.41
|
||
|
|
|
|
|
|
|
|
|
||
|
Weighted
average diluted shares
|
17,347
|
|
17,226
|
|
17,193
|
|
17,151
|
||
NN,
Inc,
Condensed
Balance Sheets
(In
thousands)
(Unaudited)
|
|
December 31,
|
|
December
31,
|
|||
|
|
2005
|
|
2004
|
|||
|
Assets
|
|
|
|
|||
|
Current
Assets:
|
|
|
|
|||
|
Cash
|
$
10,856
|
|
$
10,772
|
|||
|
Accounts
receivable, net
|
47,297
|
|
51,597
|
|||
|
Inventories,
net
|
38,096
|
|
35,629
|
|||
|
Other
current assets
|
10,238
|
|
10,340
|
|||
|
|
|
|
|
|||
|
Total
current assets
|
106,487
|
|
108,338
|
|||
|
|
|
|
|
|||
|
Property,
plant and equipment, net
|
118,829
|
|
131,169
|
|||
|
Assets
held for sale
|
1,072
|
|
--
|
|||
|
Goodwill,
net
|
41,648
|
|
44,457
|
|||
|
Other
assets
|
4,629
|
|
5,905
|
|||
|
|
|
|
|
|||
|
Total
assets
|
$272,665
|
|
$289,869
|
|||
|
|
|
|
|
|||
|
Liabilities
and Stockholders’ Equity
|
|
|
|
|||
|
Current
liabilities:
|
|
|
|
|||
|
Accounts
payable
|
$
41,661
|
|
$
45,217
|
|||
|
Accrued
salaries and wages
|
12,407
|
|
16,332
|
|||
|
Income
taxes payable
|
2,093
|
|
1,599
|
|||
|
Short-term
portion of long-term debt
|
4,668
|
|
7,160
|
|||
|
Other
current liabilities
|
3,774
|
|
4,123
|
|||
|
|
|
|
|
|||
|
Total
current liabilities
|
$
64,603
|
|
$
74,431
|
|||
|
|
|
|
|
|||
|
Deferred
income taxes
|
17,683
|
|
17,857
|
|||
|
Long-term
notes payable
|
57,900
|
|
67,510
|
|||
|
Accrued
Pension and other
|
15,938
|
|
14,931
|
|||
|
|
|
|
|
|||
|
Total
liabilities
|
$156,124
|
|
$174,729
|
|||
|
|
|
|
|
|||
|
Total
stockholders’ equity
|
$116,541
|
|
$115,140
|
|||
|
|
|
|
|
|||
|
Total
liabilities and stockholders’ equity
|
$272,665
|
|
$289,869
|
|||