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): August 3, 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:
oWritten
communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
oPre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o 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 quarter ended June 30,
2006, which was issued on August 3, 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:
Exhibit
Number
Description of Exhibit
99.1 Press
Release of NN,
Inc. dated August 3, 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: August 3, 2006 | By: | /s/ William C. Kelly, Jr. |
|
|
||
|
Title: Vice
President and
Chief Administrative
Officer
|
||
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
August
3,
2006
NN,
INC. REPORTS SECOND QUARTER 2006 RESULTS
Earnings
Per Share Rise 5% For The Quarter and 16% For
The
Six Month Period
Johnson
City, Tenn, August 3, 2006 -
NN,
Inc. (Nasdaq: NNBR) today reported its financial results for the second quarter
ended June 30, 2006. Net sales for the second quarter of 2006 decreased slightly
to $83.6 million from $83.8 million for the same period of 2005. Net income
for
the second quarter of 2006 totaled $3.5 million, or $0.20 per diluted share,
compared to $3.3 million, or $0.19 per diluted share for the second quarter
of
2005, an increase of 6.1% and 5.3%, respectively.
Net
sales
for the first half of 2006 were $169.6 million, compared to $170.5 million
for
the same period of 2005. Net income for the first half of 2006 totaled $8.7
million, or $0.50 per diluted share, compared to $7.3 million, or $0.43 per
diluted share for the same period of 2005, an increase of 19.2% and 16.3%,
respectively. Net income for the first half of 2006 includes an after-tax gain
on the sale of excess land of $1.5 million or $0.08 per diluted share and an
after-tax write-off of certain unused equipment of $667,000 or $0.04 per diluted
share, both recorded in the first quarter.
James
H.
Dorton, Vice President and Chief Financial Officer, commented,
“Revenues
of $169.6 million for the first half of 2006 were down compared to $170.5
million for the same period in 2005. Increased revenues from our global business
units for the six month period were offset by the negative effects of currency
translation. In the absence of this currency movement during the first half
of
the year, revenues would have been approximately $175.0 million, an increase
of
2.6% over the same period in 2005.
“As
a
percentage of net sales, 2006 second quarter cost of products sold was 77.7%
compared to 78.8% recorded in the prior year. Year-to-date cost of products
sold
was 77.2% in 2006 as compared to 78.4% for the same period last year. The
improvement in our
cost
of products sold relative to sales was the result of the timing of material
price pass through to certain customers and Level 3 cost reduction and
efficiency initiatives.”
“Selling,
general and administrative expenses were $7.1 million or 8.5% of net sales
for
the second quarter of 2006 as compared to $7.3 million, or 8.7% of net sales
for
the second quarter of 2005. Selling, general and administrative expenses for
the
first half of 2006 remained on plan at 8.7% of net sales as compared to 8.7%
of
net sales for the same period in 2005.”
Mr.
Dorton continued, “During the second quarter we purchased 36,347 shares under
our previously announced stock repurchase plan which brings the total shares
purchased through the end of June 2006 to 56,821 shares. The program allows
for
the purchase of up to $10.0 million of the Company’s outstanding stock. This
program commenced in mid-March of 2006 and will continue for 18 months
thereafter.”
“We
have
paid down debt by $3.7 million during the first half of the year. At this rate,
we are running slightly behind our debt reduction goal of approximately $10.0
million for the full year of 2006. This was due to traditionally higher working
capital needs for the first half of the year; however, we remain committed
to
our goal and will take measures in the second half of the year to more
aggressively manage our working capital needs. The $10.0 million debt reduction
goal assumes the full funding of the stock repurchase plan of up to $10.0
million and excludes the impact of any potential new acquisitions that may
occur
during the year.”
Mr.
Dorton concluded, “At the end of the quarter, the remaining balance of our
variable rate revolving credit facility was $18.9 million. On June 30, 2007,
this credit facility matures; therefore, we have begun the process of
negotiating with a bank group a new syndicated five year, $90.0 million loan
agreement. This new credit facility will provide us with the necessary capital
structure to execute our strategic growth plan. We anticipate the completion
of
this new credit facility in the third quarter of this year.”
Roderick
R. Baty, Chairman and Chief Executive Officer, commented, “For the remainder of
2006, we expect similar economic conditions to those we have experienced in
the
U.S. and Europe for the first six months of this year. Therefore, our guidance
for the full year remains unchanged with estimated total year revenues at
approximately $325 million and full year earnings to be in the range of $0.86
to
$0.92 per diluted share.”
Mr.
Baty
further commented, “While we remain focused on the disciplined management of our
current operations, we are pursuing new opportunities to grow our business
which
are consistent with our recently developed five year strategic growth plan.
To
execute this plan, we will focus on three major areas of potential growth:
further geographic expansion of existing bearing component products; acquisitive
growth of both captive and independent businesses within bearing components,
and
identified acquisition opportunities that leverage our competencies in related
high precision steel component manufacturing.”
2
Mr.
Baty
concluded, “Our five year objectives are to grow revenues and earnings at a
compound annual rate which would double the size of the Company over the five
year planning horizon. We believe the current plan provides a clear strategic
direction to achieve our objectives and to create long-term value for our
customers, employees and shareholders.”
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 $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, 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 10-K for the fiscal year ended December 31, 2005.
Financial
Tables Follow
3
NN,
Inc.
Consolidated
Statements of Income
(In
thousands, except per share amounts)
(Unaudited)
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||
|
2006
|
2005
|
2006
|
2005
|
|||||||
|
Net
sales
|
$
83,554
|
$
83,787
|
$
169,571
|
$
170,502
|
||||||
|
Cost
of products sold (exclusive of
depreciation
shown separately below)
|
64,905
|
66,005
|
130,904
|
133,670
|
||||||
|
Selling,
general and administrative
|
7,063
|
7,297
|
14,744
|
14,782
|
||||||
|
Depreciation
and amortization
|
4,425
|
4,130
|
8,587
|
8,303
|
||||||
|
Loss
on disposal of assets
|
4
|
2
|
(726)
|
6
|
||||||
|
Income
from operations
|
7,157
|
6,353
|
16,062
|
13,741
|
||||||
|
Interest
expense, net
|
1,021
|
1,025
|
2,007
|
2,008
|
||||||
|
Other
(income) expense, net
|
449
|
(168)
|
240
|
(340)
|
||||||
|
Income
before provision for income taxes
|
5,687
|
5,496
|
13,815
|
12,073
|
||||||
|
Provision
for income taxes
|
2,234
|
2,184
|
5,100
|
4,736
|
||||||
|
Net
income
|
$
3,453
|
$
3,312
|
$
8,715
|
$
7,337
|
||||||
|
Diluted
income per common share
|
$
0.20
|
$
0.19
|
$
0.50
|
$
0.43
|
||||||
|
Weighted
average diluted shares
|
17,369
|
17,328
|
17,365
|
17,252
|
||||||
4
NN,
Inc.
Condensed
Balance Sheets
(In
thousands)
(Unaudited)
|
June
30,
2006
|
December
31,
2005
|
||
|
Assets
|
|||
|
Current
Assets:
|
|||
|
Cash
|
$
11,792
|
$
10,856
|
|
|
Accounts
receivable, net
|
58,537
|
47,297
|
|
|
Inventories,
net
|
36,538
|
38,096
|
|
|
Other
current assets
|
12,310
|
9,701
|
|
|
Total
current assets
|
119,177
|
105,950
|
|
|
Property,
plant and equipment, net
|
121,987
|
118,829
|
|
|
Goodwill,
net
|
43,049
|
41,648
|
|
|
Other
assets
|
3,987
|
3,228
|
|
|
Total
assets
|
$
288,200
|
$
269,655
|
|
|
Liabilities
and Stockholders’ Equity
|
|||
|
Current
liabilities:
|
|||
|
Accounts
payable
|
$
44,312
|
$
41,660
|
|
|
Accrued
salaries and wages
|
12,705
|
12,407
|
|
|
Current
portion of long-term debt
|
18,917
|
4,668
|
|
|
Other
liabilities
|
8,917
|
6,104
|
|
|
Total
current liabilities
|
84,851
|
64,839
|
|
|
Deferred
income taxes
|
16,435
|
15,128
|
|
|
Long-term
notes payable
|
40,000
|
57,900
|
|
|
Other
|
17,007
|
15,714
|
|
|
Total
liabilities
|
158,293
|
153,581
|
|
|
Total
stockholders’ equity
|
129,907
|
116,074
|
|
|
Total
liabilities and stockholders’ equity
|
$
288,200
|
$
269,655
|
5