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): October
30, 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 third quarter and nine months
ended September 30, 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 October 30, 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: November 1, 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 BOARD
|
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
October
30, 2006
NN,
INC. REPORTS THIRD QUARTER 2006 RESULTS
Earnings
Per Share Unchanged For The Quarter and Up 14%
Year-To-Date
Johnson
City, Tenn., October 30, 2006 -
NN,
Inc. (Nasdaq: NNBR) today reported its financial results for the third quarter
and nine months ended September 30, 2006. Net sales of $74.9 million for the
third quarter of 2006 were flat compared to net sales of $75.0 million for
the
same period of 2005. Net income and earnings per share for the third quarter
of
2006 and for the same period of 2005 totaled $2.6 million and $0.15 per diluted
share, respectively.
Net
sales
of $244.4 million for the first nine months of 2006 were essentially unchanged
as compared to net sales of $245.5 million for the same period of 2005. The
Company achieved net income of $11.3 million for the first nine months of 2006,
an increase of $1.4 million, or 14.0% over net income of $9.9 million recorded
for the same period of 2005. Earnings for the first nine months of 2006 were
$0.65 per diluted share, an increase of 14.0% compared to $0.57 per diluted
share for the same period of 2005.
James
H.
Dorton, Vice President and Chief Financial Officer, commented, “Revenues of
$74.9 million in the third quarter of 2006 were down slightly compared to
revenues of $75.0 million recorded in the third quarter of the prior year.
Decreases in volume of approximately $3.1 million were offset by selling price
increases of $0.8 million and the positive effect of currency translation of
$2.2 million. For
the
first nine months of
2006,
revenues of $244.4 million were down slightly by $1.1 million. Decreases in
volume of $3.5 million as well as the negative effects of currency translation
of $2.7 million were offset by selling price increases of $5.1
million.
“As
a
percentage of net sales, cost of products sold was 78.4% in the third quarter
of
2006 versus 77.6% in the third quarter of 2005. For the first nine months of
2006, as a percentage of net sales, cost of product sold was 77.6% as compared
to 78.1% for the same period in the prior year. Although our Level 3 initiatives
have continued to produce excellent results in 2006, volume reductions
particularly in our U.S. operations impacted margins for the third quarter
of
2006.”
1
“Selling,
general and administrative expenses of $7.2 million, or 9.6% as a percentage
of
net sales for the third quarter of 2006 were comparable to the same period
in
2005 of $7.2 million, or 9.6% as a percentage of net sales. Selling, general
and
administrative expenses for the first nine months of 2006 were $21.9 million,
or
9.0% of net sales and compared with $22.0 million, or 8.9% of net sales recorded
in the same period of 2005.”
Mr.
Dorton continued, “During the third quarter, we purchased 156,715 shares of our
common stock pursuant to our previously announced stock repurchase plan. This
brings the total amount purchased under this plan to 213,536 shares. This
program, which we began in mid March of this year and will continue for 18
months thereafter, allows for the purchase of up to $10.0 million of the
Company’s outstanding stock.”
Mr.
Dorton concluded, “On September 21, 2006, we completed negotiations with a bank
group led by KeyBank and entered into a new syndicated five year $90.0 million
credit facility. This new credit facility, along with the existing $40.0 million
in private placement notes will provide us with the capital structure we feel
is
necessary to execute our strategic growth plan. Additionally, subsequent to
September 30, 2006, we paid down approximately $8.0 million in debt; therefore,
we remain committed to our previously stated debt reduction goal of $10.0
million for the full year of 2006.
Roderick
R. Baty, Chairman and Chief Executive Officer, commented, “While weakening
automotive sales in the U.S. market created difficult economic conditions for
our U.S. business units, our overall exposure to the big three North American
automotive business is only 14% of total global sales. These reductions effected
our U.S. operations by approximately $2.5 million in the third quarter of this
year and we expect a similar impact in our fourth quarter. This will result
in a
total revenue shortfall of approximately $5.0 million for the year compared
to
our original guidance. Therefore, our guidance for the full year of 2006 has
been lowered to $320 million in revenues and full year earnings to $0.81 to
$0.85 per diluted share.”
Mr.
Baty
concluded, “We have made excellent progress regarding the execution of our long
term growth strategy during the first nine months of 2006. Recall that our
plans
call for growing our business in three specific areas: future 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 metal component manufacturing.”
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.
2
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.
Condensed
Statements of Income
(In
Thousands, except per share amounts)
(Unaudited)
|
Three
Months Ended
|
Nine
Months
Ended
|
|||||||
|
September
30,
|
September
30,
|
|||||||
|
2006
|
2005
|
2006
|
2005
|
|
|
Net
sales
|
$
74,870
|
$
74,998
|
$
244,441
|
$
245,500
|
| Cost
of products sold (exclusive of
depreciation shown separately below)
|
58,693
|
58,177
|
189,597
|
191,848
|
| Selling, general and administrative |
7,178
|
7,180
|
21,922
|
21,961
|
| Depreciation and amortization |
4,192
|
3,998
|
12,779
|
12,302
|
| Gain on disposal of assets |
--
|
--
|
(726)
|
6
|
| Income from operations |
4,807
|
5,643
|
20,869
|
19,383
|
| Interest expense, net |
916
|
967
|
2,923
|
2,976
|
| Other (income) expense |
(550)
|
53
|
(310)
|
(286)
|
|
Income
before provision for income taxes
|
4,441
|
4,623
|
18,256
|
16,693
|
| Provision for income taxes |
1,808
|
2,066
|
6,908
|
6,801
|
| Net income |
$
2,633
|
$2,557
|
$11,348
|
$9,892
|
| Diluted income per common share |
$
0.15
|
$
0.15
|
$
0.65
|
$
0.57
|
| Weighted average diluted shares |
17,338
|
17,522
|
17,389
|
17,286
|
4
NN,
Inc.
Condensed
Balance Sheets
(In
Thousands)
(Unaudited)
|
September
30,
2006
|
December
31,
2005
|
||
|
Assets
|
|||
|
Current
Assets:
|
|||
|
Cash
|
$
18,502
|
$
10,856
|
|
|
Accounts
receivable, net
|
49,811
|
47,297
|
|
|
Inventories,
net
|
37,244
|
38,096
|
|
|
Other
current assets
|
11,901
|
9,701
|
|
|
Total
current assets
|
117,458
|
105,950
|
|
|
Property,
plant and equipment, net
|
122,853
|
118,829
|
|
|
Goodwill,
net
|
42,974
|
41,648
|
|
|
Other
assets
|
4,162
|
3,228
|
|
|
Total
assets
|
$
287,447
|
$
269,655
|
|
|
Liabilities
and Stockholders’ Equity
|
|||
|
Current
liabilities:
|
|||
|
Accounts
payable
|
$
39,424
|
$
41,660
|
|
|
Accrued
salaries and wages
|
12,782
|
12,407
|
|
|
Current
portion of long-term debt
|
243
|
4,668
|
|
|
Other
liabilities
|
10,090
|
6,104
|
|
|
Total
current liabilities
|
62,539
|
64,839
|
|
|
Deferred
income taxes
|
16,601
|
15,128
|
|
|
Long-term
notes payable
|
62,500
|
57,900
|
|
|
Other
|
17,235
|
15,714
|
|
|
Total
liabilities
|
158,875
|
153,581
|
|
|
Total
stockholders’ equity
|
128,572
|
116,074
|
|
|
Total
liabilities and stockholders’ equity
|
$
287,447
|
$
269,655
|
5