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, 2007
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 Conditions.
Furnished
as Exhibit 99.1 is a coyp of the earnings release of NN, Inc. reporting
results
for the year ended December 31, 2006, which was issued on February 28,
2007.
ITEM
9.01 FINANCIAL STATEMENTS AND
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 hte previous of 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, 2007.
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: March 1, 2007 | By: | /s/ William C. Kelly, Jr. |
|
|
||
|
Title: Vice
President and Chief Administrative
Officer
|
||
3
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, 2007
NN,
INC. REPORT 2006 FOURTH QUARTER AND FULL YEAR RESULTS
PROVIDES
GUIDANCE FOR 2007
EXCLUDING
WHIRLAWAY, NN EARNS $15 MILLION IN NET INCOME
AND
$0.87 PER SHARE FOR 2006, MEETS FULL YEAR GUIDANCE
Johnson
City, Tenn, February 28, 2007
- NN,
Inc. (Nasdaq: NNBR) today reported its financial results for the fourth quarter
and year ended December 31, 2006. These results include for the first time
the
operations of Whirlaway Corporation, a precision metal component manufacturing
operation, with locations in Ohio and Arizona, which was acquired on December
1,
2006. Pro-forma financial statements, which would include the full fourth
quarter and full year results of Whirlaway are not included in this press
release. These pro-forma financial statements will be included in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2006.
Operating
Results of NN, Inc., Excluding the Results of Whirlaway
Excluding
the impact of the Whirlaway acquisition, net sales for the fourth quarter of
2006 were $81.2 million, up $5.3 million or 6.9% from $75.9 million for the
same
period of 2005. Net income for the fourth quarter totaled $3.7 million, or
$0.21
per diluted share. This compares to net income of $5.1 million, or $0.30 per
diluted share for the fourth quarter of 2005. Net sales for the full year 2006
were $325.6 million, up $4.2 million or 1.3% compared to $321.4 million for
2005. Net income for 2006 totaled $15.0 million, or $0.87 per diluted share,
compared to $15.0 million, or $0.87 per diluted share for 2005.
As
a
percentage of net sales, cost of products sold was 78.1% in the fourth quarter
of 2006 compared to 75.1% in the fourth quarter of 2005. For the full year
2006
and 2005, cost of products sold as a percentage of net sales was 77.7% and
77.4%
respectively. The main factors for the increased costs in the fourth quarter
of
2006, as compared to the same period in 2005, were operating inefficiencies
at
the Chinese and Slovakian facilities and volume reductions related to weak
automotive demand.
1
Selling,
general and administrative expenses for the fourth quarter of 2006 were 9.5%
as
a percentage of net sales as compared to 9.4% for the same period in 2005.
For
the full year 2006, selling, general and administrative expenses as a percentage
of net sales were 9.1% as compared to 9.0% in 2005.
James
H.
Dorton, Vice President and Chief Financial Officer, commented, “We exceeded the
revised full year guidance given on October 30, 2006 and ended the year with
results within the range of our beginning year guidance. Revenue for the full
year of 2006, not including the impact of the Whirlaway acquisition, was up
$4.2
million, or 1.3% from the same period in 2005. Accounting for the increase
was
net price increases associated with material inflation of $7.8 million and
positive currency translation of Euro-denominated sales of $1.6 million which
were offset by volume and mix related decreases of $5.2 million.”
Mr.
Dorton continued, “Excluding the funds borrowed for the acquisition of Whirlaway
in December 2006, we paid down approximately $8.0 million in debt for the year.
However, due to higher than expected working capital needs in the fourth quarter
of this year, this was short of our debt reduction goal of $10.0 million for
the
year.”
Mr.
Dorton concluded, “During the fourth quarter of 2006, we purchased an additional
249,199 shares of our common stock pursuant to our previously announced stock
repurchase plan. This plan was announced in March of this year and continues
for
18 months thereafter and allows us to purchase up to $10.0 million of the
Company’s common stock. The total amount we have purchased under this plan is
462,735 shares at a cost of $5.3 million.”
Roderick
R. Baty, Chairman and Chief Executive Officer, commented, “Generally, our 2006
results were in-line with our original expectations. Sales growth with several
of our bearing component customers was offset by down economic conditions driven
by weak automotive demand in the U.S. and share loss to one of our largest
customers. We were also able to offset start-up costs at our China and Slovakian
facilities with excellent operating results in our other domestic and European
facilities. Additionally, our Level 3 initiatives continue to produce impressive
results which helped to offset negative economic conditions.”
Operating
Results of NN, Inc. Including Whirlaway Corporation for the Period Beginning
December 1, 2006 and Ending December 31, 2006
For
the
period beginning December 1, 2006 and ending December 31, 2006, Whirlaway
Corporation had net sales of $4.7 million and a net loss of $0.6 million.
December sales at Whirlaway are historically impacted by seasonal factors.
Additionally, 70% of the $0.6 million net loss for the month of December is
attributed to the negative impact of purchase accounting adjustments and will
not impact future quarterly results.
Including
Whirlaway Corporation for the period beginning December 1, 2006 and ending
December 31, 2006, consolidated net sales for the fourth quarter of 2006 were
$85.9 million, up $10.0 million or 13.2% from $75.9 million for the same period
of 2005. Net income for the fourth quarter totaled $3.1 million, or $0.18 per
diluted share. This compares to net income of $5.1 million or $0.30 per diluted
share for the fourth quarter of 2005. Net sales for the full year 2006 were
$330.3 million, up $8.9 million or 2.8% compared to $321.4 million for 2005.
Net
income for 2006 totaled $14.4 million, or $0.83 per diluted share, compared
to
$15.0 million or $0.87 per diluted share for 2005.
2
As
a
percentage of net sales, cost of products sold was 79.3% in the fourth quarter
of 2006 compared to 75.1% in the fourth quarter of 2005. For the full year
2006
and 2005, cost of goods sold as a percentage of net sales was 78.0% and 77.4%
respectively.
Selling,
general and administrative expenses for the fourth quarter of 2006 were 9.4%
as
a percentage of net sales as compared to 9.4% for the same period in 2005.
For
the full year, selling, general and administrative expenses as a percentage
of
net sales were 9.1% as compared to 9.0% in 2005.
Mr.
Baty
continued, “We are enthusiastic regarding the acquisition of Whirlaway. We
believe Whirlaway will be a solid cornerstone for our new precision metal
platform and will provide us with excellent growth opportunities. Additionally,
this acquisition and platform provides us with a diversification of products,
manufacturing technology, end markets and customers, yet remains complementary
with our core competencies and growth strategy. We expect Whirlaway to be
accretive to 2007 earnings by $0.10 to $0.12 per diluted share.”
Anticipated
2007 Results
Mr.
Baty
continued, “For 2007, we continue to forecast relatively static economic
conditions for our businesses. Our forecast for 2007 reflects estimated down
North American automotive sales offset by anticipated improvements in the
European automotive markets and continued strong industrial global demand.
We
have also included in our revenue guidance reductions from share loss from
certain major customers who are re-sourcing a portion of their bearing component
businesses. We are, however, anticipating strong industrial demand, which should
result in some business growth, particularly in the precision metal platform.”
“Our
2007
business plan anticipates full year sales to be approximately $400 million
(up
23%) and full year earnings to be in the range of $0.98 to $1.04 per share,
up
13% to 20% compared with 2006 results, and excluding the one month of December
2006 Whirlaway operations and certain acquisition adjustments. We are not
including the potential positive effects of any potential new acquisitions
in
2007 in our guidance.”
NN,
Inc.
manufactures and supplies high precision metal bearing components, industrial
plastic and rubber products and precision metal components to a variety of
markets on a global basis. Headquartered in Johnson City, Tennessee, NN has
14
manufacturing plants in the United States, Western Europe, Eastern Europe and
China.
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.
3
NN,
Inc.
Condensed
Statements of Income
(In
Thousands, except per share amounts)
(Unaudited)
&
#160;
Three
Months Ended
Twelve
Months Ended
60;
December
31,
December 31,
|
2006
|
2005
|
2006
|
2005
|
||||
|
Net
sales
|
$
85,884
|
$
75,886
|
$
330,325
|
$
321,387
|
|||
|
Cost
of products sold (exclusive of
depreciation
shown separately below)
|
68,106
|
56,981
|
257,703
|
248,828
|
|||
|
Selling,
general and administrative
|
8,086
|
7,103
|
30,008
|
29,073
|
|||
|
Depreciation
and amortization
|
4,713
|
4,030
|
17,492
|
16,331
|
|||
|
(Gain)Loss
on disposal of assets
|
21
|
(398)
|
(705)
|
(391)
|
|||
|
Restructuring
and impairment costs
|
(65)
|
(334)
|
(65)
|
(342)
|
|||
|
Income
from operations
|
5,023
|
8,504
|
25,892
|
27,888
|
|||
|
Interest
expense, net
|
1,060
|
802
|
3,983
|
3,777
|
|||
|
Other
(income) expense
|
(738)
|
(368)
|
(1,048)
|
(653)
|
|||
| Income before provision for income taxes |
4,701
|
8,070
|
22,957
|
24,764
|
|||
| Provision for income taxes |
1,614
|
2,950
|
8,522
|
9,752
|
|||
| Net income |
$
3,087
|
$
5,120
|
$
14,435
|
$
15,012
|
|||
|
Diluted
income per common share
|
$
0.18
|
$
0.30
|
$
0.83
|
$
0.87
|
|||
|
Weighted
average diluted shares
|
17,141
|
17,347
|
17,351
|
17,193
|
|||
4
NN,
Inc.
Condensed
Balance Sheets
(In
Thousands)
(Unaudited)
|
December
31,
2006
|
December
31,
2005
|
|||
|
Assets
|
||||
|
Current
Assets:
|
||||
|
Cash
|
$
11,681
|
$
10,856
|
||
|
Accounts
receivable, net
|
63,485
|
47,297
|
||
|
Inventories,
net
|
43,538
|
38,096
|
||
|
Other
current assets
|
7,113
|
9,701
|
||
|
Total
current assets
|
125,817
|
105,950
|
||
|
Property,
plant and equipment, net
|
156,447
|
118,829
|
||
|
Goodwill
and intangible assets, net
|
56,278
|
41,648
|
||
|
Other
assets
|
3,101
|
3,228
|
||
|
Total
assets
|
$
341,643
|
$
269,655
|
||
|
Liabilities
and Stockholders’ Equity
|
||||
|
Current
liabilities:
|
||||
|
Accounts
payable
|
$
52,576
|
$
41,660
|
||
|
Accrued
salaries and wages
|
13,533
|
12,407
|
||
|
Current
portion of long-term debt
|
851
|
4,668
|
||
|
Short-term
note payable
|
21,305
|
--
|
||
|
Other
liabilities
|
8,051
|
6,104
|
||
|
Total
current liabilities
|
96,316
|
64,839
|
||
|
Deferred
income taxes
|
15,150
|
15,128
|
||
|
Long-term
notes payable
|
80,711
|
57,900
|
||
|
Other
|
16,297
|
15,714
|
||
|
Total
liabilities
|
208,474
|
153,581
|
||
|
Total
stockholders’ equity
|
133,169
|
116,074
|
||
|
Total
liabilities and stockholders’ equity
|
$
341,643
|
$
269,655
|
###
5