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): November 1,
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
|
37604
|
|
|
Johnson
City, Tennessee
|
(Zip
Code)
|
|
|
(Address
of principal executive offices)
|
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 obligation of the registrant under any of the following
provisions:
o
Written
communications pursuant to Rule 425 under the Securities Act (17 CFT
230.425)
o
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFT
240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFT
240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFT
240.13e-4(c))
ITEM
2.02 Results of Operations and Financial Conditions.
Furnished
as Exhibit 99.1 is a copy of the earnings
release of NN, Inc. reporting results for the quarter ended September 30,
2007, which was issued on November 1, 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 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 November 1, 2007
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,
2007
|
By:
|
/s/ William C. Kelly, Jr. | |
| Name: William C. Kelly, Jr. | |||
| Title: Vice President and Chief Administrative Officer | |||
news
F
I N A N C I A L
RELATIONS
BOARD
60; RE: NN,
Inc.
60; 2000
Waters
Edge Drive
60; 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
November
1, 2007
NN,
INC. REPORTS THIRD QUARTER 2007 RESULTS
Results
include $5.0 million, or $0.30 per Diluted Share, in After-Tax Restructuring
and
Impairment Costs
Johnson
City, Tenn., November 1, 2007 – NN, Inc. (Nasdaq: NNBR) today reported
its financial results for the third quarter and nine months ended September
30,
2007. The results include the operations of Whirlaway, which was
acquired on December 1, 2006 and certain restructuring and impairment
costs.
Net
sales
for the third quarter of 2007 totaled $99.0 million, an increase of $24.1
million or 32.2%, compared to net sales for the third quarter of 2006 of $74.9
million. The acquisition of Whirlaway contributed $15.6 million of
the increase. The balance of the increase was primarily due to
continued strong demand, mainly at our European operations of $4.0 million
and
the positive effect of currency translation of $3.8 million. Net loss for the
third quarter of 2007 totaled $3.2 million, or $0.19 per diluted share, compared
to net income of $2.6 million, or $0.15 per diluted share for the third quarter
of 2006. The 2007 third quarter includes the recording of
approximately $5.0 million, or $0.30 per diluted share in after-tax
restructuring and impairment costs. Excluding the impact of
Whirlaway’s $0.03 per diluted share loss, before restructuring and impairment
costs recorded in the quarter, net income for the third quarter of 2007 would
have been $2.4 million, or $0.14 per diluted share.
Net
sales
for the first nine months of 2007 were $314.3 million, an increase of $69.9
million or 28.6%, compared to net sales of $244.4 million for the first nine
months of 2006. The acquisition of Whirlaway contributed $50.7
million of the increase. The positive effect of currency translation
of $13.1 million and the net of volume increase and unfavorable pricing/mix
issues of $6.1 million were also primary contributors to the increase in net
sales for the nine month period of 2007. Net loss for the first nine
months of 2007 was $11.3 million, or $0.66 per diluted share compared to net
income of $11.3 million, or $0.65 per diluted share for the first nine months
of
2006. The first nine months of 2007 include the recording of
approximately $19.9 million, or $1.17 per diluted share in after-tax
restructuring and impairment costs. Excluding the impact of results
for Whirlaway’s $0.06 per diluted share loss, before restructuring charges and
impairment costs, net income would have been $9.7 million, or $0.57 per diluted
share. The first nine months of 2006 included an after-tax gain on
the sale of land in Europe of $0.08 per diluted share, offset by an after-tax
write-off of unused equipment of $0.04 per diluted share.
As
a
percentage of net sales, the third quarter of 2007 cost of products sold was
81.1% compared to 78.4% recorded for the prior year period. Cost of
products sold as a percentage of sales for the first nine months of 2007 was
80.0% compared to 77.6% for the same prior year period. For both the
third quarter and the first nine months of 2007, approximately 50% of the
increase of cost of goods sold as a percentage of sales was attributed to the
acquisition of our Whirlaway operation. The remainder of the increase
was due to inflation and price/mix issues mainly in our European
operations.
Selling,
general and administrative expenses were $8.4 million, or 8.5% of net sales
for
the third quarter of 2007 compared to $7.2 million or 9.6% of net sales for
the
third quarter of 2006. The acquisition of Whirlaway accounted for
$1.1 million of the increase. For the first nine months of 2007,
selling, general and administrative expenses were $27.4 million, or 8.7% of
net
sales compared to $21.9 million, or 9.0% of net sales for the same period in
2006. The acquisition of Whirlaway accounted for the approximately
$3.3 million of the increase and the remainder was due to increased stock option
expense, professional fees and currency translation.
Mr.
James
Dorton, Vice President and Chief Financial Officer commented, “We previously
stated in our second quarter earnings release that we would take steps to
appropriately adjust our cost structure at our Precision Metal Bearing
Components Division. As anticipated most of this restructuring is
taking place at the European operations of our Metal Bearing Components Division
where we have been adjusting our global precision ball manufacturing to better
take advantage of favorable cost structures at our Slovakian and Chinese ball
manufacturing facilities. During the second quarter of 2007, we
recorded approximately $15.3 million ($14.9 million after tax or $0.87 per
diluted share) of non-cash restructuring costs. These costs included
the write-down of certain excess production equipment and the impairment of
goodwill and other intangible assets to levels supported by our projected cash
flows after restructuring.”
Mr.
Dorton continued, “At that time we also stated that we anticipated incurring
approximately $0.9 million ($0.6 million after-tax, or $0.04 per diluted share)
of cash charges for employment and legal expenses associated with this
restructuring. During the third quarter, we recorded approximately
$1.3 million, or $0.07 per diluted share of cash charges associated with these
expenses. Additionally, after further evaluating certain intangible
assets recorded in connection with the acquisition of Whirlaway, it was
necessary to record the write-down of these intangible assets to their estimated
realizable value and therefore recorded an additional non-cash, after-tax charge
of $3.7 million or $0.22 per diluted share in restructuring and impairment
costs.”
Mr.
Dorton, Chief Financial Officer, concluded, “On September 13, 2007 we announced
that our Board of Directors had authorized a new share repurchase program for
the purchase of up to $25.0 million of the Company’s stock in the open
market. This new program which will be in effect for one year began
on September 13, 2007 and takes the place of the program that expired in
September of this year. Under the expired program, we purchased
673,965 shares ($7.4 million) of the Company’s stock. Under the new
program, we have purchased 97,371 shares ($1.0 million) of the Company’s stock
through the end of September 30, 2007. We anticipate continuing to
purchase shares under this program as market conditions and regulations
allow.”
Roderick
R. Baty, Chairman and Chief Executive Officer, commented, “In July of this year
we announced that we would be revising our original 2007 full year earnings
guidance from $0.98 to $1.04 per diluted share to $0.70 to $0.74 per diluted
share before restructuring and impairment costs. This revised guidance was
due
to two main factors: sales weakness in the Metal Components Division (Whirlaway)
associated with two pre-build issues with diesel engines and HVAC units and
lower than anticipated revenues and profits from our manufacturing facility
in
China. Although it is difficult to predict the timing regarding more
favorable market conditions with respect to both markets, we do anticipate
Whirlaway’s revenue in 2008 to return to profitable levels on the basis of new
business awards with existing customers.”
Mr.
Baty
continued, “In regards to our operation in China, the reduced earnings are the
result of issues related to the timing of revenues. We have been
awarded new business for the China operations and expect the majority of the
timing issues we have experienced to be resolved late in
2007. Currently, we are in the process of adding incremental capacity
in China and obtaining the required customer approvals. Additionally,
we are continuing to make progress on the operations side of the
business.”
Mr.
Baty
concluded, “We reconfirm our previously released guidance of $0.70 to $0.74 per
diluted share before restructuring and other impairment costs for the full
year
of 2007. Although we will not provide full year revenue and earnings guidance
for 2008 until February of 2008, we are in the final stages of our 2008 Business
Plan development. We anticipate good revenue growth in our core Metal Bearing
Components Division as well as in our newest Division, Precision Metal
Components (Whirlaway).”
NN,
Inc.
manufacturers 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. NN, Inc. had sales of US $330 million in
2006.
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, 2006.
(Financial
Tables Follow)
NN,
Inc.
Condensed
Statements of Income
(In
Thousands, except per share amounts)
(Unaudited)
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
September
30,
|
September
30,
|
|||||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||||||
|
Net
sales
|
$ |
99,021
|
$ |
74,870
|
$ |
314,267
|
$ |
244,441
|
||||||||
|
Cost
of products sold (exclusive of depreciation
shown separately below)
|
80,264
|
58,693
|
251,274
|
189,597
|
||||||||||||
|
Selling,
general and administrative
|
8,423
|
7,178
|
27,406
|
21,922
|
||||||||||||
|
Depreciation
and amortization
|
5,542
|
4,192
|
16,723
|
12,779
|
||||||||||||
|
Gain
on disposal of assets
|
(11 | ) |
--
|
(23 | ) | (726 | ) | |||||||||
|
Restructuring
and impairment costs
|
7,069
|
--
|
22,338
|
--
|
||||||||||||
|
Income
(Loss) from operations
|
(2,266 | ) |
4,807
|
(3,451 | ) |
20,869
|
||||||||||
|
Interest
expense, net
|
1,496
|
916
|
4,821
|
2,923
|
||||||||||||
|
Other
(income) expense
|
(154 | ) | (550 | ) | (150 | ) | (310 | ) | ||||||||
|
Income
(Loss) before provision for income taxes
|
(3,608 | ) |
4,441
|
(8,122 | ) |
18,256
|
||||||||||
|
Provision
for income taxes
|
(400 | ) |
1,808
|
3,150
|
6,908
|
|||||||||||
|
Net
income (Loss)
|
$ | (3,208 | ) | $ |
2,633
|
$ | (11,272 | ) | $ |
11,348
|
||||||
|
Diluted
income per common share
|
$ | (0.19 | ) | $ |
0.15
|
$ | (0.66 | ) | $ |
0.65
|
||||||
|
Weighted
average diluted shares
|
16,904
|
17,339
|
16,986
|
17,389
|
||||||||||||
NN,
Inc.
Condensed
Balance Sheets
(In
Thousands)
(Unaudited)
|
September
30,
2007
|
December
31,
2006
|
|||||||
|
Assets
|
||||||||
|
Current
Assets:
|
||||||||
|
Cash
|
$ |
8,481
|
$ |
11,681
|
||||
|
Accounts
receivable, net
|
71,420
|
63,442
|
||||||
|
Inventories,
net
|
47,836
|
43,538
|
||||||
|
Other
current assets
|
7,575
|
7,203
|
||||||
|
Total
current assets
|
135,312
|
125,864
|
||||||
|
Property,
plant and equipment, net
|
157,403
|
156,447
|
||||||
|
Goodwill
and intangible assets, net
|
38,510
|
56,278
|
||||||
|
Other
assets
|
7,574
|
4,112
|
||||||
|
Total
assets
|
$ |
338,799
|
$ |
342,701
|
||||
|
Liabilities
and Stockholders’ Equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ |
44,952
|
$ |
52,576
|
||||
|
Accrued
salaries and wages
|
16,674
|
13,519
|
||||||
|
Current
portion of long-term debt
|
2,437
|
851
|
||||||
|
Other
liabilities
|
10,109
|
7,923
|
||||||
|
Total
current liabilities
|
74,172
|
74,869
|
||||||
|
Deferred
income taxes
|
20,643
|
16,334
|
||||||
|
Long-term
debt
|
103,228
|
102,016
|
||||||
|
Other
|
17,015
|
16,313
|
||||||
|
Total
liabilities
|
215,058
|
209,532
|
||||||
|
Total
stockholders’ equity
|
123,741
|
133,169
|
||||||
|
Total
liabilities and stockholders’ equity
|
$ |
338,799
|
$ |
342,701
|
||||
NN,
Inc.
Reconciliation
of Non-GAAP to GAAP Financial Measures
(Unaudited)
|
Three
Months Ended
September
30, 2007
|
Nine
Months Ended
September
30, 2007
|
|||||||||||||||
|
In
Thousands
|
Diluted
Earnings Per Share
|
In
Thousands
|
Diluted
Earnings Per Share
|
|||||||||||||
|
Net
Loss
|
$ | (3,208 | ) | $ | (0.19 | ) | $ | (11,272 | ) | $ | (0.66 | ) | ||||
|
After-tax
restructuring and impairment costs
|
5,022
|
0.30
|
19,895
|
1.17
|
||||||||||||
|
After
–tax loss of Whirlaway
|
574
|
0.03
|
1,035
|
0.06
|
||||||||||||
|
Net
income excluding restructuring and impairment costs and Whirlaway
net
loss
|
$ |
2,388
|
$ |
0.14
|
$ |
9,658
|
$ |
0.57
|
||||||||