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 26, 2008 (February 20,
2008)
NN, INC.
(Exact name of registrant as
specified in its charter)
|
Delaware
|
0-23486
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62-1096725
|
|
(State
or other jurisdiction of incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
|
2000 Waters Edge
Drive
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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
4.02(a). Non-Reliance on Previously Issued Financial
Statements or a Related Audit Report or Completed Interim Review
On
February 26, 2008, NN, Inc. (the "Company") announced that it will restate its
previously issued financial statements for the second quarter ended June 30,
2007 and the third quarter ended September 30, 2007. In preparing
these financial statements, management concluded that, due to the internal
restructuring of the Metal Bearing Components segment in the second quarter and
the lower than expected sales of the Precision Metal Components segment in the
third quarter, the carrying amount of certain long-lived assets may not be
recoverable. As a result, management performed impairment tests in
both the second and third quarters in accordance with the provisions of SFAS
144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS
144").
An
impairment charge of $1.932 million ($1.452 million after-tax) was initially
recorded in the second quarter, which related to a customer contract intangible
asset recorded in conjunction with the October 2005 acquisition of the assets of
SNR Roulements. An impairment charge of $5.6 million ($3.7 million
after-tax) was initially recorded in the third quarter, which related to a
customer relationship intangible asset that had been recorded in conjunction
with the November 30, 2006 acquisition of Whirlaway
Corporation. After performing the impairment tests based on the
Company's assumptions and interpretation of the provisions of SFAS 144,
management determined that these intangible assets were impaired and
consequently recorded non-cash charges to write these assets down to the value
supported by a fair value analysis based on their forecasted cash
flows.
During
the preparation of its year-end financial statements and in response to a
comment letter issued by the Division of Corporation Finance of the Securities
and Exchange Commission related to a routine review of the Company's third
quarter 10-Q filings, management re-evaluated the assessment of asset groups
used to determine the grouping of long-lived assets and the lowest level for
which identifiable cash flows are largely independent of the cash flows of other
assets and liabilities to test for impairment pursuant to SFAS
144. After this re-evaluation, management determined that different
asset groups and cash flow assumptions should have been utilized in its
assessment of whether the carrying value of its asset groups were
recoverable. Upon testing the new asset groups for recoverability,
management has determined that the undiscounted cash flows indicated the asset
groups are recoverable. Accordingly, the previously recorded non-cash
impairment charges related to these assets were not supported and should be
reversed. The Company has determined that the Metal Bearing
Component's contract intangible should continue to be amortized over the
remainder of its original useful life of five years and the Precision
Component's customer relationship intangible asset should be amortized over a
remaining useful life of ten years, which has been revised from its originally
assumed life of twenty years.
After
discussions between management and the Audit Committee of the Board of Directors
of NN, Inc. on February 20, 2008, management, at the direction of the Audit
Committee, concluded that the Company should restate its previously issued
financial statements for the three and six months ended June 30, 2007 and the
three and nine months ended September 30, 2007.
Management
believes that the net effect of adjustments that will be made in the restated
financial statements will be to increase net income by $1.5 million, or $0.08
per share for the three and six months ended June 30, 2007 and to increase net
income by $3.6 million, or $0.21 and $5.1 million, or $0.30 per share
respectively for the three and nine months ended September 30,
2007. Total assets and total stockholder’s equity will increase by
approximately $1.5 million at June 30, 2007 and $5.1 million at September 30,
2007. In light of the restatement of the interim financial
information, the Company’s management and the Audit Committee of its Board of
Directors has concluded that the previously issued financial statements for the
second quarter ended June 30, 2007 and the third quarter ended September 30,
2007 should no longer be relied upon. The Company intends to file
amended Form 10-Q’s for these quarters as soon as practicable.
The
Company’s management has concluded that this matter resulted from a material
weakness in its internal controls over the accounting for the impairment of
long-lived assets and that its disclosure controls and procedures were
ineffective as of June 30, 2007, September 30, 2007 and December 31,
2007. However, as of the date of the filings of the Company's Form
10-Q/A for the second and third quarters of 2007, the material weakness in
the Company’s internal control over financial reporting with respect to the
accounting for the impairment of long-lived assets has been remediated by the
inclusion of enhanced procedures surrounding these calculations.
The Audit
Committee and management of the Company have discussed the matters disclosed
pursuant to this Item 4.02(a) filing with the Company's independent registered
public accounting firm, PricewaterhouseCoopers LLP.
A copy of
the press release relating to such conclusions, dated February 26, 2008 is
attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
Item
9.01. Financial Statements and Exhibits.
(c) Exhibits.
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Exhibit
No.
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Description
of Document
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99.1
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Press
Release dated February 26, 2008
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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 26,
2008
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By:
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/s/ William C. Kelly, Jr. | |
| Name: William C. Kelly, Jr. | |||
| Title: Vice President and Chief Administrative Officer | |||
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 |
60;
FOR
IMMEDIATE RELEASE
February
26, 2008
NN,
INC. REPORTS RESTATEMENT OF SECOND AND
THIRD
QUARTER 2007 RESULTS
Recorded
Non-Cash Impairment Charges to be Adjusted: Net Income and Earnings per Share
for the Second and Third Quarters of 2007 Increased by $1.5 Million, or $0.08
per Share and $3.6 Million, or $0.21 per Share, Respectively
Johnson City, Tenn., February 26,
2008 – NN, Inc. (Nasdaq: NNBR) today announced that it will restate its
previously issued financial statements for the second quarter ended June 30,
2007 and the third quarter ended September 30, 2007. In preparing
these financial statements, management analyzed certain customer relationship
intangible assets that had been recorded in conjunction with the November 30,
2006 acquisition of Whirlaway Corporation and the October 2005 acquisition of
the assets of SNR Roulements to determine if forecasted cash flows supported the
recorded carrying values of these assets. After performing this
analysis which was reviewed by its external auditors of its assumptions and
interpretation of the provisions of SFAS 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets (“SFAS 144”), management determined that certain
of these intangible assets were impaired and consequently recorded non-cash
charges to write these assets down to the value supported by a fair value
analysis based upon their forecasted cash flows.
During
the preparation of its year-end financial statements and in response to a
comment letter issued by the Securities and Exchange Commission related to a
routine review of the Company’s third quarter 10-Q filings, management
re-evaluated the assumptions and method used in performing its calculation of
forecasted cash flows under the provisions of SFAS 144. After this
re-evaluation and after discussion with its external auditors,
management determined that a more appropriate set of assumptions should have
been used in its valuation and impairment calculations. Upon applying
these revised assumptions to its analysis, management has determined that the
recorded non-cash impairment charges to these assets was not supported by the
revised cash flows and therefore should be reversed.
After
discussions between management and the Audit Committee of the Board of Directors
of NN, Inc. on February 20, 2008, management, at the direction of the Audit
Committee, concluded that the Company should restate its previously issued
financial statements for the three and six months ended June 30, 2007 and the
three and nine months ended September 30, 2007.
Management
believes that the net effect of adjustments that will be made in the restated
financial statements will be to increase net income by $1.5 million, or $0.08
per share for the three and six months ended June 30, 2007 and to increase net
income by $3.6 million, or $0.21 per share and $5.1 million, or $0.30 per share
respectively for the three and nine months ended September 30,
2007. Total assets and total stockholder’s equity will increase by
approximately $1.5 million at June 30, 2007 and $5.1 million at September 30,
2007. In light of the restatement of the interim financial
information, the Company’s management and the Audit Committee of its Board of
Directors has concluded that the previously issued financial statements for the
second quarter ended June 30, 2007 and the third quarter ended September 30,
2007 should no longer be relied upon. The Company intends to file
amended Form 10-Q’s for these quarters as soon as practicable.
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.
###