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 29, 2008 (February 28, 2008)
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 year ended December 31,
2007, which press release was issued on February 28, 2008.
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 February 28, 2008
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 29,
2008
|
By:
|
/s/ William C. Kelly, Jr. | |
| Name: William C. Kelly, Jr. | |||
| Title: Vice President and Chief Administrative Officer | |||
EXHIBIT 99.1
F I N A N C I A L
F I N A N C I A L
RELATIONS
BOARD
Value Added
Communications
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 |
0;
FOR
IMMEDIATE RELEASE
February
28, 2008
NN,
INC. REPORTS 2007 FOURTH QUARTER AND FULL YEAR RESULTS
PROVIDES
GUIDANCE FOR 2008
EXCLUDING
RESTRUCTURING AND IMPAIRMENT EFFECTS, MEETS REVISED FULL YEAR GUIDANCE OF $0.74
PER DILUTED SHARE
Johnson City, Tenn, February 28,
2007 – NN, Inc. (Nasdaq: NNBR) today reported its financial results for
the fourth quarter and year ended December 31, 2007. These results
include the operations of Whirlaway Corporation, a precision metal component
manufacturing operation, which was acquired on December 1, 2006, and certain
restructuring and impairment costs. Additionally, as previously announced on
February 26, 2008, the Company restated its previously issued second quarter
ended June 30, 2007 and third quarter ended September 30, 2007 financial
statements. The effect of the restated financial information is
included in the financial statements included herein. More
information is available in the restated and amended reports filed with the
Securities and Exchange Commission on forms 10-Q/A.
Net sales
for the fourth quarter of 2007 were $107.0 million, up $21.1 million or 24.6%
from $85.9 million for the same period of 2006. The acquisition of
Whirlaway contributed $11.9 million of this increase. The remainder
of the increase was due primarily to the positive impact of currency translation
of $6.6 million and continued strong demand, mainly at our European operations
of $2.6 million. Net income for the fourth quarter totaled $5.0
million, or $0.31 per diluted share compared to net income of $3.1 million, or
$0.18 per diluted share for the fourth quarter of 2006. Included in
the fourth quarter net income was the net favorable effect of approximately $0.7
million, or $0.05 per diluted share of certain tax adjustments, mainly the
adjustment of recorded Italian deferred taxes related to the lowering of the
statutory Italian tax rate. Also included was the reversal of
approximately $1.1 million of previously recorded restructuring charges related
to the planned downsizing of our Eltmann, Germany facility. In the
third quarter of 2007, we finalized these plans and gave notice that
approximately 15% of the positions there would be eliminated. Under
the provisions of SFAS 146 “Accounting for Costs
1
Associated
with Exit or Disposal” (“SFAS 146”), we appropriately recorded a restructuring
charge of approximately $1.1 million, after-tax for related severance
costs. However, during the fourth quarter, we received an unsolicited
offer from the German workers counsel for increased hours and wage concessions
which we agreed to consider. On February 13, 2008, we signed a new
contract with the workers under acceptable terms. We therefore, under the
provisions of SFAS 146, reversed the severance accrual taken in the third
quarter effective as of December 31, 2007. The workers agreement must be
ratified by the national union, which we believe will occur during the first
quarter of 2008.
Net sales
for the full year 2007 were $421.3 million, up $91.0 million or 27.6% compared
to $330.3 million for 2006. The acquisition of Whirlaway contributed
$62.6 million of this increase. The remainder was due primarily to
the positive impact of currency translation of $19.6 million and increased
volume, mainly at our European operations of $8.8 million. Net loss
for 2007 totaled $1.2 million, or $0.07 per share compared to net income of
$14.4 million, or $0.83 per diluted share for 2006. Net loss
for the full year of 2007 includes the recording of approximately $13.6 million,
or $0.81 per diluted share in after-tax impairment charges mainly due to the
restructuring of our European operations. Excluding the impact of
these charges, net income would have been $0.74 per diluted
share. The restructuring and impairment charges have been incurred,
as we have previously discussed, to appropriately adjust our cost structure at
our Metal Bearing Components Division. This restructuring has taken
place mainly in our European operations to better take advantage of favorable
cost structures at our Slovakian and Chinese ball manufacturing
facilities.
As a
percentage of net sales, cost of products sold was 80.1% in the fourth quarter
of 2007 compared to 79.3% in the fourth quarter of 2006. For the full
year 2007 and 2006, cost of products sold as a percentage of net sales was 80.0%
and 78.0%, respectively. The acquisition of Whirlaway accounted for
approximately 50% of the increase in cost of goods sold as a percentage of sales
for the fourth quarter and the full year of 2007. The remainder of
the increase was due to inflation and price/mix issues mainly in our European
operations.
Selling,
general and administrative expenses for the fourth quarter of 2007 were $9.1
million, or 8.5% of net sales as compared to $8.1 million, or 9.4% for the same
period in 2006. Currency translation accounted for $0.4 million and
the acquisition of Whirlaway accounted for the remainder of the increase. For
the full year 2007, selling, general and administrative expenses were $36.5
million or 8.7% of net sales as compared to $30.0 million, or 9.1% of net sales
in 2006. The acquisition of Whirlaway accounted for $4.1 million of
the increase and currency translation accounted for $1.3 million. The
remainder of the increase was due to increased stock option expense and
professional fees.
James H.
Dorton, Vice President and Chief Financial Officer, commented, “We met our
revised full year guidance of $0.70 to $0.74 per diluted share before
restructuring and impairment costs earlier announced in July. Net
income for the full year before these charges was $12.4 million, or $0.74 per
diluted share. Additionally, excluding the impact of Whirlaway’s
$0.08 per diluted share loss, net income for the full year would have been $13.8
million, or $0.82 per diluted share.”
Mr.
Dorton, concluded, “During the fourth quarter we purchased 699,838 shares ($6.6
million) of the Company’s stock under the previously announced share repurchase
program. This program, which we announced on September 13, 2007, was
authorized by our Board of Directors to purchase up to $25.0 million of the
Company’s stock in the open market. This new program will be in
effect for one year beginning on September 13, 2007 and takes the place of the
program that expired in September of 2007. Under the expired program,
we purchased 673,965 shares ($7.4 million) of the Company’s
stock. Under the new program, we have purchased 797,209 shares ($7.6
million) of the Company’s stock through the end of December 31,
2007. We anticipate continuing to purchase shares under this program
as market conditions and regulations allow.”
2
Roderick
R. Baty, Chairman and Chief Executive Officer, commented, “2007 was a mixed year
in terms of operating results. In total, our core metal bearing components
operations in the U.S and Europe met our beginning of the year expectations for
both revenues and profitability. However, three issues negatively affected our
performance for 2007: sales weakness in the Precision Metal Components Division
(Whirlaway) associated with two pre-build issues with diesel engines and HVAC,
continuing losses in our Slovakian ball manufacturing facility as well as our
Chinese ball manufacturing facility. As a result of these issues, in July we
revised 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.”
Anticipated
2008 Results
Mr. Baty
continued, “Despite the current weaker economic outlook for global end markets,
we are forecasting a stronger year for NN in 2008. Our global outlook
for our businesses and the guidance we are providing includes a reduction in
demand for the U.S. auto segment and stable demand in the European auto market.
In both North America and Europe, we are forecasting moderate growth in our
industrial end markets. We expect to see significant profitability improvements
at our ball plants in Slovakia and China as well as improvements at our latest
acquisition, Whirlaway. With regards to our ball manufacturing
operations in China and Slovakia, we have been awarded business for these
operations in 2008 that will resolve the capacity and customer approval issues
and resulting profitability problems we experienced in 2007. At Whirlaway, we
are forecasting a return to more favorable market conditions and profitability
in 2008 due mainly to new business being awarded to us from existing customers.
We are also experiencing improvements in the diesel and HVAC end markets based
upon the elimination of the pre-build inventory issues that existed in 2007.
Additionally, our Level 3 initiatives are continuing to deliver operating
improvements in each of our global manufacturing operations.”
Mr. Baty
concluded, “Although we are optimistic regarding our anticipated 2008 results,
the current economic environment makes it difficult to provide guidance. Having
said this, our guidance assumes that the current global economic conditions that
exist in the first quarter of 2008 will continue for the balance of the full
year. Our 2008 business plan anticipates full year sales to be approximately
$440 million (up 5%) and full year earnings to be in the range of $0.90 to $0.95
per diluted share, up 22% to 28% compared with 2007 results from operations of
$0.74 per diluted share before impairment and restructuring
charges.”
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.
3
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.
4
NN,
Inc.
Condensed
Statements of Income
(In
Thousands, except per share amounts)
(Unaudited)
Three
Months
Ended
Twelve Months
Ended
&
#160; December
31,
December 31,
|
2007
|
2006
|
2007
|
2006
|
|||||||||||||
|
Net
sales
|
$ | 107,027 | $ | 85,884 | $ | 421,294 | $ | 330,325 | ||||||||
|
Cost
of products sold (exclusive of
depreciation
shown separately below)
|
85,750 | 68,106 | 337,024 | 257,703 | ||||||||||||
|
Selling,
general and administrative
|
9,067 | 8,086 | 36,473 | 30,008 | ||||||||||||
|
Depreciation
and amortization
|
6,045 | 4,713 | 22,996 | 17,492 | ||||||||||||
|
(Gain)Loss
on disposal of assets
|
(48 | ) | 21 | (71 | ) | (705 | ) | |||||||||
|
Restructuring
and impairment costs
|
(1,062 | ) | (65 | ) | 13,636 | (65 | ) | |||||||||
|
Income
from operations
|
7,275 | 5,023 | 11,236 | 25,892 | ||||||||||||
|
Interest
expense, net
|
1,552 | 1,060 | 6,373 | 3,983 | ||||||||||||
|
Other
(income) expense
|
(236 | ) | (738 | ) | (386 | ) | (1,048 | ) | ||||||||
|
Income
before provision for income taxes
|
5,959 | 4,701 | 5,249 | 22,957 | ||||||||||||
|
Provision
for income taxes
|
921 | 1,614 | 6,422 | 8,522 | ||||||||||||
|
Net
income
|
$ | 5,038 | $ | 3,087 | $ | (1,173 | ) | $ | 14,435 | |||||||
|
Diluted
income per common share
|
$ | 0.31 | $ | 0.18 | $ | (0.07 | ) | $ | 0.83 | |||||||
|
Weighted
average diluted shares
|
16,280 | 17,141 | 16,749 | 17,351 | ||||||||||||
5
NN,
Inc.
Condensed
Balance Sheets
(In
Thousands)
(Unaudited)
| December
31,
2007
|
December
31,
2006
|
|||||||
|
Assets
|
||||||||
|
Current
Assets:
|
||||||||
|
Cash
|
$ | 13,029 | $ | 11,681 | ||||
|
Accounts
receivable, net
|
65,566 | 63,442 | ||||||
|
Inventories,
net
|
51,821 | 43,538 | ||||||
|
Other
current assets
|
7,393 | 7,203 | ||||||
|
Total
current assets
|
137,809 | 125,864 | ||||||
|
Property,
plant and equipment, net
|
161,008 | 156,447 | ||||||
|
Goodwill
and intangible assets, net
|
48,750 | 56,278 | ||||||
|
Other
assets
|
2,589 | 4,112 | ||||||
|
Total
assets
|
$ | 350,156 | $ | 342,701 | ||||
|
Liabilities
and Stockholders’ Equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 51,124 | $ | 52,576 | ||||
|
Accrued
salaries and wages
|
15,087 | 13,519 | ||||||
|
Current
portion of long-term debt
|
11,851 | 851 | ||||||
|
Other
liabilities
|
6,194 | 7,923 | ||||||
|
Total
current liabilities
|
84,256 | 74,869 | ||||||
|
Deferred
income taxes
|
18,760 | 16,334 | ||||||
|
Long-term
notes payable
|
100,193 | 80,711 | ||||||
|
Related
party payable
|
-- | 21,305 | ||||||
|
Other
|
16,904 | 16,313 | ||||||
|
Total
liabilities
|
220,113 | 209,532 | ||||||
|
Total
stockholders’ equity
|
130,043 | 133,169 | ||||||
|
Total
liabilities and stockholders’ equity
|
$ | 350,156 | $ | 342,701 | ||||
6
NN,
Inc.
Reconciliation
of Non-GAAP to GAAP Financial Measures
(Unaudited)
|
Three
Months Ended
December
31, 2007
|
Year
Ended
December
31, 2007
|
|||||||||||||||
|
In
Thousands
|
Diluted
Earnings Per Share
|
In
Thousands
|
Diluted
Earnings Per Share
|
|||||||||||||
|
Net
Income (Loss)
|
$ | 5,038 | $ | 0.31 | $ | (1,173 | ) | $ | (0.07 | ) | ||||||
|
After-tax
restructuring and impairment costs
|
(1,062 | ) | (0.07 | ) | 13,621 | 0.81 | ||||||||||
|
Sub-Total
|
3,976 | 0.24 | 12,448 | 0.74 | ||||||||||||
|
After-tax
loss of Whirlaway
|
298 | 0.02 | 1,333 | 0.08 | ||||||||||||
|
Net
income excluding restructuring and impairment costs and Whirlaway net
loss
|
$ | 4,274 | $ | 0.26 | $ | 13,781 | $ | 0.82 | ||||||||
###
7