-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M1AWCSnF06S6ds6Hsxxe9AwTPQ4IGzMZIdAoQryJzdcaeI2JqLmIhIV5dK3PhnYD 7gMhJ6IhF3BmmTSDg8SJuQ== 0001005794-08-000073.txt : 20080229 0001005794-08-000073.hdr.sgml : 20080229 20080229113217 ACCESSION NUMBER: 0001005794-08-000073 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20080228 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20080229 DATE AS OF CHANGE: 20080229 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NN INC CENTRAL INDEX KEY: 0000918541 STANDARD INDUSTRIAL CLASSIFICATION: BALL & ROLLER BEARINGS [3562] IRS NUMBER: 621096725 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-23486 FILM NUMBER: 08653503 BUSINESS ADDRESS: STREET 1: 2000 WATERS EDGE DR CITY: JOHNSON CITY STATE: TN ZIP: 37604 BUSINESS PHONE: 4237439151 MAIL ADDRESS: STREET 1: 2000 WATERS EDGE DR CITY: JOHNSON CITY STATE: TN ZIP: 37604 FORMER COMPANY: FORMER CONFORMED NAME: NN BALL & ROLLER INC DATE OF NAME CHANGE: 19940203 8-K 1 nn8k022808.htm NN 8-K 02-22-08 (FINANCIAL REPORT) nn8k022808.htm


 
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   
       
 
             
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EXHIBIT 99.1

NN NEWS
 

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

 




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