EXHIBIT 99.1
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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
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Will Kelly Alison Ziegler Susan Garland
Treasurer & Manager of Investor Relations (General info) (Analyst info)
(423) 743-9151 212-445-8432 212-445-8458
FOR IMMEDIATE RELEASE
July 9, 2004
NN, INC. TO REPORT SECOND QUARTER 2004 RESULTS AND HOLD
CONFERENCE CALL ON JULY 29, 2004
INCREASED SARBANES-OXLEY COMPLIANCE COSTS AND
ADDITIONAL INVENTORY REDUCTIONS TO IMPACT
SECOND QUARTER AND FULL YEAR
Johnson City, Tenn., July 9, 2004 - NN, Inc. (Nasdaq: NNBR) today announced that
it will release second quarter 2004 financial results for the period ended June
30, 2004 before the opening of the market on Thursday, July 29, 2004.
Management will hold a conference call at 11 a.m. ET that day to review the
company's results. The call can be accessed via the Internet live or as a replay
at www.fulldisclosure.com. For those who are unavailable to listen to the live
broadcast, a replay will be available shortly after the call for 90 days.
The Company also announced that certain expenses would rise more than expected
in the second quarter due to continued reductions in inventory which will
negatively impact margins in the second quarter ($0.03 per diluted share) as
well as increases in compliance costs related to Section 404 of the 2002
Sarbanes-Oxley Act ("SOX 404") ($0.02 per diluted share) and higher start-up
costs associated with its new Slovakian operation ($0.02 per diluted share).
Accordingly, the Company now expects to report earnings of $0.11 to $0.12 per
diluted share for the second quarter of 2004.
During the quarter, the company reduced inventory at a faster pace than
originally planned, principally due to the Level 3 program. Although this is a
positive development from a cash flow perspective and is fundamental to
streamlining operations, it is anticipated to negatively impact second quarter
and full year margins. Currently, the full year impact on diluted earnings per
share associated with inventory reductions is estimated to be approximately
$0.10 per diluted share. In light of the expected benefit of increased cash
flow, it is now
expected that the Company will reduce debt by approximately $12 million to $14
million for the year.
Additionally, the Company continues to be positioned to comply with the internal
control regulations of SOX 404. However, interpretations of these regulations
have and continue to develop. The Company therefore has increased its cost
estimates of compliance to be approximately $2 million ($1.3 million after-tax)
or $0.07 per diluted share.
Roderick R. Baty, Chairman and Chief Executive Officer, stated, "Although for
the year we anticipate operations in total to perform as expected, we are
reducing our previously stated guidance of $0.76 to $0.78 per diluted share for
the full year. For 2004, we now anticipate earnings of approximately $0.60 to
$0.63 per diluted share. As we have mentioned previously, increased costs in
2004 resulting from dramatic price increases of steel, the negative impact on
margins associated with inventory reductions, costs associated with SOX 404
compliance, start up costs in Slovakia and China, as well as costs in connection
with the Company's financing needs are now estimated to result in added expenses
of approximately $0.38 per diluted share for the year, up from our prior
estimate of $0.22 per diluted share. These costs will offset the benefit of our
planned cost reductions, volume increases, the expected accretion from the full
year ownership of Veenendaal and the buyout of the remaining interest of
Euroball. Looking ahead, assuming no additional material price inflation, we
believe approximately 80% of these costs will not reoccur in 2005. A notable
exception is SOX 404 compliance. We believe the compliance costs associated with
SOX 404, while lower than 2004, will continue to be a major cost factor in the
upcoming year. With respect to our Level 3 program, we expect that profit
improvement initiatives will fully offset the negative earnings impact
associated with further inventory reductions in 2005 and beyond."
NN, Inc. manufactures and supplies high precision bearing components consisting
of balls, rollers, seals, and retainers for leading bearing manufacturers on a
global basis. In addition, the company manufactures a variety of other plastic
components. NN, Inc. had sales of US $253 million in 2003.
The comments by Mr. Baty regarding forecasted costs and earnings are forward
looking statements made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements involve a
number of risks and uncertainties that may cause actual results to be materially
different from such forward-looking statements. Such factors include, among
others, general economic conditions and economic conditions in the industrial
sector, inventory levels, regulatory compliance costs, start-up cost 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, 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, 2003.
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