<PAGE> 1
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number 0-23486
NN BALL & ROLLER, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 62-1096725
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
800 TENNESSEE ROAD
ERWIN, TENNESSEE 37650
(Address of principal executive offices, including zip code)
(423) 743-9151
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
------- -------
As of November 11, 1996 there were 14,629,242 shares of the registrant's common
stock, par value $0.01 per share, outstanding.
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<PAGE> 2
PART I. FINANCIAL INFORMATION
NN BALL & ROLLER, INC.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA 1996 1995 1996 1995
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 16,558 $ 18,940 $ 65,477 $ 56,182
Cost of goods sold 10,828 13,346 43,759 39,016
----------- ----------- ----------- -----------
Gross profit 5,730 5,594 21,718 17,166
Selling, general and administrative 1,263 1,131 3,527 3,132
Depreciation 826 525 2,530 1,737
----------- ----------- ----------- -----------
Income from operations 3,641 3,938 15,661 12,297
Interest expense 87 9 274 12
----------- ----------- ----------- -----------
Income before provision for income taxes 3,554 3,929 15,387 12,285
Provision for income taxes 1,359 1,252 5,440 3,960
----------- ----------- ----------- -----------
Net income $ 2,195 $ 2,677 $ 9,947 $ 8,325
=========== =========== =========== ===========
Net income per common share (Note 2): $ 0.15 $ 0.18 $ 0.66 $ 0.58
=========== =========== =========== ===========
Weighted average number of
shares outstanding (Note 2) 14,961,082 14,472,656 15,072,547 14,472,656
=========== =========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
2
<PAGE> 3
NN BALL & ROLLER, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
THOUSANDS OF DOLLARS (UNAUDITED)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Accounts receivable, net $ 14,665 $ 16,915
Inventories, net (Note 3) 11,233 9,813
Income taxes refundable 196 --
Other current assets 376 --
----------- -----------
Total current assets 26,470 26,728
Property, plant and equipment, net 32,359 27,367
Other 136 146
=========== ===========
Total assets $ 58,965 $ 54,241
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 3,917 $ 8,201
Revolving credit facility 3,242 3,590
Accrued vacation expense 216 369
Accrued interest expense 27
28
Income taxes payable -- 208
Other current liabilities 2,478 908
----------- -----------
Total current liabilities 9,881 13,303
Deferred income taxes 1,720 1,720
----------- -----------
Total liabilities 11,601 15,023
Total stockholders' equity 47,364 39,218
----------- -----------
Total liabilities and stockholders' equity $ 58,965 $ 54,241
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE> 4
NN BALL & ROLLER, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED
NUMBER PAR PAID-IN EARNINGS
THOUSANDS OF DOLLARS, EXCEPT SHARE DATA OF SHARES VALUE CAPITAL (DEFICIT) TOTAL
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1995 6,432 $ 64 $ 25,289 $ 5,184 $ 30,537
Net income 8,325 8,325
Dividends (2,830) (2,830)
Three-for-two stock split (Note 2) 3,216 32 -- (32) --
===== ===== ======== ========= =========
Balance, September 30, 1995 9,648 $ 96 $ 25,289 $ 10,647 $ 36,032
===== ===== ======== ========= =========
Balance, January 1, 1996 14,473 $ 144 $ 25,289 $ 13,785 $ 39,218
Net income 9,947 9,947
Dividends (3,497) (3,497)
Stock options exercised (Note 4) 156 2 1,694 -- 1,696
------ ----- -------- --------- ---------
Balance, September 30, 1996 14,629 $ 146 $ 26,983 $ 20,235 $ 47,364
====== ===== ======== ========= =========
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE> 5
NN BALL & ROLLER, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
THOUSANDS OF DOLLARS 1996 1995
- -------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 9,947 $ 8,325
Adjustments to reconcile net income:
Depreciation 2,530 1,737
Changes in operating assets and liabilities:
Accounts receivable 2,250 (3,711)
Inventories (1,420) (1,650)
Taxes refundable (196) --
Other current assets (376) (236)
Accounts payable (4,284) 1,214
Other liabilities 1,210 771
----------- -----------
Net cash provided by operating activities 9,661 6,450
----------- -----------
INVESTING ACTIVITIES:
Acquisition of plant, property, and equipment (7,522) (9,361)
Other assets 10 (3)
----------- -----------
Net cash used by investing activities (7,512) (9,364)
----------- -----------
FINANCING ACTIVITIES:
Proceeds under revolving credit facility (348) 1,450
Dividends (3,497) (2,830)
Stock options exercised (Note 4) 1,696 --
----------- -----------
Net cash (used) provided by financing activities (2,149) (1,380)
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS -- (4,294)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD -- 4,294
=========== ===========
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ -- $ --
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE> 6
NN BALL & ROLLER, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed financial statements of NN Ball & Roller, Inc. have
not been audited by independent accountants, except for the balance sheet at
December 31, 1995. In the opinion of the Company's management, the financial
statements reflect all adjustments necessary to present fairly the results of
operations for the three and nine month periods ended September 30, 1996 and
1995, the Company's financial position at September 30, 1996 and December 31,
1995, and the cash flows for the nine month periods ended September 30, 1996 and
1995. These adjustments are of a normal recurring nature, except for the
adjustments described below in Note 2, and are, in the opinion of management,
necessary for fair presentation of the financial position and operating results
for the interim periods.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted from the interim financial statements presented
in this Quarterly Report on Form 10-Q.
The results for the first three quarters of 1996 are not necessarily indicative
of future results.
NOTE 2. THREE-FOR-TWO STOCK SPLITS
On February 9, 1995, the Company's Board of Directors authorized a three-for-two
stock split effected in the form of a 50% stock dividend payable on March 5,
1995 to stockholders of record on February 27, 1995. This resulted in the
issuance of approximately 3,216,000 additional shares of Common Stock.
On November 13, 1995, the Company's Board of Directors authorized a
three-for-two stock split effected in the form of a 50% stock dividend payable
on December 5, 1995 to stockholders of record on November 27, 1995. This
resulted in the issuance of approximately 4,825,000 additional shares of common
stock.
Unless otherwise stated, all references in the financial statements to stock
option data, per share and weighted average share amounts have been restated to
reflect these stock splits.
NOTE 3. INVENTORIES
Inventories are stated at the lower of cost or market, with cost being
determined by the first-in, first-out method.
Inventories are comprised of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER, 30 DECEMBER 31,
1996 1995
(UNAUDITED)
------------- --------------
<S> <C> <C>
Raw materials $ 1,302 $ 2,707
Work in process 2,804 3,172
Finished goods 7,187 3,994
------------- --------------
11,293 9,873
Less - Reserve for excess and obsolete inventory 60 60
============= ==============
$ 11,233 $ 9,813
============= ==============
</TABLE>
6
<PAGE> 7
NOTE 4. STOCK OPTIONS EXERCISED
During the first nine months of 1996, certain employees exercised options to
purchase the Company's common stock under the Company's Stock Incentive Plan.
Options to purchase 150,231 shares were exercised at $6.22 per share and options
to purchase 5,875 shares were exercised at $9.39 per share.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1995
Net Sales. Net sales decreased by approximately $2.4 million, or 12.6%, from
$18.9 million for the third quarter of 1995 to $16.6 million for the third
quarter of 1996. Foreign sales decreased $2.3 million, or 25.6%, from $9.0
million in the third quarter of 1995 to $6.7 million during the third quarter of
1996. The decrease in foreign sales was due primarily to decreased sales to
European customers due to general European economic conditions and the
over-building of inventories by customers in the first half of 1996. Domestic
sales remained relatively flat, decreasing $69,000, or 0.7%, from $9.9 million
in the third quarter of 1995 to $9.8 million in the third quarter of 1996.
As a result of weaker international demand, the excess inventory builds by
certain customers and a slowing in the rate of outsourcing of captive production
by customers with captive ball producers, the Company currently expects net
sales in the fourth quarter of 1996 will be lower than the $21.6 million of net
sales reported in the fourth quarter of 1995, although net sales in the fourth
quarter of 1996 are expected to exceed net sales in the third quarter of 1996.
The Company also currently expects net sales in fiscal year 1997 will
approximate net sales in fiscal year 1996.
Gross Profit. Gross profit increased $136,000, or 2.4%, from $5.6 million for
the third quarter of 1995 to $5.7 million for the third quarter of 1996. As a
percentage of net sales, gross profit increased from 29.5% in the third quarter
of 1995 to 34.6% for the same period in 1996. During the third quarter of 1995,
gross profit was adversely affected as a result of increased raw material costs
resulting from a steel shortage and of inefficiencies associated with the steel
shortage and capacity constraints, including increased labor and transportation
costs. During the first quarter of 1996, the Company brought additional capacity
on-line with the addition of the Mountain City, Tennessee facility which allowed
for more efficient operations. In addition, the Company was able to pass along
increased steel costs to customers in the latter part of 1995. During the third
quarter of 1996, the Company implemented a new financial reporting software
package which allows for the more efficient tracking and controlling of costs.
Additionally, in the third quarter of 1996, the Company recorded $300,000 of
duty drawback associated with 1995 imports of raw material which had not been
previously recorded. This amount is an offset to export fees paid.
Selling, General and Administrative. Selling, general and administrative
expenses increased by 11.7%, from $1.1 million in the third quarter of 1995 to
$1.3 million in the third quarter of 1996. This increase was due primarily to
increased salaries and wages and also increased travel expenses. As a percentage
of net sales, selling, general and administrative expenses increased from 6.0%
for the third quarter of 1995 to 7.6% for the same period in 1996.
Depreciation. Depreciation expense increased from $525,000 for the third quarter
of 1995 to $826,000 for the same period in 1996. This increase was due primarily
to purchases of capital equipment. As a percentage of net sales, depreciation
expense increased from 2.8% for in the third quarter of 1995 to 5.0% in the
third quarter of 1996.
Net Income. Net income decreased by $482,000, or 18.0%, from $2.7 million for
the third quarter of 1995 to $2.1 million for the same period in 1996. As a
percentage of net sales, net income decreased from 14.1% in the third quarter of
1995 to 13.3% for the third quarter of 1996. This decrease in net income as a
percentage of net sales was due primarily to increased selling, general and
administrative expenses and
8
<PAGE> 9
depreciation expenses discussed above, as well as increased interest expense
associated with draws by the Company on its revolving line of credit with
NationsBank (terms of the credit facility are discussed below). In addition,
the Company increased the provision for income taxes due to the decrease in
foreign sales and the anticipated decrease in the level of tax benefit from the
Company's participation in a shared foreign sales corporation.
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 1995
Net Sales. Net sales increased by approximately $9.3 million, or 16.5%, from
$56.2 million for the first nine months of 1995 to $65.5 million for the same
period in 1996. Foreign sales increased $6.7 million, or 25.7%, from $26.1
million in the first nine months of 1995 to $32.8 million during the same period
of 1996. This increase was due primarily to increased sales volumes with
existing customers, and to a lesser extent, sales to several new customers.
Domestic sales increased $2.7 million, or 8.9%, from $30.0 million in the first
nine months of 1995 to $32.7 million in the same period of 1996. This increase
was due primarily to increased sales volumes with existing customers.
As a result of weaker international demand, the excess inventory builds by
certain customers and a slowing in the rate of outsourcing of captive production
by customers with captive ball producers, the Company currently expects net
sales in the fourth quarter of 1996 will be lower than the $21.6 million of net
sales reported in the fourth quarter of 1995, although net sales in the fourth
quarter of 1996 are expected to exceed net sales in the third quarter of 1996.
The Company also currently expects net sales in fiscal year 1997 will
approximate net sales in fiscal year 1996.
Gross Profit. Gross profit increased $4.5 million, or 26.5%, from $17.2 million
for the first nine months of 1995 to $21.7 million for the same period of 1996.
As a percentage of net sales, gross profit increased from 30.6% in the first
nine months of 1995 to 33.2% in the same period of 1996. During the first nine
months of 1995, gross profit was adversely affected as a result of increased raw
material costs resulting from a steel shortage and inefficiencies associated
with the steel shortage and capacity constraints, including increased labor and
transportation costs. During the first quarter of 1996, the Company brought
additional capacity on-line with the addition of the Mountain City, Tennessee
Facility which allowed for more efficient operations. In addition, the Company
was able to pass along increased steel costs to customers in the latter part of
1995. During the third quarter of 1996, the Company implemented a new financial
reporting software package which allowed for the more efficient tracking and
controlling of costs. Additionally, in the third quarter of 1996, the Company
recorded $300,000 of duty drawback associated with 1995 imports of raw material
which had not been previously recorded. This amount is an offset to export fees
paid.
Selling, General and Administrative. Selling, general and administrative
expenses increased by $395,000, or 12.6%, from $3.1 million in the first nine
months of 1995 to $3.5 million in the same period of 1996. This increase was due
primarily to increase salaries and wages and increased travel expenses. As a
percentage of net sales, selling, general and administrative expenses decreased
from 5.6% in the first nine months of 1995 to 5.4% for the same period in 1996.
Depreciation. Depreciation expense increased from $1.7 million for the first
nine months of 1995 to $2.5 million for the same period in 1996. This increase
was due primarily to purchases of capital equipment. As a percentage of net
sales, depreciation expense increased from 3.1% for the first nine months of
1995 to 3.9% for the same period in 1996.
Net Income. Net income increased by $1.6 million, or 19.5%, from $8.3 million
for the first nine months of 1995 to $9.9 million for the same period for 1996.
As a percentage of net sales, net income increased from 14.8% for the first nine
months of 1995 to 15.2% for the same period for 1996. The increase in gross
margin was due to higher operating costs and higher interest expense related to
the Company's draw on the line of credit with NationsBank (the terms of the
credit facility are discussed below). Additionally,
9
<PAGE> 10
higher income taxes were recorded due to the decrease in export sales as a
percentage of total sales and the anticipated decreased tax benefit from the
Company's participation in a shared foreign sales corporation.
LIQUIDITY AND CAPITAL RESOURCES
In February 1995, the Company entered into a modified loan agreement with
NationsBank of Tennessee N.A. ("NationsBank") which replaced a loan agreement
entered into with NationsBank in the first quarter of 1994. The loan agreement,
as modified, provides for a revolving credit facility of up to $10.0 million,
which will expire on May 31, 1998.
Amounts outstanding under the revolving facility are unsecured and bear interest
at a floating rate equal to, at the Company's option, either the NationsBank
prime commercial rate minus 1.0% or LIBOR plus 1.15% (or LIBOR plus 1.0% if the
minimum advance is at least $1.0 million). The loan agreement contains customary
financial and operating restrictions on the Company, including covenants
restricting the Company, without NationsBank's consent, from pledging its
inventory, accounts receivable or other assets to other lenders or from
acquiring any other businesses if the aggregate expenditures by the Company in
connection with such acquisitions would exceed a certain threshold in any fiscal
year. In addition, the Company is prohibited from declaring or paying any
dividend if an event of default exists under the revolving credit facility at
the time of, or would occur as a result of, such declaration or payment. The
loan agreement also contains customary covenants requiring the satisfaction of
certain financial tests and the maintenance of certain financial ratios,
including covenants requiring the Company to maintain a tangible net worth of
not less than $25.0 million, working capital of not less than $10.0 million, a
ratio of total debt to net worth of not more than 1 to 1, and a ratio of current
assets to current liabilities of not less than 1.5 to 1. The Company is in
compliance with all such covenants. The outstanding principal balance of the
Company's borrowings under the revolving facility as of September 30, 1996 was
$3.2 million of which $1.0 million was accruing interest at LIBOR plus 1%. The
remaining $2.2 million was accruing interest at the NationsBank prime commercial
rate minus 1%.
The Company's arrangements with its domestic customers typically provide that
payments are due within 30 days following the date of the Company's shipment of
goods, while arrangements with foreign customers (other than foreign customers
that have entered into an inventory management program with the Company)
generally provide that payments are due within either 90 or 120 days following
the date of shipment. Under the Company's inventory management program, payments
typically are due within 30 days after the product is used by the customer. Due
to the continuing expansion of the Company's foreign sales, management believes
that the Company's working capital requirements will increase as a result of
longer payment terms provided to foreign customers. Currently, all foreign sales
are billed and paid for in United States dollars. As foreign sales have
increased as a percentage of total sales, seasonality has become a factor for
the Company in that many foreign customers cease production during the month of
August.
To date, the Company has not been materially adversely affected by currency
fluctuations or foreign exchange restrictions. Approximately 90% of the steel
used by the Company is 52100 chrome alloy steel ("52100 Steel"). The Company
currently purchases a significant amount of its 52100 Steel requirements from
foreign mills. During 1995 and the first nine months of 1996, due to an increase
in worldwide demand for 52100 Steel and the decrease in the value of the United
States dollar relative to foreign currencies, the Company experienced an
increase in the price of 52100 Steel. The Company typically reserves the right
to periodically increase product prices in the event of increases in its raw
material costs. During 1995 and the first nine months of 1996, the Company was
able to minimize the impact on its operations resulting from the 52100 Steel
price increases by taking such measures. As the Company's international
operations continue to grow, foreign exchange risk may increase, and the Company
may be required to develop and implement additional strategies to manage this
risk.
10
<PAGE> 11
Working capital, which consists principally of accounts receivable and
inventories was $16.6 million at September 30, 1996 as compared to $13.4 million
at December 31, 1995. The ratio of current assets to current liabilities
increased from 2.0:1 at December 31, 1995 to 2.7:1 at September 30, 1996. Cash
flow from operations increased from $6.4 million during the first nine months of
1995 to $9.7 million during the first nine months of 1996. This increase was
primarily attributed to the increase in accounts receivable of $2.3 million,
increased net income of $1.6 million and increased depreciation charges of
$793,000 from the prior year. This increase was partially offset by a decrease
in accounts payable of $4.3 million and an increase in inventories of $1.4
million.
During 1996, the Company plans to spend $8.5 million on capital expenditures (of
which $7.5 million has been spent through September 30, 1996) including the
purchase and further renovation of the Mountain City facility, as well as the
purchase of additional machinery and equipment for all three of the Company's
facilities. The Company intends to finance these activities with cash generated
from operations and funds available under the credit facility described above.
The Company believes that funds generated from operations and borrowings from
the credit facility will be sufficient to finance the Company's working capital
needs and projected capital expenditure requirements through December 1997.
CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company wishes to caution readers that this report contains, and future
filings by the Company, press releases and oral statements made by the Company's
authorized representatives may contain, forward looking statements that involve
certain risks and uncertainties. The Company's actual results could differ
materially from those expressed in such forward looking statements due to
important factors bearing on the Company's business, many of which already have
been discussed in this filling and in the Company's prior fillings.
The following paragraphs discuss the risk factors the Company regard as the most
significant. Although the Company has attempted to list comprehensively the risk
factors, the Company wishes to caution investors that other factors may in the
future prove to be important in affecting the Company's results of operations.
The Company undertakes no obligation to publicly update or revise any forward
looking statements, whether as a result of new information, future events or
otherwise.
Industry Risks. The precision ball and roller industry is cyclical and tends to
decline in response to overall declines in industrial production. The Company's
sales in the past have been negatively affected, and in the future very likely
would be negatively affected, by adverse conditions in the industrial production
sector of the economy or by adverse global or national economic conditions
generally.
Competition. The precision ball and roller market is highly competitive, and
many of the ball and roller manufacturers in the market are larger and have
substantially greater resources than the Company. The Company's competitors are
continuously exploring and implementing improvements in technology and
manufacturing processes in order to improve product quality, and the Company's
ability to remain competitive will depend, among other things, on whether it is
able, in a cost effective manner, to keep apace with such quality improvements.
In addition, the Company competes with many of its customers that, in addition
to producing bearings, also internally produce balls and rollers for sale to
third parties. The Company also faces a risk that its customers will decide to
produce balls and rollers internally rather than outsourcing their needs to the
Company.
Rapid Growth. The Company has significantly expanded its production facilities
and capacity over the last several years. The Company currently is not operating
at full capacity and faces risks of further underutilization or inefficient
utilization of its production facilities in future years. The Company also \
<PAGE> 12
faces risks associated with start-up expenses, inefficiencies , delays and
increased depreciation costs associated with its recently completed facility in
Mountain City, Tennessee, and with its plant expansions.
Raw Material Shortages. Because the balls and rollers manufactured by the
Company have highly-specialized applications, their production requires the use
of very particular types of steel. Due to quality constraints, the Company
obtains the majority of its steel from overseas suppliers. Steel shortages or
transportation problems, particularly with respect to 52100 Steel, could have a
detrimental effect on the Company's business.
Risks Associated with International Trade. Because the Company obtains a
majority of its raw materials from overseas suppliers and sells to a large
number of international customers, the Company faces risks associated with (I)
adverse foreign currency fluctuations, (ii) changes in trade, monetary and
fiscal policies, laws and regulations, and other activities of governments,
agencies and similar organizations, (iii) the imposition of trade restrictions
or prohibitions, (iv) the imposition of import or other changes or taxes, and
(v) unstable governments or legal systems in countries in which the Company's
suppliers and customers are located. Currently, all foreign sales are billed and
paid for in United States dollars. An increase in the value of the United States
dollar relative to foreign currencies may adversely affect the ability of the
Company to compete with its foreign-based competitors for international as well
as domestic sales.
12
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibit 27 - Financial Data Schedules (For Information of SEC Only)
13
<PAGE> 14
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 thereunto duly authorized.
NN Ball & Roller, Inc.
------------------------------------------------
(Registrant)
Date: November 11, 1996 /s/ James J. Mitchell
----------------------- ------------------------------------------------
James J. Mitchell, President and Chief Operating
Officer
(Duly Authorized Officer)
Date: November 11, 1996 /s/ Roderick R. Baty
----------------------- ------------------------------------------------
Roderick R. Baty
Chief Financial Officer and
Vice President
(Principal Financial Officer)
(Duly Authorized Officer)
Date: November 11, 1996 /s/ William C. Kelly, Jr.
----------------------- ------------------------------------------------
William C. Kelly, Jr.,
Treasurer, Assistant Secretary and
Chief Accounting Officer
(Principal Accounting Officer)
(Duly Authorized Officer)
14
<PAGE> 15
NN BALL & ROLLER, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements:
Condensed Statements of Income for the three and nine months
ended September 30, 1996 and 1995 2
Condensed Balance Sheets at September 30, 1996 and December 31, 1995 3
Condensed Statements of Changes in Stockholders' Equity
for the nine months ended September 30, 1996 and 1995 4
Condensed Statements of Cash Flows for the nine months
ended September 30, 1996 and 1995 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 14,780
<ALLOWANCES> (115)
<INVENTORY> 11,233
<CURRENT-ASSETS> 26,470
<PP&E> 51,908
<DEPRECIATION> (19,549)
<TOTAL-ASSETS> 58,965
<CURRENT-LIABILITIES> 9,881
<BONDS> 0
0
0
<COMMON> 146
<OTHER-SE> 47,218
<TOTAL-LIABILITY-AND-EQUITY> 47,364
<SALES> 16,558
<TOTAL-REVENUES> 16,558
<CGS> 10,828
<TOTAL-COSTS> 10,828
<OTHER-EXPENSES> 2,089
<LOSS-PROVISION> 115
<INTEREST-EXPENSE> 87
<INCOME-PRETAX> 3,554
<INCOME-TAX> 1,359
<INCOME-CONTINUING> 2,195
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,195
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
</TABLE>
