UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT FOR ISSUERS SUBJECT TO THE
1934 REPORTING REQUIREMENTS
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 6, 1999
NN BALL & ROLLER, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-23485 62-1096725
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification Number)
800 Tennessee Road, Erwin, Tennessee 37650
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(Registrant's telephone number, including area code) (423) 743-9151
None
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
INFORMATION TO BE INCLUDED IN REPORT
Page
No.
Item 7. Financial Statements
(a) Historical Financial Statements of Industrial Molding Inc.
Independent Auditors' Report 1
Historical Financial Statements for the Years Ended January 2, 1999
and January 3, 1998 2
(b) Unaudited Pro Forma Consolidated Financial Information
Unaudited Pro Forma Consolidated Financial Statements: 14
NN Ball & Roller, Inc. Unaudited Pro Forma Consolidated Balance
Sheet as of June 30, 1999 15
Notes to Unaudited Pro Forma Consolidated Balance Sheet 16
NN Ball & Roller, Inc. Pro Forma Consolidated Statement of
Operations for the Twelve Months Ended December 31, 1998 17
Notes to Unaudited Pro Forma Consolidated Statement of Operations 18
NN Ball & Roller, Inc. Pro Forma Consolidated Statement of
Operations For the Six Months Ended June 30, 1999 19
Notes to Unuadited Pro Forma Consolidated Statement of Operations 20
Signatures 21
<PAGE>
INDUSTRIAL MOLDING
(a division of Industrial Molding Corporation)
Financial Statements
January 2, 1999 and January 3, 1998
(With Independent Auditors' Report Thereon)
<PAGE>
Independent Auditors' Report
The Boards of Directors
NN Ball & Roller, Inc., and
Industrial Molding Corporation:
We have audited the accompanying balance sheets of Industrial Molding (a
division of Industrial Molding Corporation) as of January 2, 1999 and January 3,
1998, and the related statements of operations, divisional equity and cash flows
for the years then ended. These financial statements are the responsibility of
the management of Industrial Molding. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Industrial Molding (a division
of Industrial Molding Corporation) as of January 2, 1999 and January 3, 1998,
and the results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
September 3, 1999
1
<PAGE>
<TABLE>
<CAPTION>
INDUSTRIAL MOLDING
(a division of Industrial Molding Corporation)
Balance Sheets
January 2, January 3,
Assets 1999 1998
- ------ ---- ----
<S> <C> <C>
Current assets:
Cash $ 2,100 2,100
Trade accounts receivable, less allowance for doubtful
accounts and returns of $160,461 in 1998 and
$29,088 in 1997 4,340,285 4,379,034
Inventories 2,823,088 2,491,233
Prepaid expenses 77,431 39,744
------ ------
Total current assets 7,248,904 6,912,111
Property, plant and equipment, net 8,559,761 8,729,169
Note receivable less current portion -- 684,953
Other assets, net 791,492 797,843
------- -------
$ 16,600,157 17,124,076
============= ==========
Liabilities and Divisional Equity
Current liabilities:
Note payable $ 759,384 799,789
Current maturities of long-term debt 1,197,425 1,900,841
Due to affiliate 2,268,668 --
Accounts payable 858,188 623,873
Accrued expenses 1,412,122 1,778,438
Deferred revenue 144,100 196,168
------- -------
Total current liabilities 6,639,887 5,299,109
Long-term debt, less current maturities 3,249,010 5,983,195
--------- ---------
Total liabilities 9,888,897 11,282,304
--------- ----------
Divisional equity 6,711,260 5,841,772
Commitments and contingencies
$ 16,600,157 17,124,076
============= ==========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
INDUSTRIAL MOLDING
(a division of Industrial Molding Corporation)
Statements of Operations
Years ended January 2, 1999 and January 3, 1998
January 2, January 3,
1999 1998
---------------- ---------------
<S> <C> <C>
Net sales $ 28,005,418 26,777,147
Cost of goods sold 22,858,626 21,999,511
---------------- ---------------
Gross profit 5,146,792 4,777,636
---------------- ---------------
Operating expenses:
Selling expenses 961,238 858,232
General and administrative expenses 3,325,997 2,401,721
---------------- ---------------
4,287,235 3,259,953
---------------- ---------------
Operating income 859,557 1,517,683
---------------- ---------------
Other income (expense):
Interest expense (531,135) (816,448)
Interest income 27,421 37,975
Other, net 186,437 198,469
Litigation settlements, net 977,928 (511,601)
Gain (loss) on disposal of property, plant and equipment (186,925) 97,698
---------------- ---------------
473,726 (993,907)
---------------- ---------------
Net income $ 1,333,283 523,776
================ ===============
See accompanying notes to financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
INDUSTRIAL MOLDING
(a division of Industrial Molding Corporation)
Statements of Divisional Equity
Years ended January 2, 1999 and January 3, 1998
<S> <C>
Balance at
December 28, 1996 $ 6,279,380
Net income 523,776
Distributions to parent and affiliates, net (961,384)
--------
Balance at
January 3, 1998 5,841,772
Net income 1,333,283
Distributions to parent, net (463,795)
--------
Balance at
January 2, 1999 $ 6,711,260
==========
See accompanying notes to financial statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
INDUSTRIAL MOLDING
(a division of Industrial Molding Corporation)
Statements of Cash Flows
Years ended January 2, 1999 and January 3, 1998
<S> <C> <C>
January 2, January 3,
1999 1998
---- ----
Cash flows from operating activities:
Net income $ 1,333,283 523,776
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,599,822 1,466,457
Bad debt expense 677,160 --
(Gain) loss on disposal of property, plant and equipment 186,925 (97,698)
Changes in operating assets and liabilities:
Increase in trade accounts receivable (13,411) (979,743)
Increase in note receivable (65,047) (148,813)
Increase in inventories (337,855) (120,167)
Increase in prepaid expenses (37,687) 55,497
Decrease in other assets 131,351 --
Increase (decrease) in accounts payable 234,315 (58,354)
(Decrease) increase in accrued expenses (366,316) 674,315
Decrease in deferred revenue (52,068) (92,640)
-------- ------
Net cash provided by operating activities 3,290,472 1,222,630
--------- ---------
Cash flows from investing activities:
Acquisition of property, plant and equipment (1,752,839) (964,256)
Proceeds from sales of property, plant and equipment 135,500 354,500
------- -------
Net cash used in investing activities (1,617,339) (609,756)
---------- --------
Cash flows from financing activities:
(Repayments) proceeds from long-term debt, net (3,437,601) 107,542
Payments on note payable (40,405) --
Additions from affiliate, net 2,268,668 --
Distributions to Parent, net (463,795) (961,384)
-------- --------
Net cash used in financing activities (1,673,133) (853,842)
---------- --------
Net decrease in cash -- (240,968)
Cash at beginning of year 2,100 243,068
----- -------
Cash at end of year $ 2,100 2,100
============= ====
Supplemental Disclosure of Cash Flow Information:
Interest paid during the year $ 537,432 903,116
============= =======
See accompanying notes to financial statements.
</TABLE>
5
<PAGE>
INDUSTRIAL MOLDING
(a division of Industrial Molding Corporation)
Notes to Financial Statements
January 2, 1999 and January 3, 1998
(1) Summary of Significant Accounting Policies
(a) Organization and Nature of Business
Industrial Molding (a division of Industrial Molding Corporation)
("Division") operates as a division of Industrial Molding
Corporation ("IM") and has no separate legal status or existence.
The Division is engaged in the manufacturing and sale of custom
injection molded products primarily for the automotive,
industrial, and consumer products industries. The Division's raw
materials are readily available and the Division is not dependent
on a single or small group of suppliers.
(b) Basis of Presentation
The accompanying financial statements have been prepared utilizing
the accounting records of IM, segregating accounts attributable
to the Division. Certain allocations of debt and related interest
expense are discussed in note 7 and allocation of general and
administrative expenses which are discussed below.
During 1998, an allocation of general and administrative expenses
was not necessary as the affiliate performed their own corporate
and administrative services.
During 1997, the Division provided certain corporate and
administrative services to an affiliate owned by IM. Costs of
approximately $345,000 relating to certain employees that provided
services to the affiliate are, therefore, not included in general
and administrative expenses. Management of the Division determined
the allocation by estimating the amount of time devoted by these
employees to the affiliate.
(c) Inventories
Inventories are stated at the lower of cost (first-in, first-out
method) or market value.
(d) Property, Plant and Equipment
Property, plant and equipment are stated at cost and depreciated
over the estimated useful lives of the respective assets on a
straight-line basis. Upon sale or retirement, the related cost and
accumulated depreciation are eliminated from the accounts and
gains and losses are recognized in income. Repairs and maintenance
which do not extend the lives or improve the respective assets are
charged to expense as incurred.
(e) Intangible Assets
The cost of intangible assets (primarily non-compete agreement) is
being amortized on a straight-line basis over the estimated useful
lives of such assets. The cost of such assets, net of the related
accumulated amortization, is included in other assets in the
accompanying financial statements.
(Continued)
6
<PAGE>
INDUSTRIAL MOLDING
(a division of Industrial Molding Corporation)
Notes to Financial Statements
Years ended January 2, 1999 and January 3, 1998
(f) Federal Income Taxes
The Division is included in the federal income tax return of IMC.
IMC has elected by unanimous consent of its stockholders to be
taxed under the provisions of Subchapter S of the Internal Revenue
Code. Under those provisions, IMC is not taxed on its net income.
Instead, the stockholders include their respective portions of
IMC's net income in their federal income tax returns.
Consequently, no provision for Federal income taxes has been made
in the Division's financial statements.
(g) Revenue Recognition
The Division recognizes revenue from product sales as they are
shipped. The Division occasionally receives advance payments from
its customers prior to the time that the product is completed.
These amounts are reflected as deferred revenue in the
accompanying balance sheet.
(h) Fiscal Year End
The Division prepares its financial statements and reports its
results of operations on the basis of a fiscal year which ends on
the Saturday nearest December 31. Accordingly, the fiscal years
ended January 2, 1999 and January 3, 1998, consisted of 52 weeks
and 53 weeks, respectively.
(i) Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed of The Division reviews long-lived assets and certain
identifiable intangibles for impairment whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Recoverability of assets to be held
and used is measured by a comparison of the carrying amount of an
asset to future net cash flows expected to be generated by the
asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceeds the fair value of the
assets. Assets to be disposed of are reported at the lower of the
carrying amount or fair value less costs to sell.
(j) Use of Estimates
Management of the Division has made a number of estimates and
assumptions relating to the reporting of assets and liabilities
and operations and the disclosure of contingent assets and
liabilities to prepare these financial statements in conformity
with generally accepted accounting principles. Actual results
could differ from those estimates.
7
<PAGE>
INDUSTRIAL MOLDING
(a division of Industrial Molding Corporation)
Notes to Financial Statements
Years ended January 2, 1999 and January 3, 1998
(2) Inventories
-----------
Inventories consist of the following at January 2, 1999 and January 3,
1998:
1998 1997
----------------- ------------------
Raw materials $ 1,013,566 910,192
Work in progress 245,160 151,526
Finished goods 1,570,362 1,429,515
================= ==================
$ 2,829,088 2,491,233
================= ==================
(3) Property, Plant and Equipment
-----------------------------
Property, plant and equipment consist of the following at January 2, 1999
and January 3, 1998:
1998 1997
--------------- ------------------
Land $ 481,940 481,940
Buildings 5,164,371 5,077,122
Machinery and equipment 13,994,404 12,972,679
Office furniture and equipment 1,906,106 1,647,242
Construction in progress 127,823 270,074
--------------- ------------------
21,674,644 20,449,057
Accumulated depreciation
and amortization (13,114,883) (11,719,888)
--------------- ------------------
$ 8,559,761 8,729,169
=============== ==================
(4) Other Assets
------------
Other assets consist of the following at January 2, 1999 and January 3,
1998:
1998 1997
----------------- ------------------
Non-compete agreement (note 5) $ 799,789 799,789
Other 125,000 17,097
----------------- ------------------
924,789 816,886
Accumulated amortization (133,297) (19,043)
---------------- ------------------
$ 810,535 816,886
================= ==================
During 1998, the Division exchanged a $750,000 note receivable for a
$125,000 investment in a private company. The transaction resulted in bad
debt expense of $625,000, which is included in general and administrative
expenses in the accompanying statements of operations.
(Continued)
8
<PAGE>
INDUSTRIAL MOLDING
(a division of Industrial Molding Corporation)
Notes to Financial Statements
Years ended January 2, 1999 and January 3, 1998
(5) Note Payable and Non Compete Agreement
--------------------------------------
In 1997, the Division issued a $799,789 unsecured note payable to a
former officer in exchange for a seven year non-compete agreement (note
4), which was considered a noncash investing activity. The note is
payable upon demand or if no demand, in semi-monthly installments at the
annual rate of $50,000 including interest at the Division's average
borrowing rate (8.23% at January 2, 1999). At January 2, 1999 and January
3, 1998, the Division owed the former officer $759,384 and $799,789,
respectively. During 1998, the Company made payments of approximately
$108,000 of which interest represented approximately $68,000. The
Division made no payments in 1997.
(6) Accrued Expenses
----------------
Accrued expenses consist of the following at January 2, 1999 and January
3, 1998:
1998 1997
----------------- ------------------
Litigation $ 412,560 864,456
Other 999,562 913,982
================= ==================
$ 1,412,122 1,778,438
================= ==================
(Continued)
9
<PAGE>
INDUSTRIAL MOLDING
(a division of Industrial Molding Corporation)
Notes to Financial Statements
Years ended January 2, 1999 and January 3, 1998
(7) Long-term Debt
--------------
The long-term debt of IMC consists of the following at January 2, 1999
and January 3, 1998:
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
----------------- ------------------
Revolving line of credit with a bank secured by accounts $ 600,000 1,302,000
receivable, inventory and property, plant and equipment
(maximum limit of $12,000,000), due on December 31, 1999
with interest payable monthly at prime (7.75% as of January 2, 1999)
Notes payable to a bank secured by accounts 4,901,565 6,522,006
receivable, inventory and equipment, payable in
monthly installments including interest at prime
plus .5% (8.25% as of January 2, 1999)
through July 31, 2001
Notes payable to a bank secured by certain real 4,321,415 4,499,418
estate, due in monthly installments including
interest at prime plus .5% (8.25% as of
January 2, 1999) through September 20, 2011
Notes payable to a bank secured by accounts 1,087,206 1,390,612
receivable, inventory and equipment, due in
60 monthly installments through July 31, 2002 including
interest at prime plus .5% (8.25% as
of January 2, 1999)
Notes payable to a bank secured by accounts
receivable, inventory and equipment, due in
60 monthly installments through July 31, 2003 including
interest at prime plus .5% (8.25% at January 2, 1999) 1,718,351 495,000
---------------- -----------------
12,628,537 14,209,036
Less portion allocated to affiliate (8,182,102) (6,325,000)
----------------- ------------------
Long-term debt allocated to Division 4,446,435 7,884,036
Less current portion (1,197,425) (1,900,841)
----------------- ------------------
$ 3,249,010 5,983,195
================= ==================
</TABLE>
All debt is incurred by IMC and allocated to the two divisions. The debt
allocated to the Division at January 2, 1999, is based on the January 3,
1998 balance adjusted for the actual 1998 borrowings and payments made by
the Division. Management of IMC allocated the January 3, 1998 debt to the
Division based on reviewing the debt and the related collateral. The
December 28, 1996 debt balance was allocated based on the percentages
used for the January 3, 1998 allocation.
10
<PAGE>
INDUSTRIAL MOLDING
Notes to Financial Statements
Statements of Cash Flows
Years ended January 2, 1999 and January 3, 1998
During 1998, interest expense was allocated based on allocated balances.
The 1997 interest expense was allocated using the weighted average
allocated debt balances at January 3, 1998 and December 28, 1996. The
total interest expense for 1998 and 1997 was $1,466,797 and $1,593,737,
respectively, of which $531,135 and $816,448, respectively, was allocated
to the Division.
The line of credit and notes payable to a bank are guaranteed by IMC
stockholders and include various affirmative and negative covenants
relating primarily to certain financial ratios, net worth levels and
incurrence of additional debt. IMC was in compliance with all covenants
at January 2, 1999, except for tangible net worth for which they received
a waiver from the bank.
In July 1999, the revolving line of credit and all the bank notes payable
for the Division, were paid in full (note 13).
(8) Profit Sharing Plan
-------------------
IMC has established an employee defined contribution profit sharing plan
covering substantially all employees. In September 1998, the plan was
restated and amended to change the completed employment eligibility
requirement from one year to six months and the IMC began making a
matching contribution equal to 25% of employee contributions up to 6% of
their eligible earnings. In addition to the matching contribution, IMC
may make a discretionary contribution each plan year. Contributions by
the IMC for the years ended January 2, 1999 and January 3, 1998, totaled
$35,740 and $0, respectively, and plan expenses paid by IMC during the
period were approximately $12,000 and $0, respectively. The Division's
allocated portion during 1998 for the contributions and plan expenses
were $29,837 and $12,000, respectively.
(9) Commitments and Contingencies
-----------------------------
(a) Litigation
During 1997, the Division received a favorable settlement in the
amount of approximately $353,000, and the Division received two
unfavorable judgements aggregating approximately $865,000. The
Division appealed both unfavorable judgements and in 1998 both
lawsuits were settled aggregating approximately $413,000. In
addition, the Division received approximately $525,000 in
connection with two favorable settlements during 1998.
(b) Self-Insurance
IMC is self-insured for medical and dental benefits for its
employees and their covered dependents. Medical claims exceeding
$25,000 per covered individual are covered through a private
insurance carrier. In addition, the private insurance carrier also
provides for amounts over an aggregate as defined by the policies.
11
<PAGE>
INDUSTRIAL MOLDING
(a division of Industrial Molding Corporation)
Notes to Financial Statements
Years ended January 2, 1999 and January 3, 1998
The Division's portion of unpaid claims filed and an estimate of
its incurred but not reported claims for medical and dental
expenses existing at January 2, 1999 and January 3, 1998 have been
recorded as accrued expenses in the accompanying financial
statements in the amount of $100,928 and $120,219, respectively.
(10) Operating Lease
The Division has several noncancelable operating leases primarily for
buildings and equipment. Rent expense for 1998 and 1997 was approximately
$76,000 and $66,000, respectively, related to these leases. Future
minimum lease payments under noncancelable operating leases (with initial
or remaining lease terms in excess of one year) as of January 2, 1999
are:
1999 $ 48,840
2000 18,435
2001 4,500
-----------------
$ 71,775
=================
(11) Related Party Transactions
During 1998 and 1997, net sales includes sales to an affiliate owned by
IMC. Sales to the affiliate during 1997 were at the Division's cost. On
January 4, 1998, the Division entered into a long-term supply agreement
with the affiliate to provide products at negotiated prices that include
mark-ups.
Net sales to the affiliate and related cost of goods sold for the years
ended January 2, 1999 and January 3, 1998, and the related accounts
receivable at January 2, 1999 and January 3, 1998 from this affiliate
were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
----------------- ------------------
Net sales $ 6,266,073 4,343,942
Cost of goods sold 3,284,729 4,343,942
----------------- ------------------
Gross profit $ 2,981,344 --
================= ==================
Accounts receivable from affiliate $ 1,063,919 --
================= ==================
In 1998, the affiliate advanced $2,268,668 to the Division.
</TABLE>
(12) Major Customer
--------------
Sales to an unrelated customer aggregated approximately 12% and 14% of
net sales during 1998 and 1997, respectively. Accounts receivable from
this customer was approximately $427,000 and $1,074,000 at January 2,
1999 and January 3, 1998, respectively.
(Continued)
12
<PAGE>
INDUSTRIAL MOLDING
(a division of Industrial Molding Corporation)
Notes to Financial Statements
Years ended January 2, 1999 and January 3, 1998
(13) Subsequent Event
----------------
On July 4, 1999, according to the terms of a asset purchase agreement,
IMC sold all the assets of the Division to NN Ball & Roller, Inc. In
addition, NN Ball & Roller, Inc. also assumed certain Division trade
payables and accrued liabilities.
13
<PAGE>
NN Ball & Roller, Inc.
Unaudited Pro Forma Consolidated Financial Statements
The following unaudited pro forma consolidated financial information of NN Ball
& Roller, Inc. (the "Company") is based on the historical financial statements
of the Company, adjusted to give pro forma effect to the acquisition of certain
assets of Industrial Molding, a division of Industrial Molding Corporation
("IM").
The unaudited pro forma consolidated balance sheet as of June 30, 1999 gives
effect to the IM acquisition as if it occurred June 30, 1999. The unaudited pro
forma consolidated statements of Income and Comprehensive Income for the year
ended December 31, 1998 and the six months ended June 30, 1999 give effect to
the acquisition as if it had occcurred on January 1, 1998. The unaudited pro
forma adjustments are based upon available information and certain assumptions
that the Company believes are reasonable under the circumstances. The unaudited
pro forma consolidated financial statements do not purport to represent what the
Company's results of operations or financial condition would actually have been
had the acquisition in fact had occurred on such dates, nor do they purport to
project the Company's results of operations or financial condition for any
future period or date. The information set forth below should be read in
conjunction with the historical financial statements of IMC for the years ended
January 2, 1999 and January 3, 1998 (contained herein), Company's unaudited
consolidated financial statements and notes thereto as of and for the six months
ended June 30, 1999 (which are contained in the Company's Form 10-Q for the six
months ended June 30, 1999), and the audited consolidated financial statements
and notes thereto as of December 31, 1998 and 1997 and for the three years
December 31, 1997 (which are contained in the Company's Anuual Report on Form
10-K).
The acquisition of certain assets of IM has been accounted for as a purchase.
Under purchase accounting, the total purchase price and fair value of
liabilities assumed are allocated to the tangible assets of the Company based
upon their respective fair values as of the purchase date in accordance with
Accounting Principles Board Opinion No. 16. A preliminary allocation of the
purchase price of the IM acquistion has been made in the accompanying unaudited
pro forma consolidated financial statements based upon Company estimates. The
actual allocation of the purchase cost and the resulting effect on income from
operations may differ from the pro forma amounts included therein; however, the
Company does not expect the final allocation to differ materially from the
preliminary allocation.
14
<PAGE>
<TABLE>
<CAPTION>
NN Ball & Roller Inc.
Unaudited Pro Forma Consolidated Balance Sheet
As Of June 30, 1999
(In Thousands)
<S> <C> <C> <C> <C>
Industrial
Actual Molding(a) Adjustments (b) Pro Forma
------------- ------------------- ------------------- --------------
Assets
Current assets:
Cash $5,449 $(5,449) $ --
Accounts receivable, net 13,946 $5,899 19,845
Inventories, net 10,371 3,818 14,189
Other current assets 1,248 86 1,334
------------- --------------
Total current assets 31,014 35,368
Property, plant and equipment, net 36,010 8,503 44,513
Goodwill -- 13,005 13,005
Other -- 754 754
============= ==============
Total assets $ 67,024 $ 93,640
============= ==============
Liabilities and stockholders' equity
Current liabilities
Accounts payable - trade $ 4,050 923 $ 4,973
Accrued expenses 2,691 1,205 3,896
Deferred income 705 162 867
Income taxes payable 334 334
------------- --------------
Total current liabilities 7,780 10,070
Deferred income taxes 2,980 2,980
Long-term debt, less current maturities -- 21,826 21,826
------------- --------------
Total liabilities 10,760 34,876
Stockholders' equity:
Common stock 149 4 153
Additional paid-in capital 27,902 2,496 30,398
Retained earnings 29,615 29,615
Other comprehensive income (1,402) (1,402)
------------- --------------
Total stock equity 56,264 58,764
------------- --------------
Total liabilities and stockholders' equity $ 67,024 $ 93,640
============= ==============
</TABLE>
See Notes to Unaudited Pro Forma Consolidated
15
<PAGE>
Balance Sheet NN Ball & Roller, Inc.
Notes to Unaudited Pro Forma
Consolidated Balance Sheet
(a) Reflects the IM assets purchased and liabilities assumed, recorded at
historical cost, by the Company from the IM acquistion as if the
acquisition occurred on June 30, 1999.
(b) Reflects the Company's payment for the net assets acquired from IM.
The Company paid $27.3 million in cash and issued 440,038 shares of its
common stock in consideration for the net assets of IM. The total
consideration for the acquisition is approximately $29.8 million. The
Company financed the acquisition by drawing down an existing line of
credit with First American National Bank.
16
<PAGE>
<TABLE>
<CAPTION>
NN Ball & Roller, Inc.
Statements of Income and Comprehensive Income
For The Twelve Months Ended December 31, 1998
(In Thousands Except Per Share Data)
Industrial
Actual Molding (a) Adjustments Pro Forma
-------------- ------------------ ---------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 73,006 $ 28,129 $ 101,135
Cost of products sold 50,353 22,853 $ (1,429 (b)) 71,777
-------------- ------------------ --------------
Gross profit 22,653 5,276 29,358
Selling, general and administrative expenses 5,896 4,869 (222) (b) 10,543
Depreciation and amortization 4,557 -- 2,364 (b) 6,921
-------------- ------------------ --------------
Income from operations 12,200 407 11,894
Interest expense 64 -- 1,311 (c) 1,375
-------------- ------------------ --------------
Income before provision for income taxes 12,136 407 10,519
Provision for income taxes 4,480 -- (598) (d) 3,882
-------------- ------------------ --------------
Net income $ 7,656 $ 407 6,637
-------------- ------------------ --------------
Other comprehensive income:
Foreign currency translation 352 -- 352
-------------- ------------------ --------------
Other comprehensive income 352 -- 352
-------------- ------------------ --------------
Comprehensive income $ 8,008 $ 407 $ 6,989
============== ================== ==============
Net income per share $ 0.52 $ -- $ 0.44
============== ================== ==============
Shares outstanding 14,804 -- 440 (e) 15,244
============== ================== ==============
Net income per share - assuming dilution $ 052 $ -- $ 0.44
============== ================== ==============
Shares outstanding 14,804 -- 440 (e) 15,244
============== ================== ==============
</TABLE>
See Notes to Unaudited Pro Forma Statements of Income and Comprehensive Income
17
<PAGE>
NN Ball & Roller, Inc.
Notes to Unaudited Pro Forma
Statements of Income and Comprehensive Income
(a) Represents the historical results for IM for the twelve month period ended
January 2, 1999.
(b) Reflects the reclassification of IM's depreciation expense for consistency
with the presentation of the Company's financial statements for the year
ended December 31, 1998 and the amortization of intangible assets incurred
in conjunction with the IM acquisition over a period of 20 years.
(c) Represents interest expense incurred in connection with additional
borrowings outstanding which were used to finance the IM acquisition.
These additional borrowings were made under the Company's existing bank
facility with First American Bank at an interest rate of 6%.
(d) Reflects federal and state taxes applied to IM and to adjustments at a
rate of 37%. Prior to the acquisition Industrial Molding Corporation
was a S corporation and not subject to federal taxes.
(e) Represents shares issued in conjunction with the acquisition of IM.
18
<PAGE>
<TABLE>
<CAPTION>
NN Ball & Roller, Inc.
Statements of Income and Comprehensive Income
For The Six Months Ended June 30, 1999
(In Thousands Except Per Share Data)
Industrial
Molding
Actual Corporation (a) Adjustments Pro Forma
-------------- -------------------- --------------- --------------
<S> <C> <C> <C> <C>
Net sales $35,387 $ 16,267 $ 51,654
Cost of products sold 25,114 12,180 $ (411) (b) 36,883
-------------- -------------------- --------------
Gross profit 10,273 4,087 14,771
Selling, general and administrative expenses 2,245 2,755 (58) (b) 4,942
Depreciation and amortization 2,475 -- 1,190 (b) 3,665
-------------- -------------------- --------------
Income from operations 5,553 1,332 6,164
Interest expense 9 -- 637 (c) 646
-------------- -------------------- --------------
Income before provision for income taxes 5,544 1,332 5,518
Provision for income taxes 1,867 -- 175 (d) 2,042
-------------- -------------------- --------------
Net income $ 3,677 $ 1,332 $ 3,476
-------------- -------------------- --------------
Other comprehensive income:
Foreign currency translation (1,287) -- (1,287)
-------------- -------------------- --------------
Other comprehensive income (1,287) -- (1,287)
-------------- -------------------- --------------
Comprehensive income $ 2,390 $ 1,332 $2,189
============== ==================== ==============
Net income per share $ 0.25 $ -- $ 0.23
============== ==================== ==============
Shares outstanding 14,804 -- 440 (e) 15,244
============== ==================== ==============
Net income per share - assuming dilution $ 0.25 $ -- $ 0.23
============== ==================== ==============
Shares outstanding 14,811 -- 440 (e) 15,244
============== ==================== ==============
</TABLE>
See Notes to Unaudited Pro Forma Statements of Income and Comprehensive Income
19
<PAGE>
NN Ball & Roller, Inc.
Notes to Unaudited Pro Forma
Statements of Income and Comprehensive Income
(a) Represents the historical results for IM for the six month period ended
July 3, 1999.
(b) Reflects the reclassification of IM's depreciation expense for consistency
with the presentation of the Company's financial statements for the six
months ended June 30, 1999 and the amortization of intangible assets
incurred in conjunction with the IM acquisition over a period of 20 years.
(c) Represents interest expense incurred in connection with additional
borrowings outstanding which were used to finance the IM acquisition.
These additional borrowings were made under the Company's existing bank
facility with First American Bank at an interest rate of 6%.
(d) Reflects federal and state taxes applied to IM and to adjustments at a
rate of 37%. Prior to the acquisition Industrial Molding Corporation was
a S corporation and not subject to federal taxes.
(e) Represents shares issued in conjunction with the acquisition of IM.
20
<PAGE>
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.
(Registrant)
Date: /s/ William C. Kelly, Jr.
William C. Kelly, Jr.
Chief Accounting Officer
21
