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NN, Inc. (Nasdaq: NNBR) today reported its financial results for the first quarter ended March 31, 2006. Net sales for the first quarter of 2006 were $86.0 million, a decrease of 1.0% from $86.7 million for the same period of 2005. Net income for the first quarter of 2006 totaled $5.3 million or $0.30 per diluted share and includes an after-tax gain from the sale of excess land of $1.5 million or $0.08 per diluted share and an after-tax write-off of certain unused equipment of $667,000 or $0.04 per diluted share. This compares to net income of $4.0 million, or $0.23 per diluted share for the first quarter of 2005.
James H. Dorton, Vice President and Chief Financial Officer commented, revenues of $86.0 million in the first quarter of 2006 were down slightly from $86.7 million recorded in the first quarter of the prior year. Increases in volume and mix of approximately $1.6 million as well as selling price increases related to material cost pass through of approximately $2.8 million were offset by the negative result of currency translation of $5.1 million.
As a percentage of net sales, 2006 first quarter cost of goods sold was 76.7% of net sales as compared to the 2005 first quarter cost of goods sold of 78.0%. Our Level 3 initiatives made a major contribution to this margin improvement. As a percentage of net sales, selling, general and administrative expenses for the first quarter of 2006 was 8.9% as compared to 8.6% for the same period in 2005. This increase was mainly due to stock compensation related expenses.
Mr. Dorton continued, our reported net income of $5.3 million or $0.30 per diluted share includes a net gain of approximately $784,000 or $0.04 per diluted share comprised of an after-tax gain from the sale of excess land located at our Pinerolo, Italy facility of $1.5 million or $0.08 per diluted share and offsetting this gain, the write-off of certain unused and obsolete equipment of $667,000 or $0.04 per diluted share, after-tax.
Due to the proceeds realized from the sale of this land, we were able to pay down debt during the quarter by $3.2 million. We anticipate reducing debt by approximately $10 million for the full year. This assumes fully funding the previously announced stock repurchase plan up to $10 million and excludes the impact of any potential new acquisitions that may occur during 2006.
Mr. Dorton concluded, during the quarter we purchased 20,474 shares under our recently announced stock repurchase program. This program allows for the purchase of up to $10.0 million of the Company outstanding stock which commenced in mid March of 2006 and will continue for 18 months thereafter.
Roderick R. Baty, Chairman and Chief Executive Officer commented, We are very pleased with the financial results for the first quarter of 2006. Each of our business units contributed positively to the excellent operating results. Our Level 3 program continues to play a major role in achieving significant improvements in cost reductions and operating efficiencies. The cost savings realized by this program have allowed us to offset substantially higher energy costs in our global operations as well as start-up expenses associated with our new facility in China.
Mr. Baty concluded, we look forward to both the challenges and the opportunities for the remainder of 2006. As I previously stated in our 2005 fourth quarter earnings release, we are forecasting relatively flat economic conditions in the U.S. and Europe for 2006, therefore our guidance for the total year remains unchanged with estimated total year revenues at approximately $325 million and full year earnings to be in the range of $0.86 to $0.92 per diluted share.
| Product Model | Inside Diameter | Outside Diameter | Thickness |
| 10N07 bearing | 27.76 | 39.1 | |
| 09N03 bearing | 23.62 | 32.66 |