NS Group Reports Record Annual Results

    Business Editors

    NEWPORT, Ky.--(BUSINESS WIRE)--Feb. 8, 2005--(NYSE:NSS) NS Group, Inc. announced today results for the quarter and year ended December 31, 2004. Net sales for the quarter were $151.2 million, a 24 percent increase over the third quarter of 2004. The company reported operating income of $26.4 million for the quarter compared to $25.5 million in the third quarter of 2004. Net income for the quarter was $24.3 million, or $1.10 per diluted share, down from $24.7 million, or $1.14 per diluted share, in the third quarter of 2004. Comparative results were impacted by a higher effective income tax rate in the fourth quarter versus the third quarter. Comparative per share results were also impacted by an increase in the number of outstanding shares.
    Net sales for the year ended December 31, 2004 were $467.3 million, or an 80 percent increase over the $259.0 million for the year ended December 31, 2003. Operating income for 2004 was a record $79.0 million, compared to an operating loss of $18.2 million for the prior year period. For 2004, the company reported record net income of $74.6 million, or $3.45 per diluted share, compared to a net loss of $17.3 million, or an $0.83 loss per diluted share, in 2003.
    President and CEO, Rene J. Robichaud stated, "We are pleased to report that our 2004 financial results are the best in our company's history. Strong demand for our energy products coupled with relatively low levels of tubular product inventory in the marketplace resulted in an increase in shipments and higher average selling prices for both our seamless and welded energy products. In addition, our employees achieved numerous record performances in safety, productivity, product yield, quality and customer service. I congratulate them on their performance. At December 31, 2004 we had nearly $31.0 million in cash and no borrowings against our $50.0 million credit facility."
    Robichaud went on to say, "The outlook for 2005 continues to be good. Oil and natural gas prices are at relatively high levels. Drilling for oil and natural gas remains strong both domestically and internationally. Total inventories of oil country tubular goods (OCTG) are still at relatively low levels. Imports captured approximately 30 percent of the total U.S. OCTG market in 2004. We expect imports will continue to be a significant factor going forward. The cost of steel coil and scrap should continue at relatively high levels this year. All things considered, demand for our energy tubular products is expected to be strong in 2005."
    The company will host a conference call and simultaneous web cast to discuss fourth quarter and year end 2004 results at 10:00 A.M. ET on Wednesday, February 9, 2005. Details concerning the conference call and web cast are available on the company's web site, www.nsgrouponline.com.
    NS Group, Inc. is a leading producer of seamless and welded tubular products serving the energy industry. These products are used in the drilling, exploration and transmission of oil and natural gas. The company's tubular products are marketed primarily in the United States and certain foreign markets. NS Group is traded on the NYSE under the symbol NSS. To learn more about NS Group log on to www.nsgrouponline.com.
    This report contains forward-looking information with respect to the company's operations and beliefs. Actual results may differ from these forward-looking statements due to numerous factors, including those discussed in the company's filings with the Securities and Exchange Commission. NS Group does not undertake any obligations to update or revise its forward-looking statements.

NS Group, Inc. Summarized Financial Data (Dollars and shares in thousands, except per share and revenue per ton amounts) (Unaudited)

Three Months Ended Year Ended ---------------------------- ------------------- Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31, 2004 2004 2003 2004 2003 --------- --------- -------- --------- ---------

Net sales $151,192 $122,120 $69,026 $467,262 $258,987 Cost of products sold 119,065 92,414 66,750 368,088 262,952 --------- --------- -------- --------- --------- Gross profit (loss) 32,127 29,706 2,276 99,174 (3,965)

Selling, general and administrative 5,740 4,176 2,638 18,260 14,154 Restructuring charges - - 77 1,897 77 --------- --------- -------- --------- --------- Operating income (loss) 26,387 25,530 (439) 79,017 (18,196)

Investment income (loss) 113 37 5 205 (117) Interest expense (203) (197) (316) (1,071) (3,391) Other income, net (256) 212 4,047 (62) 4,206 --------- --------- -------- --------- --------- Income (loss) before income taxes 26,041 25,582 3,297 78,089 (17,498) Provision (benefit) for income taxes 1,765 870 (169) 3,456 (169) --------- --------- -------- --------- --------- Net income (loss) $24,276 $24,712 $3,466 $74,633 $(17,329) ========= ========= ======== ========= =========

Net income (loss) per common share Basic $1.12 $1.17 $0.17 $3.53 $(0.83) ========= ========= ======== ========= ========= Diluted $1.10 $1.14 $0.17 $3.45 $(0.83) ========= ========= ======== ========= =========

Weighted average shares outstanding Basic 21,645 21,160 20,890 21,162 20,774 Diluted 22,162 21,740 20,955 21,638 20,774

Product shipments - tons Welded 64,800 55,000 60,100 240,900 254,500 Seamless 62,100 59,100 46,600 233,600 174,400 --------- --------- -------- --------- --------- 126,900 114,100 106,700 474,500 428,900 Revenue per ton Welded $1,009 $920 $482 $830 $458 Seamless $1,382 $1,210 $860 $1,144 $816

Average rig count 1,249 1,229 1,109 1,192 1,029

Selected Balance Sheet Data: December 31, December 31, 2004 2003 ------------- ------------ Cash and equivalents $30,944 $2,628 Working capital 135,430 45,076 Total assets 265,701 165,860 Shareholders' equity 174,323 88,608

Selected Cash Flow Data (for the year ended December 31):

2004 2003 ------------- ------------ Cash provided (used) by - Operating activities $29,125 $(13,599) Investing activities 3,457 5,040 Financing activities (4,266) (18,170) Depreciation 5,403 6,672 Capital expenditures (3,760) (1,137)

NOTES: 1. During the first quarter of 2004, the Company recorded restructuring charges of $1,897, or $0.09 per share, primarily as the result of an increase in estimated costs to settle operating contracts cancelled in the Company's restructuring of operations in 2001. 2. During the fourth quarter of 2003, the Company recorded income of $4,019, or $0.19 per share, from the receipt of claim settlements with electrode suppliers relating to purchases of electrodes by the Company in prior years. These settlements are recorded in Other income, net. 3. During the fourth quarter of 2003, the Company recorded income of $567, or $0.03 per share, from the receipt of payments under the "Continued Dumping and Subsidy Offset Act of 2000". These recoveries are included in Selling, General & Administrative expense. 4. During the fourth quarter of 2003, the Company recorded a charge of $231, or $0.01 per share, for impairment losses on certain long-lived assets. The charge is recorded to Cost of products sold.

--30--DJL/cl*

CONTACT: NS Group, Inc. Linda A. Pleiman, 859-292-6814 www.nsgrouponline.com

KEYWORD: KENTUCKY OHIO INDUSTRY KEYWORD: OIL/GAS ENVIRONMENT MINING/METALS ENERGY EARNINGS CONFERENCE CALLS SOURCE: NS Group, Inc.

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