Form 10-Q/A

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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-Q/A

|X|  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                  For the quarterly period ended June 30, 2003


                                       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, 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)

                             2000 Waters Edge Drive
                              Building C, Suite 12
                          Johnson City, Tennessee 37604
          (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 | |

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).     Yes |X|   No |_|

As of August 13, 2003 there were 16,652,407 shares of the registrant's common
stock, par value $0.01 per share, outstanding.

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                                    NN, Inc.
                                      INDEX


                                                                                                   Page No.
Explanatory Statement                                                                                 2

Part I. Financial Information

Item 1.  Financial Statements:

         Consolidated Statements of Income and Comprehensive Income for the
            three months ended June 30, 2003 and June 30, 2002 and sixmonths
            ended June 30, 2003 and 2002 (unaudited) (restated)
              3

         Condensed Consolidated Balance Sheets at June 30, 2003 and December 31, 2002 (unaudited)
            (restated)                                                                                4

         Consolidated Statements of Changes in Stockholders' Equity for the six
            months ended June 30, 2003 and 2002 (unaudited) (restated)                                5

         Consolidated Statements of Cash Flows for the six months ended
            June 30, 2003 (restated) and 2002 (unaudited)                                            6

         Notes to Consolidated Financial Statements (unaudited)                                      7

Item 2.  Management's Discussion and Analysis of Financial
            Condition and Results of Operations                                                      19

Item 3.  Quantitative and Qualitative Disclosures about Market Risk                                  30

Item 4.  Controls and Procedures                                                                     31

Part II. Other Information                                                                           32

Item 1.  Legal Proceedings                                                                           32

Item 2.  Changes in Securities and Use of Proceeds                                                   32

Item 3.  Defaults Upon Senior Securities                                                             32

Item 4.  Submission of Matters to a Vote of Security Holders                                         32

Item 5.  Other Information                                                                           32

Item 6.  Exhibits and Reports on Form 8-K                                                            32

Signatures                                                                                           35




                                       1






                              Explanatory Statement

This Amendment on Form 10-Q/A amends the Registrant's Quarterly Report on Form
10-Q for the three and six month periods ended June 30, 2003 and 2002, and
is being filed solely to amend the financial reporting of certain transactions
related to the formation of NN Euroball, ApS ("Euroball") on July 31, 2000, and
the subsequent purchase on December 20, 2002 of the 23% interest in Euroball
held by FAG Kugelfischer George Schaefer AG, which was subsequently acquired by
INA - Schaeffler KG (collectively, "INA/FAG") and on May 2, 2003 of the 23%
interest in Euroball held by AB SKF ("SKF"). These restatements had no material
effect on the Company's reported net sales, gross profit, income from operations
or cash flows for the three month and six month periods ended June 30, 2003 and
June 30, 2002.

We have revised the valuation of the original purchase price associated with the
formation of Euroball in July 2000. This revision resulted in a reduction of
goodwill of approximately 4.1 million Euro ($3.8 million). Further, we have
increased stockholders' equity by approximately 10.0 million Euro ($9.3
million) to reflect the amount by which the Company's proportionate interest in
Euroball exceeded the book value of the net assets exchanged by the Company. As
a result of these two adjustments, minority interest in consolidated
subsidiaries has been reduced by approximately $7.4 million at December 31,
2002, goodwill has been reduced $4.7 million and $4.3 million at June 30, 2003
and December 31, 2002, respectively, and paid-in-capital increased $9.3 million
at June 30, 2003 and December 31, 2002, respectively, from amounts previously
reported. Comprehensive income has also been restated for foreign currency
translation effects of these adjustments.

In the previously issued December 31, 2002 and June 30, 2003 Consolidated
Financial Statements, when the Company acquired the 23% interest in Euroball
held by INA/FAG in December 2002 and the 23% interest in Euroball held by SKF in
May 2003, the excess of minority interest in consolidated subsidiaries in
Euroball over the purchase price was recorded as a non-taxable gain in the
amount of approximately $5.9 million and $6.6 million, respectively. As restated
in the accompanying Consolidated Financial Statements, the non-taxable gains
have been excluded and the excess of the purchase price over the fair value of
INA/FAG's 23% interest and SKF's 23% interest in the net assets of Euroball was
allocated to goodwill. The resulting impact to the Consolidated Financial
Statements is an increase to goodwill of approximately $1.5 million and $3.7
million, a decrease in retained earnings of approximately $5.9 million and $12.5
million as of December 31, 2002 and June 30, 2003, respectively, and reversal of
the $6.6 million gain previously recorded in the Consolidated Financial
Statements of Income and Comprehensive Income for the three and six months ended
June 30, 2003.

Additionally, the Company has reclassified minority interest in consolidated
subsidiaries from a component of total liabilities to a separate line item in
the Condensed Consolidated Balance Sheets at June 30, 2003 and December 31,
2002.

Items amended include Item 1 and Item 2. In addition, in connection with the
filing of this Amendment and pursuant to the rules of the Securities and
Exchange Commission, the Registrant is including with this Amendment certain
currently dated certifications. Other than those described in Note 1 to the
Consolidated Financial Statements, no other material changes have been made to
this Quarterly Report on Form 10-Q/A. This Form 10-Q/A does not modify or update
the disclosure contained in the Quarterly Report in any way other than as
required to reflect the amendments discussed above.

                                       2




                          PART I. FINANCIAL INFORMATION

                                    NN, Inc.
           Consolidated Statements of Income and Comprehensive Income
                                   (Unaudited)

                                                             Three Months Ended                Six Months Ended
                                                                  June 30,                         June 30,

Thousands of Dollars, Except Per Share Data              Restated          Restated         Restated         Restated
                                                           2003              2002             2003             2002
------------------------------------------------------ --------------    -------------    -------------    -------------
Net sales                                                   $ 64,194         $ 49,186        $ 121,803         $ 96,386
Cost of goods sold                                            49,721           36,139           92,464           71,670
                                                       --------------    -------------    -------------    -------------
  Gross profit                                                14,473           13,047           29,339           24,716

Selling, general and administrative                            5,771            4,777           10,403            9,317
Depreciation and amortization                                  3,482            2,767            6,560            5,620
Restructuring and impairment costs                             2,723               --            2,723               78
                                                       --------------    -------------    -------------    -------------
  Income from operations                                       2,497            5,503            9,653            9,701

Interest expense, net                                            759              609            1,343            1,140
Other (income) expense                                           389            (141)              310            (496)
                                                       --------------    -------------    -------------    -------------
Income before provision for income taxes                       1,349            5,035            8,000            9,057
Provision for income taxes                                       512            1,840            2,985            3,345
Minority interest in consolidated subsidiaries                   140              787              675            1,454
                                                       --------------    -------------    -------------    -------------
    Net income                                                   697            2,408            4,340            4,258

Other comprehensive income:
     Foreign currency translation                              2,370            2,574            4,169            2,380
                                                       --------------    -------------    -------------    -------------
     Comprehensive income                                    $ 3,067          $ 4,982          $ 8,509          $ 6,638
                                                       ==============    =============    =============    =============



Basic income per common share:                               $  0.04          $  0.16          $  0.28          $  0.28
                                                       ==============    =============    =============    =============

  Weighted average shares outstanding                         16,015           15,359           15,561           15,336
                                                       ==============    =============    =============    =============

Diluted income per common share:                             $  0.04          $  0.15          $  0.27          $  0.27
                                                       ==============    =============    =============    =============

  Weighted average shares outstanding                         16,465           15,868           15,892           15,798
                                                       ==============    =============    =============    =============



                             See accompanying notes.


                                       3






                                    NN, Inc.
                      Condensed Consolidated Balance Sheets
                                   (Unaudited)


                                                                        Restated             Restated
                                                                        June 30,            December 31,
Thousands of Dollars                                                      2003                  2002
---------------------------------------------------------------------- -------------- ------ -------------
Assets
Current assets:
  Cash and cash equivalents                                                  $ 4,641              $ 5,144
  Accounts receivable, net                                                    44,542               28,965
  Inventories, net                                                            33,825               23,402
  Other current assets                                                         6,779                3,901
                                                                       --------------        -------------
     Total current assets                                                     89,787               61,412

Property, plant and equipment, net                                           105,007               88,199
Assets held for sale                                                           1,805                2,214
Goodwill, net                                                                 52,653               39,374
Other assets                                                                   4,602                4,016
                                                                       --------------        -------------
     Total assets                                                          $ 253,854            $ 195,215
                                                                       ==============        =============

Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable                                                           $33,826             $ 22,983
  Bank overdraft                                                               2,813                   37
  Accrued salaries and wages                                                  11,608                6,354
  Income taxes payable                                                         1,019                  620
  Current maturities of long-term debt                                         9,066                7,000
  Other current liabilities                                                    4,399                3,240
                                                                       --------------        -------------
     Total current liabilities                                                62,731               40,234

Non-current deferred tax liability                                             9,688                9,334
Long-term debt                                                                75,344               46,135
Accrued pension and other                                                     10,130                9,319
                                                                       --------------        -------------
     Total liabilities                                                       157,893              105,022

Minority interest in consolidated subsidiaries                                    --               12,285
                                                                       --------------        -------------
Total stockholders' equity                                                    95,961               77,908
                                                                       --------------        -------------
Total liabilities and stockholders' equity                                  $253,854             $195,215
                                                                       ==============        =============


                             See accompanying notes.


                                       4





                                    NN, Inc.
           Consolidated Statements of Changes in Stockholders' Equity
                             (Unaudited) (Restated)


                                               Common Stock
                                                                                                       Accumulated
Thousands of Dollars and Shares                                         Additional                        Other
                                         Number Of           Par          paid in       Retained      Comprehensive
                                           Shares           value         capital       Earnings      Income (Loss)      Total
------------------------------------------------------------------------------------------------------------------------------------
Balance, January 1, 2002, Restated             15,317            $154       $ 40,111       $ 36,139      $ (5,422)       $ 70,982
   Shares issued                                   50              --            329             --             --            329
   Net income                                      --              --             --          4,258             --          4,258
   Dividends declared                              --              --             --        (2,457)             --        (2,457)
    Other comprehensive income                     --              --             --             --          2,380          2,380
                                        --------------     -----------     ----------    -----------    -----------     ----------
Balance, June 30, 2002, Restated               15,367            $154       $ 40,440       $ 37,940      $ (3,042)       $ 75,492
                                        ==============     ===========     ==========    ===========    ===========     ==========

Balance, January 1, 2003, Restated             15,370            $154       $ 40,457       $ 38,984      $ (1,687)       $ 77,908
  Shares issued                                 1,280              13         12,093             --             --         12,106
  Net income                                       --              --             --          4,340             --          4,340
  Dividends declared                               --              --             --        (2,562)             --        (2,562)
  Other comprehensive income                       --              --             --             --          4,169          4,169
                                        --------------     -----------     ----------    -----------    -----------     ----------
Balance, June 30, 2003, Restated               16,650            $167       $ 52,550       $ 40,762        $ 2,482       $ 95,961
                                        ==============     ===========     ==========    ===========    ===========     ==========






                             See accompanying notes.

                                       5



                                    NN, Inc.
                      Consolidated Statements of Cash Flows
                                   (Unaudited)


                                                                                        Six Months Ended
                                                                                            June 30,
Thousands of Dollars                                                                Restated
                                                                                      2003            2002
---------------------------------------------------------------------------------- ------------    -----------
Operating Activities:
  Net income                                                                           $ 4,340        $ 4,258
  Adjustments to reconcile net income to net cash provided (used) by operating
      activities:
    Depreciation and amortization                                                        6,560          5,620
    (Gain) loss on disposals of property, plant and equipment                               --            (7)
    Minority interest in consolidated subsidiary                                           675          1,454
    Restructuring and impairment costs                                                   3,047             78
    Changes in operating assets and liabilities:
      Accounts receivable                                                             (14,043)        (5,959)
      Inventories                                                                      (3,717)          2,714
      Other current assets                                                             (1,352)          (316)
      Other assets                                                                     (3,216)              5
      Accounts payable                                                                  11,030          3,153
      Income taxes payable                                                               1,019          1,044
      Other liabilities                                                                  (645)          2,974
                                                                                   ------------    -----------
         Net cash provided by operating activities                                       3,698         15,018
                                                                                   ------------    -----------

Investing Activities:
 Acquisition of Veenendaal, The Netherlands                                           (17,777)             --
 Purchase of minority interest                                                        (15,583)             --
 Acquisition of property, plant, and equipment                                         (4,333)        (1,829)
 Proceeds from disposals of property, plant and equipment                                   --             10
                                                                                   ------------    -----------
         Net cash used by investing activities                                        (37,693)        (1,819)
                                                                                   ------------    -----------

Financing Activities:
 Proceeds from long-term debt                                                           89,560             --
 Bank overdraft                                                                            363           (83)
 Repayment of long-term debt                                                          (59,408)       (10,683)
 Repayment of short-term debt                                                               --             --
 Proceeds from issuance of stock                                                         5,168            329
 Dividends paid                                                                        (2,562)        (2,457)
                                                                                   ------------    -----------
         Net cash provided (used) by financing activities                               33,121       (12,894)
                                                                                   ------------    -----------

Effect of exchange rate changes                                                            371            381

Net Change in Cash and Cash Equivalents                                                  (503)            686
Cash and Cash Equivalents at Beginning of Period                                         5,144          3,024
                                                                                   ------------    -----------
Cash and Cash Equivalents at End of Period                                             $ 4,641        $ 3,710
                                                                                   ============    ===========

Supplemental schedule of non-cash investing and financing activities:
         Stock issued related to acquisition of Veenendaal                             $ 6,937         $   --
                                                                                   ============    ===========

                             See accompanying notes.

                                       6





                                    NN, Inc.
                   Notes To Consolidated Financial Statements
                                   (unaudited)

Note 1.  Restatement

The Company has restated its Consolidated Financial Statements for the three and
six month periods ended June 30, 2003 and 2002 solely to amend the financial
reporting of certain transactions related to the formation of Euroball on July
31, 2000 and the subsequent purchases of the minority interests held by INA/FAG
and SKF on December 20, 2002 and May 2, 2003, respectively. These restatements
had no material effect on the Company's reported net sales, gross profit, income
from operations, or cash flows for the three and six month periods ended June
30, 2003 and June 30, 2002.

We have revised the valuation of the original purchase price associated with the
formation of Euroball in July 2000. This revision resulted in a reduction of
goodwill of approximately 4,108 Euro ($3,792). Further, we have increased
stockholders' equity by approximately 10,044 Euro ($9,270) to reflect the amount
by which the Company's proportionate interest in Euroball exceeded the book
value of the net assets exchanged by the Company. As a result of these two
adjustments, minority interest in consolidated subsidiaries has been reduced by
approximately $7,421 at December 31, 2002, goodwill has been reduced $4,695 and
$4,308 at June 30, 2003 and December 31, 2002, respectively, and paid-in-capital
increased $9,270 at June 30, 2003 and December 31, 2002, respectively, from
amounts previously reported. Comprehensive income has also been restated for
foreign currency translation effects of these adjustments.

In the previously issued December 31, 2002 and June 30, 2003 Consolidated
Financial Statements, when the Company acquired the 23% interest in Euroball
held by INA/FAG in December 2002 and the 23% interest in Euroball held by SKF in
May 2003, the excess of minority interest in consolidated subsidiaries in
Euroball over the purchase price was recorded as a non-taxable gain in the
amount of approximately $5,904 and $6,600, respectively. As restated in the
accompanying Consolidated Financial Statements, the non-taxable gains have been
excluded and the excess of the purchase price over the fair value of INA/FAG's
23% and SKF's 23% interest in the net assets of Euroball was allocated to
goodwill. The resulting impact to the Consolidated Financial Statements is an
increase to goodwill of approximately $1,517 and $3,667, a decrease in retained
earnings of approximately $5,904 and $12,504 as of December 31, 2002 and June
30, 2003, respectively, and reversal of the $6,600 gain previously recorded in
the Consolidated Financial Statements of Income and Comprehensive Income for the
three and six months ended June 30, 2003.

Additionally, the Company has reclassified minority interest in consolidated
subsidiaries from a component of total liabilities to a separate line item in
the Condensed Consolidated Balance Sheets at June 30, 2003 and December 31,
2002.


                                       7



Effect on selected Consolidated Financial Statement Data at June 30, 2003 and
June 30, 2002 and for the three and six month periods then ended.

                    Selected Consolidated Balance Sheet Data
                                  June 30, 2003
                                 (In thousands)

                                                             As Previously
                                                               Reported              As Restated
                                                            ----------------        --------------

Goodwill                                                           $ 53,681              $ 52,653
Total assets                                                        254,882               253,854
Additional paid-in capital                                           43,280                52,550
Retained earnings                                                    53,266                40,762
Accumulated other comprehensive income                                  276                 2,482
Total stockholders' equity                                           96,989                95,961
Total liabilities and stockholders' equity                          254,882               253,854


                             Selected Consolidated Balance Sheet Data
                                        December 31, 2002
                                          (In thousands)

                                                            As Previously
                                                                Reported             As Restated
                                                            -----------------       ---------------
Goodwill                                                            $ 42,166              $ 39,374
Total assets                                                         198,007               195,215
Total liabilities                                                    124,728               105,022
Minority interest in consolidated subsidiaries                        19,706                12,285
Additional paid-in capital                                            31,187                40,457
Retained earnings                                                     44,888                38,984
Accumulated other comprehensive loss                                 (2,950)               (1,687)
Total stockholders' equity                                            73,279                77,908
Total liabilities and stockholders' equity                           198,007               195,215

              Selected Consolidated Statement of Income and Comprehensive Income Data
                                  Three months ended June 30, 2003
                               (In thousands, except per share data)

                                                               As Previously
                                                                 Reported             As Restated
                                                             ------------------    ------------------
Gain on purchase of minority interest                                $ (6,600)                $   --
Income before provision for income taxes                                 7,949                 1,349
Net income                                                               7,297                   697
Foreign currency translation                                             1,837                 2,370
Comprehensive income                                                     9,134                 3,067
Basic income per share                                                    0.46                  0.04
Diluted income per share                                                  0.44                  0.04

                                       8



                                  Three months ended June 30, 2002
                                           (In thousands)
                                                               As Previously
                                                                 Reported             As Amended
                                                             ------------------    ------------------
Foreign currency translation                                            $1,413                $2,574
Comprehensive income                                                     3,821                 4,982


                                   Six months ended June 30, 2003
                               (In thousands, except per share data)

                                                               As Previously
                                                                 Reported             As Amended
                                                             ------------------    ------------------
Gain on purchase of minority interest                                $ (6,600)                $   --
Income before provision for income taxes                                14,600                 8,000
Net income                                                              10,940                 4,340
Foreign currency translation                                             3,226                 4,169
Comprehensive income                                                    14,166                 8,509
Basic income per share                                                    0.70                  0.28
Diluted income per share                                                  0.69                  0.27

                                   Six months ended June 30, 2002
                                           (In thousands)
                                                               As Previously
                                                                 Reported             As Amended
                                                             ------------------    ------------------
Foreign currency translation                                            $1,333                $2,380
Comprehensive income                                                     5,591                 6,638





                                       9



Note 2. Interim Financial Statements

The accompanying consolidated financial statements of NN, Inc. (the "Company")
have not been audited by independent accountants, except that the balance sheet
at December 31, 2002 is derived from the Company's audited financial statements.
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 six month periods ended June 30, 2003 and 2002, the Company's financial
position at June 30, 2003 and December 31, 2002, and the cash flows for the six
month periods ended June 30, 2003 and 2002. These adjustments are of a normal
recurring nature and are, in the opinion of management, necessary for fair
presentation of the financial position and operating results for the interim
periods. As used in this Quarterly Report on Form 10-Q/A, the terms "NN", "the
Company", "we", "our", or "us" mean NN, Inc. and its subsidiaries.

Certain information and footnote disclosures normally included in the 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/A, as amended. These Condensed,
Consolidated, Unaudited Financial Statements should be read in conjunction with
our audited Consolidated Financial Statements and the Notes thereto included in
our most recent report on Form 10-K/A, as amended, which we filed with the
Commission on January 30, 2004.

The results for the first and second quarters of 2003 are not necessarily
indicative of future results.

Certain 2002 amounts have been reclassified to conform with the 2003
presentation.

Note 3.  Derivative Financial Instruments

We have an interest rate swap accounted for in accordance with Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities", effective January 1, 2001. The Company
adopted SFAS No. 133 on January 1, 2001, which establishes accounting and
reporting standards for derivative instruments and for hedging activities. The
Standard requires the recognition of all derivative instruments on the balance
sheet at fair value. The Standard allows for hedge accounting if certain
requirements are met including documentation of the hedging relationship at
inception and upon adoption of the Standard.

In connection with a variable Euribor rate debt financing in July 2000, our
subsidiary, NN Euroball ApS entered into an interest rate swap with a notional
amount of Euro 12.5 million for the purpose of fixing the interest rate on a
portion of its debt financing. The interest rate swap provides for the Company
to receive variable Euribor interest payments and pay 5.51% fixed interest. The
interest rate swap agreement expires in July 2006 and the notional amount
amortizes in relation to initially established principal payments on the
underlying debt over the life of the swap. This original debt was repaid in May
2003, however, the swap remains pursuant to its original terms.

As of June 30, 2003, the fair value of the swap was approximately $522,000,
which is recorded in other non-current liabilities. The change in fair value
during the six month period ended June 30, 2003 and 2002 was a loss of
approximately $128,000 and a gain of approximately $97,000, respectively, which
have been included as a component of other (income) expense.


                                       10



Note 4. Inventories

Inventories are stated at the lower of cost or market. Cost is being determined
using the first-in, first-out method.

Inventories are comprised of the following (in thousands):

                                                                                      June 30,       Dec. 31,
                                                                                        2003           2002
                                                                                    (Unaudited)
                                                                                  -------------    --------------
Raw materials                                                                         $  7,363          $  5,400
Work in process                                                                          7,132             5,139
Finished goods                                                                          19,587            13,065
Less inventory reserves                                                                  (257)             (202)
                                                                                  -------------    --------------
                                                                                      $ 33,825          $ 23,402
                                                                                  =============    ==============

Inventories on consignment at customer locations as of June 30, 2003 and
December 31, 2002 were $2,344 and $3,093, respectively.

Note 5.  Net Income Per Share (Restated)

                                                            Three Months Ended                   Six Months Ended
                                                                 June 30,                            June 30,
Thousands of Dollars, Except Share and Per Share Data    Restated                             Restated
-----------------------------------------------------      2003               2002              2003              2002
                                                     --------------     --------------    -------------     --------------
Net income                                                    $697             $2,408           $4,340             $4,258
Adjustments to net income                                       --                 --               --                 --
                                                     --------------     --------------    -------------     --------------
   Net income                                                 $697             $2,408           $4,340             $4,258
                                                     ==============     ==============    =============     ==============


Weighted average basic shares                           16,015,347         15,359,173       15,560,647         15,336,368
Effect of dilutive stock options                           449,466            508,815          331,737            461,916
                                                     --------------     --------------    -------------     --------------
Weighted average dilutive shares outstanding            16,464,813         15,867,988       15,892,384         15,798,284
                                                     ==============     ==============    =============     ==============
Basic net income per share                                   $0.04              $0.16            $0.28              $0.28
                                                     ==============     ==============    =============     ==============
Diluted net income per share                                 $0.04              $0.15            $0.27              $0.27
                                                     ==============     ==============    =============     ==============

Excluded from the shares outstanding for each of the six month periods ended
June 30, 2003 and 2002 were 54,000 and 0 antidilutive options, respectively,
which had exercise prices ranging from $10.26 to $10.67 as of June 30, 2003.

Note 6.  Segment Information (Restated)

During 2003 and 2002, the Company's reportable segments are based on differences
in product lines and geographic locations and are divided among Domestic Ball
and Roller, European operations ("NN Europe") and Plastic and Rubber Components.
The Domestic Ball and Roller Segment is comprised of two manufacturing
facilities in the eastern United States. The NN Europe Segment is comprised of
precision ball manufacturing facilities located in Kilkenny, Ireland, Eltmann,
Germany and Pinerolo, Italy acquired in July 2000 and Veenendaal, The
Netherlands ("Veenendaal") a tapered roller and metal cage manufacturing
operation acquired in May 2003. See Note 7, "Acquisitions and Joint Ventures".
All of the facilities in the Domestic Ball and Roller Segment are engaged in the

                                       11




production of precision balls and rollers used primarily in the bearing
industry. All of the facilities in the NN Europe Segment are engaged in the
production of precision balls used primarily in the bearing industry except for
Veenendaal which is engaged in the production of tapered rollers and cages for
use primarily in the bearing industry. The Plastic and Rubber Components Segment
is comprised of the Industrial Molding Corporation ("IMC") business, located in
Lubbock, Texas, which was acquired in July 1999, NN Arte ("Arte") formed in
August of 2000 (see Note 7), located in Guadalajara, Mexico and The Delta Rubber
Company ("Delta") business, located in Danielson, Connecticut, which was
acquired in February 2001. IMC and Arte are engaged in the production of plastic
injection molded products for the bearing, automotive, instrumentation, fiber
optic and consumer hardware markets. Delta is engaged principally in the
production of engineered bearing seals used principally in automotive,
industrial, agricultural, mining and aerospace applications. The Plastic and
Rubber Components Segment's name has been changed from the Plastics Segment
effective with the March 31, 2003 quarterly report on Form 10-Q/A. The
businesses and methods of calculation comprising this segment have not changed.

The NN Europe Segment, prior to the filing of this June 30, 2003 quarterly
report on Form 10-Q/A and as a result of the acquisition of Veenendaal, was
referred to as the Euroball Segment and was comprised only of the manufacturing
facilities located in Kilkenny, Ireland, Eltmann, Germany, and Pinerolo, Italy.

The accounting policies of each segment are the same as those described in the
summary of significant accounting policies in the Company's Annual Report on
Form 10-K/A, as amended, for the fiscal year ended December 31, 2002 including
those policies as discussed in Note 2. We evaluate segment performance based on
profit or loss from operations before income taxes and minority interest not
including nonrecurring gains and losses. We account for inter-segment sales and
transfers at current market prices; however, we did not have any material
inter-segment transactions during the three or six month periods ended June 30,
2003 and 2002.


                                                                 Three Months Ended June 30,
                                                     2003                                           2002
                                 Restated                        Plastic and    | Domestic                      Plastic and
                                 Domestic Ball   Restated          Rubber       |  Ball &        Restated         Rubber
Thousands of Dollars              & Roller       NN Europe       Components     |  Roller       NN Europe       Components
------------------------------------------------------------------------------------------------------------------------------
Revenues from external                                                          |
customers                           $ 13,925         $ 38,210         $ 12,059  |   $ 13,721        $ 23,179         $ 12,286
Segment pretax profit (loss)             399            3,245          (2,295)  |      1,434           2,709              892
Segment assets                        51,322          146,322           56,210  |     62,552          74,373           55,826


                                                                  Six Months Ended June 30,
                                                     2003                                           2002
                                 Restated                        Plastic and    | Domestic                      Plastic and
                                 Domestic Ball   Restated          Rubber       |  Ball &        Restated         Rubber
Thousands of Dollars              & Roller       NN Europe       Components     |  Roller       NN Europe       Components
------------------------------------------------------------------------------------------------------------------------------
Revenues from external                                                          |
customers                           $ 28,174         $ 67,045         $ 26,584  |    $ 26,925        $ 44,905         $ 24,556
Segment pretax profit                  2,379            6,974          (1,353)  |       2,432           5,059            1,566
Segment assets                        51,322          146,322           56,210  |      62,552          74,373           55,826

Note 7.  Acquisitions and Joint Ventures (Restated)

On December 20, 2002, we acquired the 23 percent interest in NN Euroball, ApS
("Euroball") held by INA/FAG. INA/FAG is a global bearing manufacturer and one
of our largest customers. We paid approximately 13.4 million Euros ($13.8
million) for INA/FAG's interest in Euroball. See Note 1, "Restatement".

On May 2, 2003 we acquired the 23 percent interest in NN Euroball, ApS
("Euroball") held by SKF. We paid approximately 13.8 million Euros ($15.6
million) for SKF's interest in Euroball. Euroball was formed in 2000 by the
Company, FAG Kugelfischer George Shaefer AG, which was subsequently acquired by
INA - Schaeffler KG ("INA/FAG"), and AB SKF ("SKF"). Upon consummation of this
transaction, we became the sole owner of Euroball. See Note 1, "Restatement".

On May 2, 2003 we acquired 100 percent of the tapered roller and metal cage
manufacturing operations of SKF in Veenendaal, The Netherlands. The results of
Veenendaal's operations have been included in the consolidated financial
statements since that date. We paid consideration of approximately 23.0 million
Euros ($25.7 million) and incurred other costs of approximately $0.9 million,
for the Veenendaal net assets

                                       12




acquired from SKF. The Veenendaal operation manufactures rollers for tapered
roller bearings and metal cages for both tapered roller and spherical roller
bearings allowing us to expand our bearing component offering. The results of
the Veenendaal operation are included in the NN Europe Segment.

In connection with the acquisition of SKF's Veenendaal, The Netherlands
operations, SKF purchased 700,000 shares of our common stock from us for an
aggregate fair value of approximately $6.9 million which was applied to the
purchase of SKF's Veenendaal, The Netherlands operations. For purposes of
valuing the 700,000 common shares issued in our Consolidated Financial
Statements, the value was determined based on the average market price of NN,
Inc.'s common shares over the two-day period before, the day of, and the two-day
period after the terms of the acquisition were agreed to, April 14, 2003.

The following table summarizes the estimated fair value of the assets acquired
and liabilities assumed at the date of acquisition. The purchase price is
subject to adjustment due to working capital changes. We are in the process of
obtaining third-party valuations of certain tangible and intangible assets;
thus, the allocation of the purchase price is subject to refinement.

                                                          (In thousands)
                                                          At May 2, 2003
                                                        -------------------
        Current assets                                  $      6,081
        Property, plant and equipment                         14,747
        Goodwill and other intangible assets                  11,460
                                                        -------------------
             Total assets acquired                            32,288
        Current liabilities                                    5,628
                                                        -------------------
             Net assets acquired                        $     26,660
                                                        ===================

The full amount assigned to goodwill is expected to be deductible for tax
purposes.

The following unaudited pro forma summary presents the financial information for
the three and six month periods ended June 30, 2003 and 2002 as if our
Veenendaal acquisition had occurred as of the beginning of each of the periods
presented. These pro forma results have been prepared for comparative purposes
and do not purport to be indicative of what would have occurred had the
acquisition been made as of the beginning of each of the periods presented, nor
are they indicative of future results.

                                                        (In thousands, except per share data)
                                                     --------------------------------------------
                                                          (Restated)            (Restated)
                                                      Three months ended     Six months ended
                                                        June 30, 2003          June 30, 2003
                                                         (unaudited)            (unaudited)
                                                     --------------------- ----------------------
                 Net sales                                       $ 68,841              $ 140,391
                 Net income                                           742                  4,521
                 Basic earnings per share                            0.05                   0.29
                 Diluted earnings per share                          0.05                   0.28



                                                       (In thousands, except per share data)
                                                     ------------------------------------------
                                                      Three months ended    Six months ended
                                                        June 30, 2002         June 30, 2002
                                                         (unaudited)           (unaudited)
                                                     --------------------- --------------------
                 Net sales                                       $ 63,128            $ 124,369
                 Net income                                         2,543                4,528
                 Basic earnings per share                            0.17                 0.29
                 Diluted earnings per share                          0.16                 0.29

On April 1, 2003, we exercised our call right and purchased the remaining 49
percent interest in NN Mexico, LLC. Based on the purchase price formula
contained in the principal agreement between the parties, the purchase price for
such interest was zero.



                                       13



Note 8. Restructuring and Impairment Charges

In May, 2003, we decided to close our Guadalajara, Mexico plastic injection
molding facility. This operation was started in September of 2000 to supply
certain Mexican operations of multi-national manufacturers of office automation
equipment. Several of these customers have recently shifted their manufacturing
operations to other geographic regions in the world. The closure is expected to
be substantially completed during the third quarter of 2003. The financial
results of this operation have been included in the Plastic and Rubber
Components Segment.

The plant closing is expected to result in the termination of approximately 42
full time hourly and salary employees located at the Guadalajara facility. We
have recorded restructuring costs of approximately $282,000 during the three
month period ended June 30, 2003 related to severance payments for the affected
employees.

As a result of the closing, we have performed a test of the recoverability of
the goodwill asset associated with the Guadalajara, Mexico operation. This test
was pursuant to the provisions of Statement of Financial Accounting Standards
No. 142 "Goodwill and Other Intangible Assets" which require that interim tests
of the recoverability of goodwill be performed under certain circumstances. As a
result, we have recorded an impairment charge of approximately $1.3 million to
fully write-off the goodwill asset.

We have decided to sell substantially all of the machinery and equipment with
certain pieces of machinery and equipment to be transferred and utilized by our
Industrial Molding facility in Lubbock, Texas. Pursuant to the provisions of
Statement of Accounting Standards No. 144 "Accounting for the Impairment or
Disposal of Long-lived Assets" we have recorded an impairment charge of
approximately $1.1 million to write-down the machinery and equipment to its
estimated fair market value.

Additionally, we have recorded impairment charges of $107,000 and $324,000 to
write-down the accounts receivable and inventory assets to their estimated fair
market values, respectively. The $324,000 inventory write down has been recorded
as a component of cost of goods sold.

The amounts we will ultimately realize upon disposition of these assets could
differ materially from the amounts assumed in arriving at the impairment losses
recorded during the three months ended June 30, 2003.

The following summarizes the 2003 restructuring and impairment charges:

                                                                                                 Reserve
                                                               Non-Cash          Paid in         Balance
In thousands                                  Charges        Write-downs          2003          At 6/30/03
                                           --------------- ----------------- ---------------- ---------------
Asset impairments                              $2,765           $2,765            $ --             $ --
Severance and other employee costs                282             --                --               282
                                           --------------- ----------------- ---------------- ---------------
Total                                          $3,047           $2,765            $ --             $ 282
                                           =============== ================= ================ ===============

In September of 2001, we announced that we would close our Walterboro, South
Carolina ball manufacturing facility as part of our ongoing strategy to locate
manufacturing capacity in closer proximity to customers. The closure was
substantially completed by December 31, 2001. Current plans are to sell the land
and building. The plant closing resulted in the termination of approximately 80
full time hourly and salaried employees in 2001.

Prior to December 31, 2001, production capacity and certain machinery and
equipment were transferred from the Walterboro facility to our two domestic ball
facilities in Erwin, Tennessee and Mountain City, Tennessee. We recorded
restructuring costs of $62,000 for additional severance payments during the six
months ended June 30, 2002. There were no restructuring costs recorded for the
six months ended June 30, 2003.

Our Euroball subsidiary incurred restructuring charges of $16,000 for the six
months ended June 30, 2002 for additional severance payments as a result of the
termination of 15 hourly employees and 3 salaried employees at its Italy
production facility. Approximately $69,000 of the severance payments recorded



                                       14



during 2001 and 2002 were paid during the six months ended June 30, 2002 and
there are no remaining accrued restructuring costs included in other current
liabilities as of June 30, 2002 and June 30, 2003 related to Euroball.

Note 9.  New Accounting Pronouncements

In June 2001, the FASB issued Statement of Financial Accounting Standards No.
141, "Business Combinations" (Statement No. 141), and Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (Statement
No. 142). Statement No. 141 requires that the purchase method of accounting be
used for all business combinations initiated after June 30, 2001. Statement No.
141 also specifies criteria that intangible assets acquired in a purchase method
business combination must meet to be recognized and reported apart from
goodwill. Statement No. 142 requires that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but rather, periodically tested
for impairment. The effective date of Statement No. 142 is January 1, 2002. As
of the date of adoption, we had unamortized goodwill of approximately $36.6
million, which is subject to the provisions of Statement No. 142.

As a result of adopting these new standards, our accounting policies for
goodwill and other intangibles changed on January 1, 2002, as described below:

Goodwill: We recognized the excess of the purchase price of an acquired entity
over the fair value of the net identifiable assets as goodwill. Goodwill is
tested for impairment on an annual basis and between annual tests in certain
circumstances. Impairment losses are recognized whenever the implied fair value
of goodwill is less than its carrying value. Prior to January 1, 2002, goodwill
was amortized over a twenty-year period using the straight-line method.
Beginning January 1, 2002, goodwill is no longer amortized.

Other Acquired Intangibles: We recognize an acquired intangible asset apart from
goodwill whenever the asset arises from contractual or other legal rights, or
whenever it is capable of being divided or separated from the acquired entity or
sold, transferred, licensed, rented, or exchanged, whether individually or in
combination with a related contract, asset or liability. An intangible asset
other than goodwill is amortized over its estimated useful life unless that life
is determined to be indefinite. We will review the lives of intangible assets
each reporting period and, if necessary, recognize impairment losses if the
carrying amount of an intangible asset subject to amortization is not
recoverable from expected future cash flows and its carrying amount exceeds its
fair value.

We completed the transitional goodwill impairment reviews required by the new
standards during the first six months of 2002 and the annually required goodwill
impairment review during the fourth quarter of 2002. In performing the
impairment reviews, we estimated the fair values of the reporting units using a
method that incorporates valuations derived from earnings before interest
expense, taxes, depreciation and amortization ("EBITDA") multiples based upon
market multiples and recent capital market transactions and also incorporates
valuations determined by each segment's discounted future cash flows. As of
January 1, 2002, the transition date and as of October 1, 2002, the most recent
annual review date, there was no impairment to goodwill as the fair values
exceeded the carrying values of the reporting units.

The changes in the carrying amount of goodwill for the six month period ended
June 30, 2003 are as follows:

In thousands                                Plastic and        (Restated)
                                          Rubber Components    NN Europe       (Restated)
                                              Segment           Segment           Total
                                         ------------------- --------------- -----------------
Balance as of January 1, 2003                       $26,712         $12,662           $39,374
Goodwill acquired                                        --          13,875            13,875
Impairment losses                                   (1,285)              --           (1,285)
Currency impacts                                         --             689               689
                                         ------------------- --------------- -----------------
Balance as of June 30, 2003                         $25,427         $27,226           $52,653
                                         =================== =============== =================



                                       15


In July 2001, the FASB issued Statement of Financial Accounting Standards No.
143, "Accounting For Asset Retirement Obligations." This Statement requires
capitalizing any retirement costs as part of the total cost of the related
long-lived asset and subsequently allocating the total expense to future periods
using a systematic and rational method. Adoption of the Statement is required
for fiscal years beginning after June 15, 2002. We adopted SFAS No. 143 on
January 1, 2003 and this adoption did not have a material impact on the
financial statements.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections".
SFAS No. 4 had required all gains and losses from extinguishment of debt to be
aggregated and, if material, classified as an extraordinary item, net of related
income tax effect. SFAS No. 145 rescinds SFAS No. 4 and the related required
classifications gains and losses form extinguishment of debt as extraordinary
items. Additionally, the SFAS No. 145 amends SFAS No. 13 to require that certain
lease modifications that have economic effects similar to sale-leaseback
transactions be accounted for in the same manner as sale-leaseback transactions.
SFAS No. 145 is applicable for us at the beginning of fiscal year 2003, with the
provisions related to SFAS No. 13 for transactions occurring after May 15, 2002.
We adopted SFAS No. 145 effective January 1, 2003 and this adoption did not have
a material impact on the financial statements.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities". SFAS No. 146 requires costs associated with
exit or disposal activities to be recognized when they are incurred rather than
at the date of a commitment to an exit or disposal plan. SFAS No. 146 is to be
applied prospectively to exit or disposal activities initiated after December
31, 2002.


In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of FASB Statement No.
123". SFAS No. 148 provides alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148, which was effective for the year ending
December 31, 2002, amends the disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee compensation
and the effect of the method used on reported results. We have adopted the
provisions of SFAS 123, which encourages but does not require a fair value based
method of accounting for stock compensation plans. We have elected to continue
accounting for its stock compensation plan using the intrinsic value based
method under Auditing Practices Board ("APB") Opinion No. 25 and, accordingly,
has not recorded compensation expense for each of the three and six month
periods ended June 30, 2003 and June 30, 2002,. Had compensation cost for our
stock compensation plan been determined based on the fair value at the option
grant dates, our net income and earnings per share would have been reduced to
the proforma amounts indicated below:



                                       16




In Thousands, Except per Shared Data
------------------------------------                                    Three months ended            Six months ended
                                                                              June 30,                    June 30,
                                                                      Restated                     Restated
                                                                        2003            2002         2003          2002
                                                                   ---------------- ------------- ------------ -------------
Net income - as reported                                                     $ 697        $2,408       $4,340        $4,258
Stock based compensation costs, net of income tax, included in
   net income as reported                                                      205           166          205           150
Stock based compensation costs, net of income tax, that would
   have been included in net income if the fair value method had
   been applied                                                                 --            --            2            62
                                                                   ---------------- ------------- ------------ -------------
Net income - proforma                                                        $ 902        $2,574       $4,543        $4,346
                                                                   ================ ============= ============ =============

Basic earnings per share - as reported                                      $ 0.04        $ 0.16       $ 0.28        $ 0.28
Stock based compensation costs, net of income tax, included in
   net income as reported                                                     0.01          0.02         0.01            --
Stock based compensation costs, net of income tax, that would
   have been included in net income if the fair value method had
   been applied                                                                 --            --           --            --
                                                                   ---------------- ------------- ------------ -------------
Basic earnings per share - proforma                                         $ 0.05        $ 0.18       $ 0.29        $ 0.28
                                                                   ================ ============= ============ =============
Earnings per share - assuming dilution - as reported                        $ 0.04        $ 0.15       $ 0.27        $ 0.27
Stock based compensation costs, net of income tax, included in
   net income as reported                                                     0.01          0.01         0.01          0.01
Stock based compensation costs, net of income tax, that would
   have been included in net income if the fair value method had
   been applied                                                                 --            --           --            --
                                                                   ---------------- ------------- ------------ -------------
Earnings per share - assuming dilution - proforma                           $ 0.05        $ 0.16       $ 0.28        $ 0.28
                                                                   ================ ============= ============ =============


The fair value of each option grant was estimated based on actual information
available through June 30, 2003 and 2002 using the Black Scholes option-pricing
model with the following assumptions:

Term                            Vesting period
Risk free interest rate         3.28% and 3.28% at June 30,2003 and 2002, respectively
Dividend yield                  2.53% and 2.50% at June 30, 2003 and 2002, respectively
Volatility                      50.11% and 40.2% at June 30, 2003 and 2002, respectively

In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others," an interpretation of FASB
Statements No. 5, 57, and 107 and rescission of FASB Interpretation No. 34. This
interpretation elaborates the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations under certain
guarantees that it has issued. It also clarifies that a guarantor is required to
recognize, at the inception of a guarantee, a liability for the fair value of
the obligation undertaken in issuing the guarantee. The initial recognition and
initial measurement provisions of this interpretation are applicable on a
prospective basis to guarantees issued or modified after December 31, 2002 and
are not expected to have a material effect on the Company's consolidated results
of operations, financial position or cash flows.

In April, 2003, the FASB issued SFAS No. 149, "Derivative Instruments and
Hedging Activities". SFAS No. 149 amends and clarifies financial accounting and
reporting for derivative instruments, including certain derivative instruments
embedded in other contracts and for hedging activities under SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 149
requires that contracts with comparable characteristics by accounted for
similarly and is effective for contracts entered into or modified after June 30,
2003 and for hedging relationships designated after June 30, 2003.

                                       17



In May, 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. SFAS
No. 150 is effective for financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. The Company adopted SFAS No. 150 on July
1, 2003 and this adoption did not have a material impact on the financial
statements.

Note 10.   Long-Term Debt

On May 1, 2003 in connection with the purchase of SKF's Veenendaal component
manufacturing operations and SKF's 23 percent interest in Euroball, we entered
into a new $90 million syndicated credit facility with AmSouth Bank ("AmSouth")
as the administrative agent and Suntrust Bank as the Euro loan agent for the
lenders under which we borrowed $60.4 million and 26.3 million Euros ($29.6
million). This new financing arrangement replaces our prior credit facility with
AmSouth and Hypo Vereinsbank Luxembourg, S.A. The credit facility consists of a
$30.0 million revolver expiring on March 1, 2005, bearing interest at a floating
rate equal to LIBOR (1.12% at June 30, 2003) plus an applicable margin of 1.25
to 2.0, a $30.4 million term loan expiring on May 1, 2008, bearing interest at a
floating rate equal to LIBOR (1.12% at June 30, 2003) plus an applicable margin
of 1.25 to 2.0 and a 26.3 million ($29.6 million) Euros term loan expiring on
May 1, 2008 which bears interest at a floating rate equal to Euro LIBOR (2.14%
at June 30, 2003) plus an applicable margin of 1.25 to 2.0. The loan agreement
contains customary financial and non-financial covenants. Such covenants specify
that we must maintain certain liquidity measures. The loan agreement also
contains customary restrictions on, among other things, additional indebtedness,
liens on our assets, sales or transfers of assets, investments, restricted
payments (including payment of dividends and stock repurchases), issuance of
equity securities, and mergers, acquisitions and other fundamental changes in
the Company's business. The credit agreement is un-collateralized except for the
pledge of stock of certain foreign subsidiaries. We were in compliance with all
such covenants as of June 30, 2003. In connection with this refinancing,
capitalized costs in the amount of $455,000 associated with the paid-off credit
facilities were written-off and are included as a component of Other (income)
expense.

Note 11.   Sale of Common Stock

During May, 2003, we completed a public offering of 3.6 million shares of our
stock by a group of selling shareholders. We did not receive any proceeds from
the sale of the shares previously held by the group of selling shareholders,
however, the underwriters did exercise their over-allotment option of 533,600
shares, which were offered by us. Net proceeds received by us in connection with
the exercise of the over-allotment option were approximately $5.1 million.





                                       18



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Restatement

The Company has restated its Consolidated Financial Statements for the three and
six month periods ended June 30, 2003 and 2002 solely to amend the financial
reporting of certain transactions related to the formation of Euroball on July
31, 2000 and the subsequent purchases of the minority interests held by INA/FAG
and SKF on December 20, 2002 and May 2, 2003, respectively. These restatements
had no material effect on the Company's reported net sales, gross profit, income
from operations, or cash flows for the three and six month periods ended June
30, 2003 and June 30, 2002.

We have revised the valuation of the original purchase price associated with the
formation of Euroball in July 2000. This revision resulted in a reduction of
goodwill of approximately 4.1 million Euro ($3.8 million). Further, we have
increased stockholders' equity by approximately 10.0 million Euro ($9.3 million)
to reflect the amount by which the Company's proportionate interest in Euroball
exceeded the book value of the net assets exchanged by the Company. As a result
of these two adjustments, minority interest in consolidated subsidiaries has
been reduced by approximately $7.4 million at December 31, 2002, goodwill has
been reduced $4.7 million and $4.3 million at June 30, 2003 and December 31,
2002, respectively, and paid-in-capital increased $9.3 million June 30, 2003 and
December 31, 2002, respectively, from amounts previously reported. Comprehensive
income has also been restated for foreign currency translation effects of these
adjustments.

In the previously issued December 31, 2002 and June 30, 2003 Consolidated
Financial Statements, when the Company acquired the 23% interest in Euroball
held by INA/FAG in December 2002 and the 23% interest in Euroball held by SKF in
May 2003, the excess of minority interest in consolidated subsidiaries in
Euroball over the purchase price was recorded as a non-taxable gain in the
amount of approximately $5.9 million and $6.6 million, respectively. As restated
in the accompanying Consolidated Financial Statements, the non-taxable gains
have been excluded and the excess of the purchase price over the fair value of
INA/FAG's 23% interest and SKF's 23% interest in the net assets of Euroball was
allocated to goodwill. The resulting impact to the Consolidated Financial
Statements is an increase to goodwill of approximately $1.5 million and $3.7
million, a decrease in retained earnings of approximately $5.9 million and $12.5
million as of December 31, 2002 and June 30, 2003, respectively, and reversal of
the $6.6 million gain previously recorded in the Consolidated Financial
Statements of Income and Comprehensive Income for the three and six months ended
June 30, 2003.

Additionally, the Company has reclassified minority interest in consolidated
subsidiaries from a component of total liabilities to a separate line item in
the Condensed Consolidated Balance Sheets at December 31,
2002.




                                       19



Results of Operations (Restated)

Three Months Ended June 30, 2003 Compared to the Three Months Ended June 30, 2002

Net Sales. Net sales increased by approximately $15.0 million or 30.5% from
$49.2 million for the second quarter of 2002 to $64.2 million for the second
quarter of 2003. By segment, sales increased $0.2 million, and $15.0 million for
the Domestic Ball and Roller Segment and the NN Europe Segment, respectively.
Net sales for the Plastic and Rubber Components Segment decreased by $0.2
million. Within the NN Europe Segment, $9.3 million of the increase is related
to our May 2, 2003 acquisition of Veenendaal and the inclusion of two months of
its operations. The remaining $5.4 million of the increase is related to the
impact of currency exchange rates. Net sales decreased by $0.2 million for the
Plastic and Rubber Components Segment.

Gross Profit. Gross profit increased by $1.4 million or 10.9% from $13.0 million
for the second quarter of 2002 to $14.5 million for the second quarter of 2003.
By segment, gross profit increased $2.6 million for the NN Europe Segment.
Within the NN Europe Segment, $1.4 million of the increase is related to the two
months of Veenendaal results included in our results due to the May 2, 2003
acquisition and $1.3 million is related to currency impacts. Gross profit
decreased by $0.4 million and $0.8 million for the Domestic Ball and Roller
Segment and the Plastic and Rubber Components Segment, respectively. Within the
Domestic Ball and Roller Segment, the decrease resulted principally from labor
inefficiencies associated with implementing lean manufacturing techniques..
Within the Plastic and Rubber Components Segment, $0.3 million of the decrease
is related to an impairment charge on the inventory of our Guadalajara, Mexico
facility and decreased demand. As a percentage of net sales, gross profit
decreased from 26.5% for the second quarter of 2002 to 22.6% for the second
quarter of 2003.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $1.0 million, or 19.8%, from $4.8 million
in the second quarter of 2002 to $5.8 million in the second quarter of 2003. The
inclusion of two months of Veenendaal results due to the May 2, 2003 acquisition
contributed $0.6 million of the increase. The impact of currency exchange rates
in the NN Europe Segment resulted in a $0.4 million increase. As a percentage of
net sales, selling, general and administrative expenses decreased from 9.7% in
the second quarter of 2002 to 9.0% in the second quarter of 2003.

Depreciation and Amortization. Depreciation and amortization expenses increased
by $0.7 million, or 25.8%, from $2.8 million in the second quarter of 2002 to
$3.5 million in the second quarter of 2003. The inclusion of two months of
Veenendaal results due to the May 2, 2003 acquisition contributed $0.4 million
of the increase. Currency impacts in the NN Europe Segment resulted in a $0.3
million increase. As a percentage of net sales, depreciation and amortization
decreased from 5.6% in the second quarter of 2002 to 5.4% in the second quarter
of 2003.

Restructuring and Impairment Costs. Restructuring and impairment costs increased
by $2.7 million from $0 during the second quarter of 2002 to $2.7 million for
the second quarter of 2003. The increase is related to the restructuring and
impairment charges recorded in the second quarter of 2003 due to the planned
closure of our Guadalajara, Mexico injection molding facility. The charges
consist of $2.4 million related to asset write-downs to their estimated fair
market values, including $1.3 million related to goodwill, $1.0 million related
to property, plant and equipment, and $0.1 million related to accounts
receivable. In addition, a $0.3 million charge related to employee severance
costs has been recorded. Restructuring and impairment charges were 0.0% of net
sales in the second quarter of 2002 and 4.2% of net sales in the second quarter
of 2003.

Interest Expense. Interest expense increased by $0.2 million from $0.6 million
in the second quarter of 2002 to $0.8 million in the second quarter of 2003. The
increase is attributed to increased debt levels due to the previously announced
acquisition of Veenendaal during May 2003, and the previously announced purchase
of the 23% interest in Euroball held by INA/FAG during December 2002, and the
previously announced purchase of the 23% interest in Euroball held by SKF during
May 2003. As a percentage of net sales, interest expense was unchanged at 1.2%
of net sales for both the second quarter of 2002 and the second quarter of 2003.



                                       20



Minority Interest in Consolidated Subsidiary. Minority interest of consolidated
subsidiary decreased $0.7 million from $0.8 million in the second quarter of
2002 to $0.1 million in the second quarter of 2003. This decrease is due
entirely to the Euroball joint venture, which the Company has been required to
consolidate since its formation on August 1, 2000. During the second quarter of
2002, minority interest in consolidated subsidiary represented the 46% of the
shares of the joint venture held by the minority partners. During the second
quarter of 2003, minority interest in consolidated subsidiary represents the 23%
of the shares of the joint venture held by the remaining minority partner
through May 2, 2003. On May 2, 2003 we purchased the 23% interest held by SKF.
As previously announced, we purchased the 23% interest in Euroball held by
INA/FAG on December 20, 2002. Effective May 2, 2003 and as of June 30, 2003, we
own 100% of the shares of Euroball. Minority interest in consolidated subsidiary
represents the combined interest in Euroball's earnings of the minority partner
and the 49% interest in Arte's earnings of the minority partner (the 49%
interest in NN Arte's earnings is zero in the second quarter of 2002).

Net Income. Net income decreased by $1.7 million, or 71.1%, from $2.4 million in
the second quarter of 2002 to $0.7 million in the second quarter of 2003. As a
percentage of net sales, net income decreased from 4.9% in the second quarter of
2002 to 1.1% in the second quarter of 2003.

Six Months Ended June 30, 2003 Compared to the Six Months Ended June 30, 2002

Net Sales. Net sales increased by approximately $25.4 million or 26.4% from
$96.4 million for the first six months of 2002 to $121.8 million for the first
six months of 2003. By segment, net sales increased $22.1 million, $2.0 million
and $1.3 million for the NN Europe Segment, the Plastic and Rubber Components
Segment and the Domestic Ball and Roller Segment, respectively. Within the NN
Europe Segment, $9.3 million of the increase is related to the inclusion of two
months of Veenendaal results which we acquired on May 2, 2003, $10.7 million is
related to currency impacts and $2.1 million is related to increases in demand.
Within the Plastic and Rubber Components Segment and Domestic Ball and Roller
Segment the increase is principally related to increases in demand and new
programs within the Plastic and Rubber Components Segment.

Gross Profit. Gross profit increased approximately $4.6 million, or 18.7%, from
$24.7 million for the first six months of 2002 to $29.3 million for the first
six months of 2003. By segment, gross profit increased by $0.6 million for the
Domestic Ball and Roller Segment and $4.7 million for the NN Europe Segment.
Within the NN Europe Segment, $1.4 million of the increase is related to the
inclusion of two months of Veenendaal results due to the May 2, 2003
acquisition, $2.7 million is related to currency impacts and $0.6 million is
related to increases in product demand. Offsetting these increases was a
decrease in the Plastic and Rubber Components Segment of approximately $0.7
million. Within the Plastic and Rubber Components Segment, $0.3 million of the
decrease is related to an impairment charge on the inventory of our Guadalajara,
Mexico facility and $0.3 million of the decrease is related to decreased demand.
As a percentage of sales, gross profit decreased from 25.6% for the first six
months of 2002 to 24.1% for the first six months of 2003.

Selling, General and Administrative. Selling, general and administrative
expenses increased by approximately $1.1 million, or 11.7%, from $9.3 million
for the first six months of 2002 to $10.4 million for the first six months of
2003. By segment, selling general and administrative expenses decreased $0.2
million for both the Domestic Ball and Roller Segment and the Plastic and Rubber
Components Segment. For the NN Europe Segment, selling, general and
administrative expenses increased $1.4 million. Within the NN Europe Segment,
$0.6 million of the increase is related to the inclusion of two months of
Veenendaal results which we acquired on May 2, 2003 and $0.8 million of the
increase is related to currency impacts. As a percentage of sales, selling,
general and administrative expenses decreased from 9.7% for the first six months
of 2002 to 8.5% for the first six months of 2003.

Depreciation and Amortization. Depreciation and amortization expenses increased
by $1.0 million, or 16.7%, from $5.6 million in the first six months of 2002 to
$6.6 million for the first six months of 2003. $0.4 million of the increase is
related to the inclusion of two months of Veenendaal results due to the May 2,
2003 acquisition and $0.5 million of the increase is related to currency
impacts. As a percentage of sales, depreciation and amortization expenses
decreased from 5.8% for the first six months of 2002 to 5.4% for the first six
months of 2003.


                                       21



Restructuring and Impairment Costs. Restructuring and impairment costs increased
by $2.6 million from $0.1 million for the first six months of 2002 to $2.7
million for the first six months of 2003. The increase is related to the
restructuring and impairment charges recorded in the second quarter of 2003 due
to the planned closure of our Guadalajara, Mexico injection molding facility.
The charges consist of $2.4 million related to asset write-downs to their
estimated fair market values, including $1.3 million related to goodwill, $1.0
million related to property, plant and equipment, and $0.1 million related to
accounts receivable. In addition, a $0.3 million charge related to employee
severance costs has been recorded. Restructuring and impairment charges were
0.1% of net sales in the first six months of 2002 and 2.2% of net sales for the
first six months of 2003.

Interest Expense. Interest expense increased by $0.2 million from $1.1 million
for the first six months of 2002 to $1.3 million for the first six months of
2003. The increase is attributed to increased debt levels due to the previously
announced acquisition of Veenendaal during May 2003, the previously announced
purchase of the 23% interest in Euroball held by INA/FAG during December 2002,
and the previously announced purchase of the 23% interest in Euroball held by
SKF during May 2003. As a percentage of net sales, interest expense decreased
0.1% from 1.2% of net sales for the first six months of 2002 to 1.1% for the
first six months of 2003.

Minority Interest in Consolidated Subsidiary. Minority interest of consolidated
subsidiary decreased $0.8 million from $1.5 million for the first six months of
2002 to $0.7 million for the first six months of 2003. This decrease is due
entirely to the Euroball joint venture, which the Company has been required to
consolidate since its formation on August 1, 2000. During the first six months
of 2002, minority interest in consolidated subsidiary represented the 46% of the
shares of the joint venture held by the minority partners. During the second
quarter of 2003, minority interest in consolidated subsidiary represents the 23%
of the shares of the joint venture held by the remaining minority partner
through May 2, 2003. On May 2, 2003 we purchased the 23% interest held by SKF.
As previously announced, we purchased the 23% interest in Euroball held by
INA/FAG on December 20, 2002. Effective May 2, 2003 and as of June 30, 2003, we
own 100% of the shares of Euroball. Minority interest in consolidated subsidiary
represents the combined interest in Euroball's earnings of the minority partner
and the 49% interest in NN Arte's earnings of the minority partner (the 49%
interest in NN Arte's earnings is zero in the first six months of 2002).

Net Income. Net income increased by $0.1 million, or 1.9%, from $4.2 million in
the first six months of 2002 to $4.3 million in the first six months of 2003. As
a percentage of net sales, net income decreased from 4.4% in the first six
months of 2002 to 3.6% in the first six months of 2003.

Recent Developments

During May 2003, we completed a public offering of 3.6 million shares of our
stock by a group of selling shareholders. We did not receive any proceeds from
the sale of the shares previously held by the group of selling shareholders,
however, the underwriters did exercise their over-allotment option of 533,600
shares. Net proceeds received by us in connection with the exercise of the
over-allotment were approximately $5.1 million.

On May 2, 2003, we acquired the 23 percent interest in NN Euroball, ApS
("Euroball") held by SKF. We paid approximately 13.8 million Euros ($15.6
million). Euroball was formed in 2000 by the Company, FAG Kugelfischer George
Shaefer AG, which was subsequently acquired by INA - Schaeffler KG ("INA/FAG"),
and AB SKF ("SKF"). Upon consummation of this transaction, we became the sole
owner of Euroball. See Note1 "Restatement", to Consolidated Financial Statements
for additional information.

On May 2, 2003, we acquired the tapered roller and metal cage manufacturing
operations of SKF in Veenendaal, The Netherlands. We paid consideration of
approximately 23.0 million Euros ($25.7 million) and incurred costs of
approximately $0.9 million, for the Veenendaal net assets acquired from SKF. The
Veenendaal operation manufactures rollers for tapered roller bearings and metal
cages for both tapered roller and spherical roller bearings.

In connection with the acquisition of SKF's Veenendaal operations, SKF purchased
700,000 shares of our common stock from us for an aggregate fair value of
approximately $6.9 million which was applied to the purchase of SKF's
Veenendaal, The Netherlands operations. For purposes of valuing the 700,000
common

                                       22




shares issued, the value was determined based on the average market price of NN,
Inc.'s common shares over the two-day period before, the day of, and the two-day
period after the terms of the acquisition were agreed to, April 14, 2003.

Liquidity and Capital Resources

On May 1, 2003 in connection with the purchase of SKF's Veenendaal component
manufacturing operations and SKF's 23 percent interest in Euroball, we entered
into a new $90 million syndicated credit facility with AmSouth Bank ("AmSouth")
as the administrative agent and Suntrust Bank as the Euro loan agent for the
lenders under which we borrowed $60.4 million and 26.3 million Euros ($29.6
million). This new financing arrangement replaces our prior credit facility with
AmSouth and Euroball's credit facility with Hypo Vereinsbank Luxembourg, S.A.
The credit facility consists of a $30.0 million revolver expiring on March 1,
2005, bearing interest at a floating rate equal to LIBOR (1.12% at June 30,
2003) plus an applicable margin of 1.25 to 2.0, a $30.4 million term loan
expiring on May 1, 2008, bearing interest at a floating rate equal to LIBOR
(1.12% at June 30, 2003) plus an applicable margin of 1.25 to 2.0 and a 26.3
million ($29.6 million) Euros term loan expiring on May 1, 2008 which bears
interest at a floating rate equal to Euro LIBOR (2.14% at June 30, 2003) plus an
applicable margin of 1.25 to 2.0. The loan agreement contains customary
financial and non-financial covenants. Such covenants specify that we must
maintain certain liquidity measures. The loan agreement also contains customary
restrictions on, among other things, additional indebtedness, liens on our
assets, sales or transfers of assets, investments, restricted payments
(including payment of dividends and stock repurchases), issuance of equity
securities, and mergers, acquisitions and other fundamental changes in our
business. The credit facility is un-collateralized except for the pledge of
stock of certain foreign subsidiaries. We were in compliance with all such
covenants as of June 30, 2003.

From July 20, 2001 until May 1, 2003, the date that this loan agreement was paid
off, we had a syndicated loan agreement with AmSouth as the administrative agent
for the lenders, for a senior non-secured revolving credit facility of up to
$25.0 million, expiring on July 25, 2003 and a senior non-secured term loan for
$35.0 million expiring on July 1, 2006. On July 12, 2002, we amended this credit
facility to convert the term loan portion into a reducing revolving credit line
providing initial availability equivalent to the balance of the term loan prior
to the amendment. Amounts available for borrowing under this facility were to be
reduced by $ 7.0 million per annum and the facility was to expire on July 1,
2006. Additionally, on July 31, 2002, we amended the credit facility again to
extend the $25 million senior non-secured revolving credit facility to July 25,
2004. Amounts outstanding under the revolving facility and term loan facility
bore interest at a floating rate equal to LIBOR (1.12% at June 30, 2003) plus an
applicable margin of 0.75% to 2.00% based upon calculated financial ratios. The
loan agreement contained customary financial and non-financial covenants. Such
covenants specifed that we had to maintain certain liquidity measures and
limited the amount of capital expenditures we could make in any fiscal year. The
loan agreement also contained customary restrictions on, among other things,
additional indebtedness, liens on our assets, sales or transfers of assets,
investments, restricted payments (including payment of dividends and stock
repurchases), issuance of equity securities, and mergers, acquisitions and other
fundamental changes in our business. Additionally, the terms of this loan
agreement restricted the declaration and payment of dividends in excess of $5.5
million in any fiscal year. Our ownership in NN Euroball ApS had been pledged as
collateral.

In connection with the Euroball transaction we and Euroball, entered into a
Facility Agreement with a bank to provide up to Euro 36.0 million in Term Loans
and Euro 5.0 million in revolving credit loans. We borrowed Euro 30.5 million
($28.8 million) under the term loan facility and Euro 1.0 million ($0.9 million)
under the revolving credit facility. Amounts outstanding under the Facility
Agreement bore interest at EURIBOR (2.14% at June 30, 2003) plus an applicable
margin between 0.8% and 2.25% based upon financial ratios. The shareholders of
Euroball provided guarantees for the Facility Agreement. The Facility Agreement
contained restrictive covenants, which specified, among other things,
restrictions on the incurrence of indebtedness and the maintenance of certain
financial ratios. Amounts outstanding under the Facility Agreement were secured
by the stock in certain subsidiaries, inventory and accounts receivable of
Euroball. This loan agreement was paid off on May 1, 2003.

Our arrangements with our domestic customers typically provide that payments are
due within 30 days following the date of shipment of goods by us, while
arrangements with certain export customers (other

                                       23




than export 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. Our net sales have historically been of
a seasonal nature due to our relative percentage of European business coupled
with slower European production during the month of August.

We bill and receive payment from some of our foreign customers in Euro as well
as other currencies. To date, we have not been materially adversely affected by
currency fluctuations. Nonetheless, as a result of these sales, our foreign
exchange transaction and translation risk has increased. Various strategies to
manage this risk are available to management including producing and selling in
local currencies and hedging programs. As of June 30, 2003, no currency hedges
were in place. In addition, a strengthening of the U.S. dollar and/or Euro
against foreign currencies could impair our ability to compete with
international competitors for foreign as well as domestic sales.

Working capital, which consists principally of accounts receivable and
inventories, was $27.4 million at June 30, 2003 as compared to $21.2 million at
December 31, 2002. The ratio of current assets to current liabilities decreased
from 1.53:1 at December 31, 2002 to 1.44:1 at June 30, 2003. Cash flow from
operations decreased to $3.7 million during the first six months of 2003 from
$15.0 million during the first six months of 2002.

During 2003, we plan to spend approximately $9.0 million to $10.0 million on
capital expenditures (of which approximately $4.3 million has been spent through
June 30, 2003) including the purchase of additional machinery and equipment for
all of our domestic facilities as well as four European facilities. We intend to
finance these activities with cash generated from operations and funds available
under the credit facilities described above. We believe that funds generated
from operations and borrowings from the credit facilities will be sufficient to
finance our working capital needs and projected capital expenditure requirements
through December 2003.





                                       24





The Euro

We currently have operations in Italy, Germany, Ireland, and The Netherlands all
of which are Euro participating countries, and sell product to customers in many
of the participating countries. The Euro has been adopted as the functional
currency at these locations.

Seasonality and Fluctuation in Quarterly Results

Our net sales historically have been of a seasonal nature due to a significant
portion of our sales to European customers that cease or significantly slow
production during the month of August.

Inflation and Changes in Prices

While the Company's operations have not been materially affected by inflation
during recent years, prices for 52100 Steel, engineered resins and other raw
materials purchased by the Company are subject to material change. For example,
during 1995, 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 and
some difficulty in obtaining an adequate supply of 52100 Steel from its existing
suppliers. In the Company's U.S. operations our typical pricing arrangements
with steel suppliers are subject to adjustment once every six months. The
Company's NN Europe Segment has entered into long term agreements with its
primary steel supplier, which provide for standard terms and conditions and
annual pricing adjustments to offset material price fluctuations in steel. The
Company typically reserves the right to increase product prices periodically in
the event of increases in its raw material costs. In the past, the Company has
been able to minimize the impact on its operations resulting from the 52100
Steel price fluctuations by taking such measures. Certain sales agreements are
in effect with SKF and INA/FAG, which provide for minimum purchase quantities
and specified, annual sales price reductions that may be modified up or down for
changes in material costs. These agreements expire during 2006 and 2008.

Critical Accounting Policies

Our significant accounting policies, including the assumptions and judgments
underlying them, are disclosed in the Company's Annual Report on Form 10-K, as
amended, for the fiscal year ended December 31, 2002 including those policies as
discussed in Note 2. These policies have been consistently applied in all
material respects and address such matters as revenue recognition, inventory
valuation, asset impairment recognition, business combination accounting and
pension and postretirement benefits. Due to the estimation processes involved,
management considers the following summarized accounting policies and their
application to be critical to understanding the Company's business operations,
financial condition and results of operations. There can be no assurance that
actual results will not significantly differ from the estimates used in these
critical accounting policies.

Accounts Receivable. Substantially all of the Company's accounts receivable are
due primarily from the served markets: bearing manufacturers, automotive
industry, electronics, industrial, agricultural and aerospace. In establishing
allowances for doubtful accounts, the Company continuously performs credit
evaluations of its customers, considering numerous inputs when available
including the customers' financial position, past payment history, relevant
industry trends, cash flows, management capability, historical loss experience
and economic conditions and prospects. While management believes that adequate
allowances for doubtful accounts have been provided in the Consolidated
Financial Statements, it is possible that the Company could experience
additional unexpected credit losses.

Inventories. Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out method. The Company's inventories are
not generally subject to obsolescence due to spoilage or expiring product life
cycles. The Company operates generally as a make-to-order business; however, the
Company also stocks products for certain customers in order to meet delivery
schedules. While management believes that adequate write-downs for inventory
obsolescence have been made in the Consolidated Financial Statements, the
Company could experience additional inventory write-downs in the future.


                                       25




Acquisitions and Acquired Intangibles. For new acquisitions, the Company uses
estimates, assumptions and appraisals to allocate the purchase price to the
assets acquired and to determine the amount of goodwill. These estimates are
based on market analyses and comparisons to similar assets. Annual tests are
required to be performed to assess whether recorded goodwill is impaired. The
annual tests require management to make estimates and assumptions with regard to
the future operations of its reporting units, the expected cash flows that they
will generate, and their market value. These estimates and assumptions therefore
impact the recorded value of assets acquired in a business combination,
including goodwill, and whether or not there is any subsequent impairment of the
recorded goodwill and the amount of such impairment.

Impairment of Long-Lived Assets. The Company's long-lived assets include
property, plant and equipment. The recoverability of the long-term assets is
dependent on the performance of the companies which the Company has acquired, as
well as volatility inherent in the external markets for these acquisitions. In
assessing potential impairment for these assets the Company will consider these
factors as well as forecasted financial performance. For assets held for sale,
appraisals are relied upon to assess the fair market value of those assets.
Future adverse changes in market conditions or adverse operating results of the
underlying assets could result in the Company having to record additional
impairment charges not previously recognized.

Pension and Post-Retirement Obligations. The Company uses several assumptions in
determining its periodic pension and post-retirement expense and obligations
which are included in the Consolidated Financial Statements. These assumptions
include determining an appropriate discount rate, rate of compensation increase
as well as the remaining service period of active employees. The Company uses an
independent actuary to calculate the periodic pension and post-retirement
expense and obligations based upon these assumptions and actual employee census
data.





                                       26




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. Statements regarding capital expenditures,
future borrowings, and financial commitments are forward-looking statements.
Readers can identify forward-looking statements by the use of such verbs as
expects, anticipates, believes or similar verbs or conjugations of such verbs.
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 filing and
in the Company's prior filings. The differences could be caused by a number of
factors or combination of factors including, but not limited to, the risk
factors described below.

You should carefully consider the following risks and uncertainties, and all
other information contained in or incorporated by reference in this quarterly
report on Form 10-Q/A, as amended, before making an investment in our common
stock. Any of the following risks could have a material adverse effect on our
business, financial condition or operating results. In such case, the trading
price of our common stock could decline and you may lose all or part of your
investment.

The demand for our products is cyclical, which could adversely impact our revenues.

The end markets for fully assembled bearings are cyclical and tend to decline in
response to overall declines in industrial production. As a result, the market
for bearing components is also cyclical and impacted by overall levels of
industrial production. Our sales in the past have been negatively affected, and
in the future will be negatively affected, by adverse conditions in the
industrial production sector of the economy or by adverse global or national
economic conditions generally.

We depend on a very limited number of foreign sources for our primary raw material and are subject to risks of
shortages and price fluctuation.

The steel that we use to manufacture precision balls and rollers is of an
extremely high quality and is available from a limited number of producers on a
global basis. Due to quality constraints in the U.S. steel industry, we obtain
substantially all of the steel used in our U.S. ball and roller production from
overseas suppliers. In addition, we obtain substantially all of the steel used
in our European ball production from a single European source. If we had to
obtain steel from sources other than our current suppliers, particularly in the
case of our European operations, we could face higher prices and transportation
costs, increased duties or taxes, and shortages of steel. Problems in obtaining
steel, and particularly 52100 chrome steel, in the quantities that we require
and on commercially reasonable terms, could increase our costs, negatively
impact our ability to operate our business efficiently and have a material
adverse effect on the operating and financial results of our Company.

We operate in and sell products to customers outside the U.S. and are subject to
several related risks.

Because we obtain a majority of our raw materials from overseas suppliers,
actively participate in overseas manufacturing operations and sell to a large
number of international customers, we face risks associated with the following:



                                       27


     o    adverse foreign currency fluctuations;

     o    changes in trade, monetary and fiscal policies, laws and regulations,
          and other activities of governments, agencies and similar
          organizations;

     o    the imposition of trade restrictions or prohibitions;

     o    high tax rates that discourage the repatriation of funds to the U.S.;

     o    the imposition of import or other duties or taxes; and

     o    unstable governments or legal systems in countries in which our
          suppliers, manufacturing operations, and customers are located.

We do not have a hedging program in place associated with consolidating the
operating results of our foreign businesses into U.S. Dollars. An increase in
the value of the U.S. Dollar and/or the Euro relative to other currencies may
adversely affect our ability to compete with our foreign-based competitors for
international, as well as domestic, sales. In the first six months of 2003,
approximately 42% of the $25.4 million increase in revenues was attributable to
favorable currency fluctuations. Also, a decline in the value of the Euro
relative to the U.S. Dollar will negatively impact our consolidated financial
results, which are denominated in U.S. Dollars.

In addition, due to the typical slower summer manufacturing season in Europe, we
expect that revenues in the third fiscal quarter will reflect lower sales, as
our sales to European customers have increased as a percentage of net sales.

We depend heavily on a relatively limited number of customers, and the loss of
any major customer would have a material adverse effect on our business.

Sales to various U.S. and foreign divisions of SKF, which is one of the largest
bearing manufacturers in the world, accounted for approximately 33% of
consolidated net sales in 2002, and sales to INA/FAG accounted for approximately
19% of consolidated net sales in 2002. Our recent acquisition at SKF's tapered
roller and metal cage production facility, along with the related long-term
supply agreement with SKF, will increase our dependence on SKF in the future.
During 2002, our ten largest customers accounted for approximately 73% of our
consolidated net sales. None of our other customers individually accounted for
more than 5% of our consolidated net sales for 2002. Recent consolidation of
certain of our bearing customers, including the acquisition at the Torrington
Company by Timken, will increase our dependence on a smaller number of
customers. The loss of all or a substantial portion of sales to these customers
would cause us to lose a substantial portion of our revenue and would lower our
profit margin and cash flows from operations.

The costs and difficulties of integrating acquired business could impede our
future growth.

We cannot assure you that any future acquisition will enhance our financial
performance. Our ability to effectively integrate any future acquisitions will
depend on, among other things, the adequacy of our implementation plans, the
ability of our management to oversee and operate effectively the combined
operations and our ability to achieve desired operating efficiencies and sales
goals. The integration of any acquired businesses might cause us to incur
unforeseen costs, which would lower our profit margin and future earnings and
would prevent us from realizing the expected benefits of these acquisitions.

We may not be able to continue to make the acquisitions necessary for us to
realize our growth strategy.

Acquiring businesses that complement or expand our operations has been and
continues to be an important element of our business strategy. This strategy
calls for growth through acquisitions constituting approximately two-thirds of
our future growth, with the remainder resulting from internal growth and market
penetration. We bought our plastic bearing component business in 1999, formed
Euroball with our two largest bearing customers, SKF and INA/FAG, in 2000 and
acquired our bearing seal operations in

                                       28




2001. During 2002, we purchased INA/FAG's minority interest in Euroball and on
May 2, 2003, we acquired SKF's minority interest in Euroball, to become the sole
owner at Euroball. On May 2, 2003 we acquired SKF's tapered roller and metal
cage manufacturing operations in Veenendaal, The Netherlands. We cannot assure
you that we will be successful in identifying attractive acquisition candidates
or completing acquisitions on favorable terms in the future. In addition, we may
borrow funds to acquire other businesses, increasing our interest expense and
debt levels. Our inability to acquire businesses, or to operate them profitably
once acquired, could have a material adverse effect on our business, financial
position, results of operations and cash flows.

Our growth strategy depends on outsourcing, and if the industry trend toward
outsourcing does not continue, our business could be adversely affected.

Our growth strategy depends in significant part on major bearing manufacturers
continuing to outsource components, and expanding the number of components being
outsourced. This requires manufacturers to depart significantly from their
traditional methods of operations. If major bearing manufacturers do not
continue to expand outsourcing efforts or determine to reduce their use of
outsourcing, our ability to grow our business could be materially adversely
affected.

Our market is highly competitive and many of our competitors have significant
advantages that could adversely affect our business.

The global market for bearing components is highly competitive, with a majority
of production represented by the captive production operations of certain large
bearing manufacturers and the balance represented by independent manufacturers.
Captive manufacturers make components for internal use and for sale to third
parties. All of the captive manufacturers, and many independent manufacturers,
are significantly larger and have greater resources than do we. Our competitors
are continuously exploring and implementing improvements in technology and
manufacturing processes in order to improve product quality, and our ability to
remain competitive will depend, among other things, on whether we are able to
keep pace with such quality improvements in a cost effective manner.

The production capacity we have added over the last several years has at times
resulted in our having more capacity than we need, causing our operating costs
to be higher than expected.

We have expanded our ball and roller production facilities and capacity over the
last several years. During 1997, we built an additional manufacturing plant in
Kilkenny, Ireland, and we continued this expansion in 2000 through the formation
of Euroball with SKF and INA/FAG. Our ball and roller facilities have not always
operated at full capacity and from time to time our results of operations have
been adversely affected by the under-utilization of our production facilities,
and we face risks of further under-utilization or inefficient utilization of our
production facilities in future years.

The price of our common stock may be volatile.

The market price of our common stock could be subject to significant
fluctuations and may decline. Among the factors that could affect our stock
price are:

     o    our operating and financial performance and prospects;

     o    quarterly variations in the rate of growth of our financial
          indicators, such as earnings per share, net income and revenues;

     o    changes in revenue or earnings estimates or publication of research
          reports by analysts;

     o    loss of any member of our senior management team;

     o    speculation in the press or investment community;

     o    strategic actions by us or our competitors, such as acquisitions or
          restructurings;

                                       29




     o    sales of our common stock by stockholders;

     o    general market conditions; and

     o    domestic and international economic, legal and regulatory factors
          unrelated to our performance.

The stock markets in general have experienced extreme volatility that has often
been unrelated to the operating performance of particular companies. These broad
market fluctuations may adversely affect the trading price of our common stock.

Provisions in our charter documents and Delaware law may inhibit a takeover,
which could adversely affect the value of our common stock.

Our certificate of incorporation and bylaws, as well as Delaware corporate law,
contain provisions that could delay or prevent a change of control or changes in
our management that a stockholder might consider favorable and may prevent you
from receiving a takeover premium for your shares. These provisions include, for
example, a classified board of directors and the authorization of our board of
directors to issue up to 5,000,000 preferred shares without a stockholder vote.
In addition, our restated certificate of incorporation provides that
stockholders may not call a special meeting.

We are a Delaware corporation subject to the provisions of Section 203 of the
Delaware General Corporation Law, an anti-takeover law. Generally, this statute
prohibits a publicly-held Delaware corporation from engaging in a business
combination with an interested stockholder for a period of three years after the
date of the transaction in which such person became an interested stockholder,
unless the business combination is approved in a prescribed manner. A business
combination includes a merger, asset sale or other transaction resulting in a
financial benefit to the stockholder. We anticipate that the provisions of
Section 203 may encourage parties interested in acquiring us to negotiate in
advance with our board of directors, because the stockholder approval
requirement would be avoided if a majority of the directors then in office
approve either the business combination or the transaction that results in the
stockholder becoming an interested stockholder.

These provisions apply even if the offer may be considered beneficial by some of
our stockholders. If a change of control or change in management is delayed or
prevented, the market price of our common stock could decline.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

We are exposed to changes in financial market conditions in the normal course of
our business due to our use of certain financial instruments as well as
transacting in various foreign currencies. To mitigate our exposure to these
market risks, we have established policies, procedures and internal processes
governing our management of financial market risks. We are exposed to changes in
interest rates primarily as a result of our borrowing activities. At June 30,
2003, these borrowings included a $30 million term loan and a $30 million
revolving credit facility which was used to maintain liquidity and fund our
business operations. At June 30, 2003, we had $55.9 million outstanding under
the domestic credit facilities and Euroball had 25.0 million Euro ($28.5
million) outstanding under the Euro term loan. At June 30, 2003, a one-percent
increase in the interest rate charged on our outstanding borrowings under both
credit facilities would result in interest expense increasing annually by
approximately $0.8 million. In connection with a variable EURIBOR rate debt
financing in July 2000 our majority owned subsidiary, Euroball entered into an
interest rate swap with a notional amount of Euro 12.5 million for the purpose
of fixing the interest rate on a portion of their debt financing. The interest
rate swap provides for us to receive variable Euribor interest payments and pay
5.51% fixed interest. The interest rate swap agreement expires in July 2006 and
the notional amount amortizes in relation to principal payments on the
underlying debt over the life of the swap. This original debt was repaid in May
2003, however, the swap remains pursuant to its original terms. On May 1, 2003,
we entered into a new $90 million syndicated credit facility. This new financing
arrangement replaces our prior credit facility with AmSouth and Euroball's
credit facility with Hypo Vereinsbank Luxembourg, S.A., see "Management's
Discussion and Analysis of Financial Condition and


                                       30




Results of Operations - Liquidity and Capital Resources". The nature and amount
of our borrowings may vary as a result of future business requirements, market
conditions and other factors.

Translation of our operating cash flows denominated in foreign currencies is
impacted by changes in foreign exchange rates. Our NN Europe Segment, bills and
receives payments from some of its foreign customers in their own currency. To
date, we have not been materially adversely affected by currency fluctuations of
foreign exchange restrictions. However, to help reduce exposure to foreign
currency fluctuation, management has incurred debt in Euros and has periodically
used foreign currency hedges. These currency hedging programs allow management
to hedge currency exposures when these exposures meet certain discretionary
levels. We did not hold a position in any foreign currency hedging instruments
as of June 30, 2003.

Item 4.  Controls and Procedures

     a)   As of June 30, 2003, we carried out an evaluation, under the
          supervision and with the participation of the Company's management,
          including the Company's Chief Executive Officer and Chief Financial
          Officer, of the effectiveness of the design and operation of the
          Company's disclosure controls and procedures pursuant to Rule 13a-14
          and 15d-14 of the Securities Exchange Act of 1934 (the "Exchange
          Act"). Based upon that evaluation, the Company's management, including
          the Chief Executive Officer and Chief Financial Officer, concluded
          that the Company's disclosure controls and procedures are effective in
          timely alerting them to material information relating to the Company
          (including its consolidated subsidiaries) required to be included in
          the Company's Exchange Act filings.

     b)   There have been no changes in the Company's internal control over
          financial reporting or in other factors that have materially affected,
          or are reasonably likely to materially affect, the registrant's
          internal control over financial reporting.



                                       31







Part II. Other Information


Item 1.           Legal Proceedings

All legal proceedings and actions involving the Company are of an ordinary and
routine nature and are incidental to the operations of the Company. Management
believes that such proceedings should not, individually or in the aggregate,
have a material adverse effect on the Company's business or financial condition
or on the results of operations.

Item 2.           Change in Securities and Use of Proceeds

None

Item 3.           Defaults upon Senior Securities

None

Item 4.           Submission of Matters to a Vote of Security Holders

The Company's Annual Meeting of Stockholders was held on May 15, 2003. As of
March 28, 2003, the record date for the meeting, there were 15,369,807 shares of
common stock outstanding and entitled to vote at the meeting. There were present
at said meeting, in person or by proxy, stockholders holding 14,728,346 shares
of common stock, constituting approximately 96% of the shares of common stock
outstanding and entitled to vote, which constituted a quorum.

The first matter voted upon at the meeting was the election of Roderick R. Baty
as a Class I Director to serve for a three-year term. The vote was 14,656,813
For and 71,533 Withheld.

The nominee was elected to serve until the 2006 Annual Meeting of Stockholders
and until his successor is duly elected and qualified. In addition to the
foregoing director, Michael D. Huff and Michael E. Werner are serving terms that
will expire in 2004, and Steven T. Warshaw, James E. Earsley, and G. Ronald
Morris are serving terms that will expire in 2005. Mr. Baty continues in his
position as Chairman of the Company's Board of Directors.

The second matter voted upon at the meeting was the proposal to ratify and
approve non-employee director stock options. The vote was 13,680,073 For and
252,057 Against, and there were 796,216 Abstentions.

The third matter voted upon at the meeting was the proposal that the
shareholders approve an amendment to the Company's Stock Incentive Plan. The
vote was 11,446,799 For and 2,483,505 Against and there were 798,042
Abstentions.

The fourth matter voted upon the 2003 Annual Meeting of Stockholders was the
ratification of KPMG LLP as independent public accountants to audit the
Company's accounts for the fiscal year ending December 31, 2003. The vote was
14,557,412 For and 69,245 Against, and there were 101,689 Abstentions.

Item 5.           Other Information

None

Item 6.           Exhibits and Reports on Form 8-K.

(a) Exhibits Required by Item 601 of Regulation S-K

     2.1  Asset Purchase Agreement dated April 14, 2003 among SKF Holding
          Maatschappij Holland B.V., SKF B.V., NN, Inc. and NN Netherlands B.V.
          (incorporated by reference to Exhibit 2.1 of Form 8-K filed on May 16,
          2003).

                                       32



     10.1 Amendment No. 3 to NN, Inc. Stock Incentive Plan as ratified by the
          shareholders on May 15, 2003 amending the Plan to permit the issuance
          of awards under the Plan to directors of the Company.

     10.2 Credit Agreement dated as of May 1, 2003 among NN, Inc., and NN
          Euroball as the Borrowers, the Subsidiaries as Guarantors, the Lenders
          as identifies therein, AmSouth Bank as Administrative Agent, and
          SunTrust Bank as Documentation Agent and Euro Loan Agent.

     10.3 Supply Agreement between NN Euroball ApS and AB SKF dated April 6,
          2000. (We have omitted certain information from the Agreement and
          filed it separately with the Securities and Exchange Commission
          pursuant to our request for confidential treatment under Rule 24b-2.
          We have identified the omitted confidential information by the
          following statement, "Confidential portions of material have been
          omitted and filed separately with the Securities and Exchange
          Commission, " as indicated throughout the document with a n asterisk
          in brackets([*]).

     10.4 Global Supply Agreement among NN, Inc., NN Netherlands B.V. and SKF
          Holding Maatschappij Holland B.V. dated April 14, 2003. (We have
          omitted certain information from the Agreement and filed it separately
          with the Securities and Exchange Commission pursuant to our request
          for confidential treatment under Rule 24b-2. We have identified the
          omitted confidential information by the following statement,
          "Confidential portions of material have been omitted and filed
          separately with the Securities and Exchange Commission, " as indicated
          throughout the document with an asterisk in brackets([*]).

     31.1 Certification of Chief Executive Officer pursuant to Section 302 of
          Sarbanes-Oxley Act.

     31.2 Certification of Chief Financial Officer pursuant to Section 302 of
          Sarbanes-Oxley Act.

     32.1 Certification of Chief Executive Officer pursuant to Section 906 of
          Sarbanes-Oxley Act.

     32.2 Certification of Chief Financial Officer pursuant to Section 906 of
          Sarbanes-Oxley Act.


(b) Reports on Form 8-K

     The Company filed a Form 8-K, in response to Items 5 and 7, on April 24,
     2003 announcing its first quarter 2003 earnings.

     The Company filed a Form 8-K/A, in response to Items 5, 7 and 9 on May 1,
     2003 amending the 8-K filed on April 24, 2003.

     The Company filed a Form 8-K, in response to Items 5 and 7, on May 2, 2003
     announcing it acquired SKF's component manufacturing operation in
     Veenendaal, The Netherlands.

     The Company filed a Form 8-K, in response to Items 5 and 7, on May 2, 2003
     announcing it purchased SKF's interest in NN Euroball ApS.

     The Company filed a Form 8-K, in response to Items 5 and 7, on May 2, 2003
     announcing it has filed with the Securities and Exchange Commission a
     prospectus, consisting of a prospectus supplement dated May 2, 2003,
     together with a base prospectus dated February 11, 2003, which relates to
     the Company's sale of 700,000 shares of its Common Stock.

     The Company filed a Form 8-K, in response to Items 5 and 7, on May 5, 2003
     announcing a public offering of the Company's common stock.

     The Company filed a Form 8-K, in response to Items 2 and 7, on May 16, 2003
     announcing additional details related to the acquisition of SKF's
     Veenendaal, The Netherlands component

                                       33



     manufacturing operation and filing the Asset Purchase Agreement.

     The Company filed a Form 8-K, in response to Items 5 and 7, on May 16, 2003
     in order to furnish certain exhibits for incorporation by reference into
     the Registration Statement.

     The Company filed a Form 8-K, in response to Items 5 and 7, on May 16, 2003
     announcing the completion of a public offering of the Company's common
     stock.

     The Company filed a Form 8-K, in response to Items 5 and 7, on May 23, 2003
     announcing the exercise of an over-allotment option by underwriters.

     The Company furnished a Form 8-K, in response to Items 7 and 9, on May 27,
     2003 announcing the payment of a regular quarterly cash dividend.

     The Company filed a Form 8-K, in response to Items 5 and 7, on June 12,
     2003 announcing the appointment of Robert M. Aiken Jr. to its Board of
     Directors.


                                       34




                                   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, Inc.

                                                              (Registrant)


Date:    January 30, 2004                               /s/ Roderick R. Baty
                                                        ------------------------
                                                         Roderick R. Baty,
                                                         Chairman, President and
                                                         Chief Executive Officer
                                                        (Duly Authorized Officer)


Date:    January 30, 2004                                /s/ David L. Dyckman
                                                        ------------------------
                                                            David L. Dyckman
                                                 Vice President - Corporate Development
                                                        Chief Financial Officer
                                                     (Principal Financial Officer)
                                                       (Duly Authorized Officer)

Date:    January 30, 2004                             /s/ William C. Kelly, Jr.
                                                      --------------------------
                                                          William C. Kelly, Jr.,
                                                      Treasurer, Secretary and
                                                       Chief Administrative Officer
                                                       (Duly Authorized Officer)





                                       35