<PAGE>

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

                                    FORM 10-Q

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003

                          COMMISSION FILE NUMBER 1-9838

                                 NS GROUP, INC.
             (Exact name of registrant as specified in its charter)

                 KENTUCKY                                    61-0985936
      (State or other jurisdiction of                     (I.R.S. Employer
      incorporation or organization)                     Identification No.)

                 530 WEST NINTH STREET, NEWPORT, KENTUCKY 41071
                    (Address of principal executive offices)

        Registrant's telephone number, including area code (859) 292-6809

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 [ ]

At August 8, 2003, there were 20,862,886 shares outstanding of the Company's
common stock.

<PAGE>

                                 NS GROUP, INC.

                                      INDEX

<TABLE>
<CAPTION>
                                                                             Page No.
                                                                             --------
<S>                                                                          <C>
PART I   FINANCIAL INFORMATION

Item 1.  Financial Statements

         Condensed Consolidated Statements of Operations...................      3
         Condensed Consolidated Balance Sheets.............................      4
         Condensed Consolidated Statements of Cash Flows...................      5
         Notes to Condensed Consolidated Financial Statements..............      6

Item 2.  Management's Discussion and Analysis of Financial Condition and
             Results of Operations.........................................     14

Item 3.  Quantitative and Qualitative Disclosures About Market Risk........     24

Item 4.  Controls and Procedures...........................................     24

PART II  OTHER INFORMATION

Item 1.  Legal Proceedings.................................................     25

Item 4.  Submission of Matters to a Vote of Security Holders...............     25

Item 6.  Exhibits and Reports on Form 8-K..................................     25
</TABLE>

                                       2
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                                 NS GROUP, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
              (In thousands, except per share amounts) (Unaudited)

<TABLE>
<CAPTION>
                                                    Three Months Ended                Six Months Ended
                                                         June 30,                         June 30,
                                                    2003          2002              2003           2002
                                                ------------  ------------     -------------  -------------
<S>                                             <C>           <C>              <C>            <C>
Net sales                                       $    65,909   $    54,851      $    116,384   $     93,699

Cost of products sold                                68,062        52,598           123,835         99,679
                                                -----------   -----------      ------------   ------------
     Gross profit (loss)                             (2,153)        2,253            (7,451)        (5,980)

Selling, general and administrative expenses         3,805         3,872             8,283          8,194
                                                -----------   -----------      ------------   ------------
     Operating loss                                  (5,958)       (1,619)          (15,734)       (14,174)

Investment income (loss)                                (47)          370              (163)         1,121
Interest expense                                     (1,434)       (2,658)           (2,795)        (5,254)
Other income, net                                        69           (12)              107             81
                                                -----------   -----------      ------------   ------------
     Loss before income taxes                        (7,370)       (3,919)          (18,585)       (18,226)
Provision (benefit) for income taxes                      -             -                 -              -
                                                -----------   -----------      ------------   ------------
     Net loss                                   $    (7,370)  $    (3,919)     $    (18,585)  $    (18,226)
                                                ===========   ===========      ============   ============

Net loss per common share-
     Basic & diluted                            $     (0.36)  $     (0.19)     $      (0.90)  $      (0.88)
                                                ===========   ===========      ============   ============

Weighted average shares outstanding-
     Basic & diluted                                 20,684        20,647            20,671         20,646
</TABLE>

                                       3
<PAGE>

                                 NS GROUP, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                       (Unaudited)
                                                                         June 30,      December 31,
                                                                           2003           2002
                                                                      -------------   -------------
<S>                                                                   <C>             <C>
ASSETS
Current assets
     Cash and equivalents                                             $      4,564    $     29,357
     Accounts receivable, net                                               32,167          12,653
     Inventories                                                            58,816          55,874
     Operating supplies and other                                           12,565          12,082
                                                                      ------------    ------------
            Total current assets                                           108,112         109,966
                                                                      ------------    ------------

Property, plant and equipment                                              198,097         197,751
     Less accumulated depreciation                                        (150,027)       (146,100)
                                                                      ------------    ------------
                                                                            48,070          51,651
                                                                      ------------    ------------
Long-term investments                                                            -           3,848
Other assets                                                                 3,644           5,416
Assets held for sale                                                         8,934           9,413
                                                                      ------------    ------------
            Total assets                                              $    168,760    $    180,294
                                                                      ============    ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
     Accounts payable                                                 $     23,428    $      8,600
     Accrued liabilities and other                                          25,951          20,162
     Revolving credit facility                                              17,890               -
     Other notes payable                                                       838               -
     Current portion of restructuring liabilities                            4,775           4,656
     Current portion of long-term debt                                          34          33,555
                                                                      ------------    ------------
            Total current liabilities                                       72,916          66,973
                                                                      ------------    ------------
Long-term debt                                                                 464             482
Deferred income taxes                                                          332             332
Other long-term liabilities                                                  8,273           8,124
                                                                      ------------    ------------
                                                                             9,069           8,938
                                                                      ------------    ------------
Common shareholders' equity
     Common stock, no par value, 40,000 authorized,
       20,719 and 20,647, issued and oustanding                            283,153         282,935
     Treasury stock, at cost, 4,200 and 4,213 shares                       (35,489)        (35,572)
     Common stock options and warrants                                         822             759
     Accumulated other comprehensive income (loss)                             342            (328)
     Accumulated deficit                                                  (162,053)       (143,411)
                                                                      ------------    ------------
            Common shareholders' equity                                     86,775         104,383
                                                                      ------------    ------------
            Total liabilities and shareholders' equity                $    168,760    $    180,294
                                                                      ============    ============
</TABLE>

See notes to condensed consolidated financial statements.

                                       4
<PAGE>

                                 NS GROUP, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (In thousands) (Unaudited)

<TABLE>
<CAPTION>
                                                                             Six Months Ended
                                                                                 June 30,
                                                                          2003             2002
                                                                      -------------    -------------
<S>                                                                   <C>              <C>
CASH FLOWS - OPERATING ACTIVITIES
     Net loss                                                         $    (18,585)    $    (18,226)
     Adjustments to reconcile net loss to cash flows
      used by operating activities:
         Depreciation and amortization                                       3,926            5,728
         Amortization of debt discount and finance costs                       459              636
         Loss on sales of securities                                           453              120
     Changes in operating assets and liabilities:
         Accounts receivable, net                                          (19,514)            (826)
         Inventories                                                        (2,942)         (19,588)
         Other current assets                                                  (16)             704
         Accounts payable                                                   14,937            6,292
         Accrued liabilities                                                 5,680            4,063
         Restructuring liabilities                                             119             (337)
         Other, net                                                            212                -
                                                                      ------------     ------------
             Cash used by operating activities                             (15,271)         (21,434)
                                                                      ------------     ------------

CASH FLOWS - INVESTING ACTIVITIES
     Purchases of property, plant and equipment                               (438)            (997)
     Proceeds from investment sales                                          3,693            6,351
     Other                                                                   2,406              399
                                                                      ------------     ------------
             Cash provided by investing activities                           5,661            5,753
                                                                      ------------     ------------

CASH FLOWS - FINANCING ACTIVITIES
     Repayments of long-term debt                                          (33,787)             (16)
     Net borrowings under revolving credit facility                         17,890                -
     Increase in other notes payable                                           838                -
     Proceeds from issuance of common stock                                    271               11
     Additions to cost of treasury shares                                      (28)               -
     Payment of financing costs                                               (367)            (757)
                                                                      ------------     ------------
             Cash flows used by financing activities                       (15,183)            (762)
                                                                      ------------     ------------

Decrease in cash and equivalents                                           (24,793)         (16,443)
Cash and equivalents at beginning of period                                 29,357           72,383
                                                                      ------------     ------------
Cash and equivalents at end of period                                 $      4,564     $     55,940
                                                                      ============     ============

Supplemental disclosure of cash flows information -
     Cash paid during the period for interest                         $      3,983     $      4,648
     Cash paid (recovered) during the period for income taxes         $       (560)    $          -
</TABLE>

See notes to condensed consolidated financial statements.

                                       5
<PAGE>

                                 NS GROUP, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         BASIS OF PRESENTATION

         The condensed consolidated financial statements include the accounts of
NS Group, Inc. and its wholly owned subsidiaries (collectively referred to as
"the Company"), Newport Steel Corporation ("Newport"), Koppel Steel Corporation
("Koppel"), Erlanger Tubular Corporation ("Erlanger"), and Northern Kentucky
Management, Inc. All significant intercompany balances and transactions have
been eliminated.

         The accompanying condensed consolidated financial statements have been
prepared in conformity with accounting principles generally accepted in the
United States of America ("US GAAP") for interim financial information and with
the rules and regulations of the Securities and Exchange Commission ("SEC").
Accordingly, they do not include all of the information and footnotes for
complete financial statements as required by US GAAP. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included in the financial
statements. Operating results for an interim period are not necessarily
indicative of the results that may be expected for a full year. Reference should
be made to NS Group, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 2002 for additional footnote disclosure, including a summary of
significant accounting policies.

         USE OF ESTIMATES

         The preparation of financial statements in conformity with US GAAP
requires that management make certain estimates and assumptions that affect the
amounts reported in the consolidated financial statements and accompanying
notes. Actual results could differ from those recorded estimates.

         EARNINGS AND LOSS PER SHARE

         Basic earnings or loss per share is computed by dividing the net income
or loss for the period by the weighted-average number of common shares
outstanding for the period. Diluted earnings or loss per share reflects the
potential dilution from securities that could result in additional common shares
being issued which, for the Company, are comprised of stock options and
warrants.

                                       6
<PAGE>

         The Company had a net loss for all periods presented, therefore, the
effect of including dilutive securities in the calculation of earnings per share
would have been anti-dilutive. At June 30, 2003 and 2002, options and warrants
to purchase 2.0 million and 2.4 million common shares, respectively, were
excluded from the calculation of diluted earnings per share.

         STOCK-BASED COMPENSATION

         As permitted under Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No.123"), the Company accounts
for stock-based compensation using the intrinsic value method in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations. Stock option grants for all periods
were exercisable at prices equal to the fair market value of the Company's
common stock on the dates the options were granted; accordingly, no compensation
expense has been recognized for the stock options granted. The fair values of
the granted options are determined using the Black-Scholes option pricing model
using assumptions that are evaluated and revised, as necessary, to reflect
market conditions and experience.

         If the Company accounted for stock-based compensation using the fair
value recognition provisions of SFAS No. 123, net loss and diluted loss per
share would have been increased to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                        Three Months Ended               Six Months Ended
                                                              June 30,                       June 30,
(in thousands, except per share amounts)                2003           2002            2003            2002
                                                    -------------  -------------   -------------   -------------
<S>                                                 <C>            <C>             <C>             <C>
Net loss as reported                                $     (7,370)  $     (3,919)   $    (18,585)   $    (18,226)

Deduct: Stock-based employee compensation
     expense determined under the fair value
     method for all awards, net of related tax
     effects                                                (592)          (914)         (1,384)         (1,835)
                                                    ------------   ------------    ------------    ------------

Pro forma net loss                                  $     (7,962)  $     (4,833)   $    (19,969)   $    (20,061)
                                                    ============   ============    ============    ============

Diluted loss per share - as reported                $      (0.36)  $      (0.19)   $      (0.90)   $      (0.88)

Effect of stock-based employee
     compensation expense determined under
     the fair value method for all awards, net of
     related tax effects                                   (0.02)         (0.04)          (0.07)          (0.09)
                                                    ------------   ------------    ------------    ------------
Diluted loss per share - pro forma                  $      (0.38)  $      (0.23)   $      (0.97)   $      (0.97)
                                                    ============   ============    ============    ============

</TABLE>

                                       7
<PAGE>

NOTE 2: RESTRUCTURING LIABILITIES AND ASSETS HELD FOR SALE

         In 2001, the Company completed certain restructuring initiatives
involving certain operations of its businesses. The Company discontinued the
manufacturing of hot-rolled coils at its welded tubular facilities in Wilder,
Kentucky and exited the special bar quality ("SBQ") business that was operated
from its Koppel, Pennsylvania facility. As a result of these actions, in March
2001, the Company recorded restructuring charges of $56.2 million, including
$43.4 million of asset impairment losses and $12.8 million of accruals for
estimated employee related costs and facilities closing costs.

         Following is a summary of accrued restructuring liabilities and
activity for the six months ended June 30, 2003:

<TABLE>
<CAPTION>
 (in thousands)                       Current      Noncurrent       Total
                                   ------------   ------------   ------------
<S>                                <C>            <C>            <C>
Balance, December 31, 2002         $     4,656    $     2,013    $     6,669
Cash payments                             (105)             -           (105)
Reclassifications                          224           (224)             -
                                   -----------    -----------    -----------
Balance, June 30, 2003             $     4,775    $     1,789    $     6,564
                                   ===========    ===========    ===========
</TABLE>

         The remaining liabilities are for the estimated costs to settle
operating contracts and payments for environmental remediation and landfill
closure costs. The current restructuring liabilities are expected to be paid
within the next twelve months, but the timing of any payments depends on the
results of contract settlements and the progress of remediation work related to
the landfill closure. The non-current liabilities are primarily related to
post-closure maintenance and monitoring costs of the landfill over the next
thirty years, and are included in Other Long-term Liabilities in the condensed
consolidated balance sheet.

         The idled machinery and equipment and related inventories of spare
parts and supplies of the restructured operations, are classified as Assets Held
for Sale on the Company's condensed consolidated balance sheet. An independent
broker is actively marketing the assets and sales amounted to $0.5 million
during the six months ended June 30, 2003.

                                       8
<PAGE>

NOTE 3: COMPREHENSIVE INCOME (LOSS)

         The Company's other comprehensive income (loss) consists of unrealized
gains and losses on available-for-sale securities. Comprehensive losses for the
periods were as follows:

<TABLE>
<CAPTION>
                                            Three Months Ended              Six Months Ended
                                                 June 30,                        June 30,
(in thousands)                             2003           2002            2003            2002
                                       -------------  -------------   -------------   ------------
<S>                                    <C>            <C>             <C>             <C>
Net loss                               $     (7,370)  $     (3,919)   $    (18,585)   $   (18,226)
Net unrealized gains (losses)                   198           (680)            670           (307)
                                       ------------   ------------    ------------    -----------
Comprehensive loss                     $     (7,172)  $     (4,599)   $    (17,915)   $   (18,533)
                                       ============   ============    ============    ===========
</TABLE>

NOTE 4: BUSINESS SEGMENT INFORMATION

         The Company reports its operations in one reportable segment - the
Energy Products segment. The Energy Products segment consists primarily of
welded and seamless tubular products used in oil and natural gas drilling and
production operations (oil country tubular goods, or OCTG); and welded and
seamless line pipe used in the transmission of oil, natural gas and other
fluids. The Energy Products segment reflects the aggregation of the Company's
welded and seamless business units, which have similar products and services,
manufacturing processes, customers and distribution channels, and are consistent
with both internal management reporting and resource and budgetary allocations.

         Three customers accounted for 19%, 14% and 11%, respectively, of the
Energy Products segment's sales for the six months ended June 30, 2003, and
three customers accounted for 15%, 13% and 11%, respectively, of the segment's
sales for the six months ended June 30, 2002.

<TABLE>
<CAPTION>
                                               Three Months Ended                Six Months Ended
                                                     June 30,                         June 30,
(in thousands)                                2003            2002              2003           2002
                                          -------------  ---------------   --------------  ------------
<S>                                       <C>            <C>               <C>             <C>
Net sales
     Welded products                        $ 30,238         $ 26,934         $  53,346      $ 44,342
     Seamless products                        35,671           27,917            63,038        49,357
                                            --------         --------         ---------      --------
                                            $ 65,909         $ 54,851         $ 116,384      $ 93,699
                                            ========         ========         =========      ========
</TABLE>

<TABLE>
<CAPTION>
                                            June 30,        December 31,
                                              2003             2002
                                            ---------      -------------
<S>                                         <C>            <C>
Assets
     Energy Products                        $ 152,618        $128,739
     Corporate                                 16,142          51,555
                                            ---------        --------
                                            $ 168,760        $180,294
                                            =========        ========
</TABLE>

Corporate assets consist primarily of cash, investments and assets held for
sale.

                                       9
<PAGE>

NOTE 5: INVENTORIES

         Inventories consist of the following:

<TABLE>
<CAPTION>
                                 June 30,      December 31,
(in thousands)                     2003           2002
                               ------------   --------------
<S>                            <C>            <C>
Raw materials                   $   13,698     $     20,108
Semi-finished and
    finished products               45,118           35,766
                                ----------     ------------
                                $   58,816     $     55,874
                                ==========     ============
</TABLE>

NOTE 6: PRODUCT WARRANTIES

         The Company's products are used in applications which are subject to
inherent risks including well failures, performance deficiencies, line pipe
leaks, personal injury, property damage, environmental contamination or loss of
production. The Company warrants its products to meet certain specifications and
actual or claimed deficiencies from these specifications may give rise to
claims. The Company maintains reserves for asserted and unasserted warranty
claims. The warranty claim exposure is evaluated using historical claim trends
and information available on specifically known claims. The Company also
maintains product and excess liability insurance subject to certain deductibles
that may limit the exposure to these claims. The Company considers the extent of
insurance coverage in its estimate of the reserve. The incurrence of an
unusually large or number of claims could alter the Company's exposure and the
related reserves.

         The following table identifies changes in warranty reserves from
December 31, 2002 to June 30, 2003:

<TABLE>
<CAPTION>
(in thousands)
<S>                                                       <C>
Balance, December 31, 2002                                $   1,842
     Accruals for warranties during the period                  680
     Accruals related to changes in estimates                   862
     Settlements made during the period                        (478)
                                                          ---------
Balance, June 30, 2003                                    $   2,906
                                                          =========
</TABLE>

                                       10
<PAGE>

NOTE 7: CREDIT FACILITY AND LONG-TERM DEBT

         In the second quarter of 2003, the Company redeemed the remaining $33.8
million of its 13 1/2% senior secured notes that were due on July 15, 2003. The
notes were redeemed at par plus accrued interest and were funded from existing
cash balances and borrowings under the Company's credit facility.

         In connection with the note redemption, the Company amended its
revolving credit facility. The facility provides up to $45.0 million under a
borrowing formula that is based upon eligible inventory and accounts receivable,
subject to certain reserves and satisfaction of certain conditions to each draw
under the facility. Interest rates on the facility vary according to the amount
of loans outstanding and range from the prime rate plus 1.00% to prime plus
1.75% with respect to domestic rate loans, and from the LIBOR rate plus 2.50% to
LIBOR plus 3.25% with respect to LIBOR rate loans. The credit agreement contains
financial and other covenants, including a minimum level of earnings, as defined
in the agreement, and limitations on certain types of transactions, including
the ability of the Company's subsidiaries to declare and pay dividends. The
failure to meet these covenants could reduce the amount available for borrowing.
At June 30, 2003, the Company was in compliance with these covenants. The
facility is secured by a first priority lien on substantially all of the
Company's inventories, accounts receivable, property, plant and equipment and
related intangibles.

         As of June 30, 2003, the Company had outstanding loans of $17.9 million
under the credit facility with an average weighted interest rate of 3.8%. In
addition, $5.0 million of letters of credit were issued against the credit
facility as collateral on self-insured workers compensation claims. The Company
had approximately $16.0 million in additional borrowing availability under the
facility as of June 30, 2003.

NOTE 8: SHELF REGISTRATION

         In July 2002, the Company filed a universal shelf registration
statement with the SEC for the issuance and the sale from time to time to the
public of up to $100 million in securities, including debt, preferred stock,
common stock and warrants. The SEC declared the registration statement effective
in September 2002. The Company may sell the securities in one or more separate
offerings in amounts, at prices and on terms to be determined at the time of
sale. No securities have been sold pursuant to the shelf registration. If and
when the Company offers any securities under this registration statement, the
Company will prepare and make available a prospectus supplement that includes
the specific terms of the securities being offered.

                                       11
<PAGE>

NOTE 9: COMMITMENTS AND CONTINGENCIES

         The Company has various commitments for the purchase of materials,
supplies and energy arising in the ordinary course of business.

         Legal Matters

         The Company is subject to various claims, lawsuits and administrative
proceedings arising in the ordinary course of business with respect to
environmental matters, workers' compensation, health care and product liability
coverages (each of which is self-insured to certain levels), as well as
commercial and other matters. The Company accrues for the cost of such matters
when the incurrence of such costs is probable and can be reasonably estimated.
Based upon its evaluation of available information, management does not believe
that any such matters will have, individually or in the aggregate, a material
adverse effect on the Company's consolidated financial position, results of
operations or cash flows.

         In March 2001, in connection with its restructuring, Newport closed its
electric arc furnace operation and as such, ceased using oxygen and argon that
was provided under a supply agreement with Air Products and Chemicals, Inc.
("Air Products"). On December 31, 2001, Air Products filed a civil action
against Newport and NS Group, Inc. in the United States District Court for the
Eastern District of Pennsylvania, Civil Action No. 01-7227, seeking damages for
breach of contract. In August 2002, the action against NS Group, Inc. was
dismissed without prejudice; however, in July 2003, NS Group, Inc. was
reinstated as a defendant. Based on current information, the Company believes
that the resolution of this matter will not have a material adverse effect on
the Company's consolidated financial position, results of operations or cash
flows.

         Environmental Matters

         The Company is subject to federal, state and local environmental laws
and regulations, including, among others, the Resource Conservation and Recovery
Act ("RCRA"), the Clean Air Act, the 1990 Amendments to the Clean Air Act and
the Clean Water Act, and all regulations promulgated in connection therewith.
Such laws and regulations include those concerning the discharge of contaminants
as air emissions or waste water effluents and the disposal of solid and/or
hazardous wastes such as electric arc furnace dust. As such, the Company is from
time to time involved in administrative and judicial proceedings and
administrative inquiries related to environmental matters.

         The Company operates a steel mini-mill at its Koppel, Pennsylvania
facility that produces dust that contains lead, cadmium and chromium, and is
classified as a hazardous waste. Dust produced by its electric arc furnace is
collected through emission control systems and recycled at EPA-approved
facilities.

                                       12

<PAGE>

         In October 2002, the United States Environmental Protection Agency
("EPA") issued a Notice of Violation ("NOV") to Newport for certain alleged
violations dating from 1998 to April 2000 of its Clean Air Act emission permit
for Newport's electric arc furnace that was installed in 1999 and shuttered in
early 2001. The NOV alleges that the permit issued to Newport in June 1998 was
based upon an incorrect analysis as to potential emissions, and thus represented
a violation of the Clean Air Act. In addition, the EPA has alleged certain
violations of the Clean Water Act occurred at Newport's Wilder facility in 1998.
Newport and the EPA have reached a tentative settlement for all these issues,
subject to finalizing the required Agreed Order. The resolution of these claims
will not have a material adverse effect on the Company's consolidated financial
position, results of operations or cash flows.

         The Company has a hazardous waste landfill on its property in Wilder,
Kentucky, which it no longer uses. In connection with the March 2001
restructuring actions, in which the Company closed Newport's melt shop and hot
strip mill operations, the Company accrued the estimated costs for closure and
post-closure care of the landfill. These costs were included in restructuring
charges in the first quarter of 2001. In March 2003, the Kentucky Division of
Waste Management issued a RCRA Part B permit modification to Newport that
incorporated the Company's closure plan for the facility. Work has begun on the
closure of the landfill and the Company expects the work to be completed by the
end of 2003.

         In late 2001, the EPA designated Imperial Adhesives, Inc., a former
subsidiary of the Company, as one of a number of potentially responsible parties
under the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") at an environmental remediation site. The EPA has contended that any
company linked to a CERCLA site is potentially liable for costs under the legal
doctrine of joint and several liability. This environmental remediation site
involves a municipal waste disposal facility owned and operated by an
independent operator. A preliminary study of the site is in its early stages.
Consequently, it is too early to determine the Company's liability exposure. The
Company believes, however, that the reasonably foreseeable resolution of this
matter will not have a material adverse effect on the Company's consolidated
financial position, results of operations or cash flows.

         The Company had accrued liabilities of $5.1 million and $5.2 million,
at June 30, 2003 and December 31, 2002, respectively, for environmental
remediation obligations. Based upon its evaluation of available information,
management does not believe that any of the environmental contingency matters
discussed above are likely, individually or in the aggregate, to have a material
adverse effect on the Company's consolidated financial position, results of
operations or cash flows. However, the Company cannot predict with certainty
that new information or developments with respect to its environmental
contingency matters, individually or in the aggregate, will not have a material
adverse effect on the Company's consolidated financial position, results of
operations or cash flows.

                                       13

<PAGE>

ITEM2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

         We make forward-looking statements in this report that represent our
expectations or beliefs about future events and financial performance. You can
identify these statements by forward-looking words such as "expect", "believe",
"anticipate", "goal", "plan", "intend", "estimate", "may", "will", or similar
words. Forward-looking statements are subject to known and unknown risks,
uncertainties and assumptions, including:

         -        world-wide and domestic supplies of and demand for natural gas
                  and oil;

         -        fluctuations in industry-wide tubular inventory levels;

         -        domestic and foreign competitive pressures;

         -        the level of imports and the presence or absence of
                  governmentally imposed trade restrictions;

         -        steel coil and steel scrap price volatility;

         -        manufacturing efficiencies;

         -        costs of compliance with environmental regulations;

         -        asserted and unasserted claims;

         -        general economic conditions; and

         -        other risks and uncertainties described in various sections of
                  the Company's recent filings with the Securities and Exchange
                  Commission ("SEC") under the Securities Act of 1933 and the
                  Securities Act of 1934, including those set forth in Exhibit
                  99.1 "Risk Factors" to the Company's Annual Report on Form
                  10-K for the year ended December 31, 2002.

         In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this report might not occur. In addition,
actual results could differ materially from those suggested by the
forward-looking statements. Accordingly, you should not place undue reliance on
the forward-looking statements, which speak only as of the date on which they
are made. We may not update these forward-looking statements, even though our
situation may change in the future, unless we are obligated under federal
securities laws to update and disclose material developments related to
previously disclosed information. We qualify all of our forward-looking
statements by these cautionary statements.

         For a more complete understanding of our business activities and
financial results, you should read the following analysis of financial condition
and results of operations together with the unaudited condensed consolidated
financial statements included in this report.

                                       14
<PAGE>

                              RESULTS OF OPERATIONS

OVERVIEW / OUTLOOK

         Our tubular products, commonly referred to as oil country tubular goods
("OCTG"), are primarily used in oil and natural gas drilling and production
operations. The demand for OCTG is cyclical in nature, being dependent on the
number and depth of oil and natural gas wells being drilled in the United States
and globally. The level of drilling activity is, among other things, dependent
on the current and anticipated supply and demand for oil and natural gas. Oil
and natural gas prices are volatile and can have a substantial effect upon
drilling levels and resulting demand for our energy related products. In
addition, shipments by domestic producers of OCTG products may be positively or
negatively affected by the amount of inventory held by producers, distributors
and end users, as well as by imports of OCTG products.

         The number of oil and natural gas drilling rigs in operation in the
United States is referred to as "rig count". In response to strong oil and
natural gas prices, rig count has risen steadily throughout the first half of
2003, reaching a high of 1,074 rigs at the end of June 2003. The average rig
count for the three months and six months ended June 30, 2003 was 1,028 and 959,
respectively, up 27.2% and 18.2 %, respectively, from the average rig count for
the comparable periods in 2002. We expect natural gas prices will continue to
support the current high level of drilling activity through the second half of
2003.

         In November 2001, the United States International Trade Commission
("ITC"), reported injury from various imported steel products under Section 201
of the 1974 Trade Act and recommended to the President of the United States a
wide-scale program of quotas and duties. However, the ITC recommendation for
quotas and duties did not include imports of oil country tubular goods and, as a
result, we expect to continue to experience high levels of competition from
imports. According to published industry reports and Company estimates, imports
of OCTG products accounted for 23% of the total domestic market during the first
six months of both 2003 and 2002.

         On March 5, 2002, the President of the United States announced his
remedy decision in response to the ITC's Section 201 investigation on steel
imports. Under the remedy decision, effective March 21, 2002, tariff rates of
30%, 24% and 18% will be applied to imports of hot-rolled coil for the next
three years, respectively. Imports from Canada, Mexico, and certain other
countries are exempt from the tariffs. The tariffs have had the effect of
increasing the cost of imported hot-rolled coils, which, in turn, increases the
cost of domestic hot-rolled coils. Increases in our steel costs have adversely
affected, and will continue to adversely affect, our financial results if we are
not able to successfully raise the price of our products to compensate for the
increased costs.

         Since 1995, the U.S. government has been imposing duties on imports of
various OCTG products from Argentina, Italy, Japan, Korea and Mexico in response
to antidumping and countervailing duty cases filed by several U.S. companies. In
June 2001, the ITC voted to continue these duties for five more years; various
appeals have been filed and are pending.

                                       15
<PAGE>

         We cannot predict the U.S. government's future actions regarding duties
and tariffs on imports or other trade restrictions on imports of OCTG and line
pipe products.

         Since June 2001, when we completed restructuring initiatives involving
certain operations of our businesses, we have operated two business units that
are aggregated into one reportable segment - the Energy Products segment. Our
Energy Products segment includes tubular steel products that are used in the
energy industry. These products include welded and seamless tubular goods,
primarily used in oil and natural gas drilling and production operations. We
also produce welded and seamless line pipe products, which are used in the
transmission of oil and natural gas, as well as a limited amount of other
tubular products.

         You should read Note 4 to the unaudited condensed consolidated
financial statements included in this report for additional business segment
financial information.

                                       16
<PAGE>

SECOND QUARTER AND SIX MONTHS OF 2003 COMPARED TO SECOND QUARTER AND SIX MONTHS
OF 2002.

        The Company's net sales, gross loss, operating loss and tons shipped for
the three and six months ended June 30, 2003 and 2002 are summarized in the
following table:

<TABLE>
<CAPTION>
                              Three Months Ended             Change             Six Months Ended             Change
(dollars in thousands)             June 30,               2003 vs 2002              June 30,              2003 vs 2002
                            ----------------------     -----------------     ----------------------    -----------------
                               2003        2002           $         %           2003        2002          $         %
                            ----------  ----------     --------  -------     ----------  ----------    --------  -------
<S>                         <C>         <C>            <C>       <C>         <C>         <C>           <C>       <C>
Net sales
    Welded products         $  30,238   $  26,934        3,304     12.3      $  53,346   $  44,342       9,004     20.3
    Seamless products          35,671      27,917        7,754     27.8         63,038      49,357      13,681     27.7
                            ---------   ---------      -------   ------      ---------   ---------     -------     ----
                            $  65,909   $  54,851       11,058     20.2      $ 116,384   $  93,699      22,685     24.2
                            =========   =========      =======   ======      =========   =========     =======     ====

Gross profit (loss)         $  (2,153)  $   2,253       (4,406)  (195.6)     $  (7,451)  $  (5,980)     (1,471)    24.6

Selling, general and
    administrative          $   3,805   $   3,872          (67)    (1.7)     $   8,283   $   8,194          89      1.1

Operating loss              $  (5,958)  $  (1,619)      (4,339)   268.0      $ (15,734)  $ (14,174)     (1,560)    11.0

Tons shipped
    Welded products            67,400      63,600        3,800      6.0        121,000     104,300      16,700     16.0
    Seamless products          45,500      32,200       13,300     41.3         80,900      57,500      23,400     40.7
                            ---------   ---------      -------   ------      ---------   ---------     -------     ----
                              112,900      95,800       17,100     17.8        201,900     161,800      40,100     24.8
                            =========   =========      =======   ======      =========   =========     =======     ====
Revenue per ton
    Welded products         $     449   $     424      $    25      5.9      $     441   $     425     $    16      3.8
    Seamless products       $     784   $     867      $   (83)    (9.6)     $     779   $     858     $   (79)    (9.2)

Average rig count               1,028         808          220     27.2            959         811         148     18.2

</TABLE>

NET SALES

         The increases in net sales for both the three and six months of 2003 as
compared to the comparable periods of 2002 were attributable to the higher
volume of shipments of both welded and seamless products. The increases were
partially offset by a decrease in average revenue per ton for our seamless
products that resulted in part from a change in product mix toward lower priced
products.

         The increases in shipments in both our welded and seamless energy
products was caused by a higher consumption of OCTG products in light of
increased drilling activity during the first half of 2003 as compared to the
first half of 2002.

                                       17
<PAGE>

GROSS AND OPERATING LOSSES

         Our gross and operating losses for the three and six months ended June
30 were higher than the comparable periods in 2002, primarily because of higher
purchased steel scrap and coil costs. Our gross margins were also negatively
affected in the three and six months ended June 30, 2003 when compared to the
comparable periods in 2002 because of lower revenue per ton for our seamless
products. These negative effects were partially offset by a higher absorption of
fixed costs due to higher operating levels in the first half of 2003 versus the
first half of 2002. In addition, depreciation expense was $1.9 million lower in
the first six months of 2003 than the comparable period in 2002. The lower
deprecation expense is the result of the machinery and equipment placed in
service in 1991 for the opening of our seamless operations becoming fully
depreciated.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         Selling, general and administrative expenses for the three and six
months ended June 30, 2003 were virtually unchanged compared to the comparable
periods in 2002.

INTEREST EXPENSE

         Interest expense for the three and six months ended June 30, 2003 was
$1.2 million and $2.5 million lower, respectively, than the comparable periods
in 2002 primarily as a result of the repayment of $35.0 million of our 13 1/2%
senior secured notes in July 2002. As a result of the payoff of the remainder of
our senior secured notes in June 2003 and the lower interest rates available
under our revolving credit facility, we expect interest expense to be lower for
the remainder of 2003 when compared to the first six months of 2003.

INVESTMENT INCOME (LOSS)

         Net investment income decreased $0.4 million and $1.3 million for the
three and six months ended June 30, 2003, respectively, as compared to the
comparable periods of 2002. The net investment loss for the first six months of
2003 includes $0.5 million of realized losses on investments compared to $0.1
million of realized losses in the first six months of 2002. The decrease in
investment income from the 2002 amount is also the result of lower cash and
investment balances at lower interest rates.

INCOME TAXES

         We exhausted our federal income tax refund capability in 1999, and
accordingly, tax benefits from operating losses are offset by valuation
allowances, resulting in no net federal tax benefit being recorded for losses.

                                       18
<PAGE>

NET LOSS

         We reported a net loss of $7.4 million, or a $0.36 loss per diluted
share, for the three months ended June 30, 2003, compared to a net loss of $3.9
million, or a $0.19 loss per diluted share, for the three months ended June 30,
2002. For the six months ended June 30, 2003, we reported a net loss of $18.6
million, or a $0.90 loss per diluted share, compared to a net loss for the six
months ended June 30, 2002 of $18.2 million, or an $0.88 loss per diluted share.

                         LIQUIDITY AND CAPITAL RESOURCES

         Working capital at June 30, 2003 was $35.2 million compared to $43.0
million at December 31, 2002. The working capital decrease was primarily due to
our use of cash to repay our 13 1/2% senior secured notes and to fund operating
losses for the period. The current ratio was 1.5 to 1 at June 30, 2003 compared
to 1.6 to 1 at December 31, 2002.

OPERATING CASH FLOWS

         Cash used by operating activities for the six months ended June 30,
2003 was $15.3 million and resulted from a $19.5 million increase in accounts
receivable and a $2.9 million increase in inventories, partially offset by
increases of $14.9 million and $5.7 million in accounts payable and accrued
liabilities, respectively. The increase in our accounts receivable balance is
the result of higher sales in the second quarter of 2003 as compared to sales in
the fourth quarter of 2002. The increase in inventories was to meet increases in
customer demand. The increase in accounts payable is directly related to the
higher production levels during the first half of 2003. Accrued liabilities
increased principally as the result of a $5.2 million increase in deferred
revenue, partially offset by a lower balance of accrued interest due to the
payoff of our senior secured notes in the second quarter of 2003.

         Cash used by operating activities for the six months ended June 30,
2002 was $21.4 million and resulted from a $19.6 million increase in
inventories, partially offset by increases of $6.3 million and $4.1 million in
accounts payable and accrued liabilities, respectively. The increases in
inventories and accounts payables were primarily related to purchases of
hot-rolled coils and the build of finished goods inventories. The increased
purchases of steel coils were based on our expectations of higher steel prices
in the second half of 2002. We added to our finished goods inventory to meet
anticipated increased customer demand in the second half of 2002. The increase
in accrued liabilities was the result of an increase in deferred revenue,
resulting from higher shipments in the June 2002 quarter.

                                       19
<PAGE>

INVESTING CASH FLOWS

         Cash flows from investing activities were $5.7 million and $5.8 million
for the six months ended June 30, 2003 and 2002, respectively. Proceeds from the
sales of long-term investments in both years were used for general corporate
purposes. Other, net in 2003 includes $1.9 million from the cancellation of
corporate owned life insurance policies. We made capital investments of $0.4
million and $1.0 million in the first six months of 2003 and 2002, respectively,
primarily for maintenance capital. We currently estimate capital spending for
2003 to be approximately $1.4 million.

FINANCING CASH FLOWS

         In the second quarter of 2003, we redeemed the remaining $33.8 million
of our 13 1/2% senior secured notes that were due on July 15, 2003. The notes
were redeemed at par plus accrued interest and were funded from existing cash
balances and borrowings under our credit facility.

         In connection with the note redemption, we amended our revolving credit
facility. The facility provides up to $45.0 million under a borrowing formula
that is based upon eligible inventory and accounts receivable, subject to
certain reserves and satisfaction of certain conditions to each draw under the
facility. Interest rates on the facility vary according to the amount of loans
outstanding and range from the prime rate plus 1.00% to prime plus 1.75% with
respect to domestic rate loans, and from the LIBOR rate plus 2.50% to LIBOR plus
3.25% with respect to LIBOR rate loans. The credit agreement contains financial
and other covenants, including a minimum level of earnings, as defined in the
agreement, and limitations on certain types of transactions, including the
ability of the Company's subsidiaries to declare and pay dividends. The failure
to meet these covenants could reduce the amount available for borrowing. At June
30, 2003, we were in compliance with these covenants. The facility is secured by
a first priority lien on substantially all our inventories, accounts receivable,
property, plant and equipment and related intangibles.

         As of June 30, 2003, we had outstanding loans of $17.9 million under
the credit facility. In addition, $5.0 million of letters of credit were issued
against the credit facility as collateral on self-insured workers compensation
claims. In addition, we had approximately $16.0 million in additional borrowing
availability under the facility as of June 30, 2003.

         Included in the proceeds from issuance of common stock for the six
months of 2003, is $0.1 million resulting from the exercise of common stock
warrants and the issuance of 23,398 of our common shares. In July 2003, all
remaining outstanding common stock warrants were exercised resulting in proceeds
of $0.7 million in cash proceeds and the issuance of 163,786 common shares.

         We believe that existing resources, including our revolving line of
credit, together with cash flow from operations and other borrowing sources,
will be sufficient to meet anticipated cash flow requirements for at least the
next twelve months, even in the event that availability is reduced as a result
of failure to meet a covenant.

                                       20
<PAGE>

         In July 2002 we filed a universal shelf registration statement for the
issuance and sale from time to time to the public of up to $100 million in
securities, including debt, preferred stock, common stock and warrants. The SEC
declared the shelf registration effective in September 2002. No securities have
been sold under this registration statement. We believe that the shelf
registration statement will assist in providing us with flexibility in raising
debt and/or equity financing in order to implement our strategic plan.

                   CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         The preparation of consolidated financial statements requires us to
make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an on-going basis, we evaluate our estimates, including
those related to allowance for bad debts, inventories, investments, long-lived
assets, income taxes, customer claims, product liability, restructuring
liabilities, environmental contingencies and litigation. We base our estimates
on historical experience and on various other assumptions that we believe are
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions. The critical accounting
policies we believe affect our more significant judgments and estimates used in
the preparation of our consolidated financial statements are included in Item 7.
"Management's Discussion and Analysis of Financial Condition And Results of
Operations" of the Company's Form 10-K for the year ended December 31, 2002, and
have not changed materially since that time.

                      RECENTLY ISSUED ACCOUNTING STANDARDS

         Effective January 1, 2003, we adopted Statement of Financial Accounting
Standards No. 145, "Rescission of SFAS No. 4, 44, and 64, Amendment of SFAS
No.13, and Technical Corrections" ("SFAS No. 145"). SFAS No. 145 requires gains
and losses on early extinguishment of debt to not be classified as extraordinary
items as previously required under SFAS No. 4. SFAS No. 145 further requires any
gain or loss on extinguishment of debt that was classified as an extraordinary
item in prior periods presented to be reclassified. Previously recorded losses
on the early extinguishment of debt that were classified as an extraordinary
item in prior periods have been reclassified to interest expense. The adoption
of SFAS No. 145 had no effect on our consolidated financial position,
consolidated results of operations, or cash flows.

                                       21
<PAGE>

         In December 2002, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure," ("SFAS No. 148"). SFAS No. 148 amends SFAS No. 123 to provide
alternative methods of transition for an entity that voluntarily changes to the
fair value based method of accounting for stock-based employee compensation.
SFAS No. 148 also amends the disclosure provisions of SFAS No. 123 to require
disclosure about the effects on reported net income of an entity's stock-based
employee compensation in interim financial statements. We adopted SFAS No. 148
on January 1, 2003. We did not change to the fair value based method of
accounting for stock-based employee compensation. Accordingly, the adoption of
SFAS No. 148 would only affect our financial condition or results of operations
if we elect to change to the fair value method specified in SFAS No. 123. The
adoption of SFAS No. 148 requires us to disclose the effects of its stock-based
employee compensation in interim financial statements beginning with the first
quarter of 2003 (see Note 1).

         In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities" ("SFAS No. 149"). SFAS No.
149 amends and clarifies accounting for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities under SFAS No. 133. The new guidance amends SFAS No. 133 for
decisions made: (a) as part of the Derivatives Implementation Group process that
effectively required amendments to SFAS No. 133, (b) in connection with other
Board projects dealing with financial instruments, and (c) regarding
implementation issues raised in relation to the application of the definition of
a derivative. The amendments set forth in SFAS No. 149 improve financial
reporting by requiring that contracts with comparable characteristics be
accounted for similarly. SFAS No. 149 is generally effective for contracts
entered into or modified after June 30, 2003 and for hedging relationships
designated after June 30, 2003. The adoption of SFAS No. 149 will not have a
material impact on our consolidated financial position, consolidated results of
operations, or cash flows.

      In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity"
("SFAS 150"). SFAS No. 150 requires certain financial instruments that embody
obligations of the issuer and have characteristics of both liabilities and
equity to be classified as liabilities. The provisions of SFAS No. 150 are
effective for financial instruments entered into or modified after May 31, 2003
and to all other instruments that exist as of the beginning of the first interim
financial reporting period beginning after June 15, 2003. We do not have any
financial instruments that meet the provisions of SFAS No. 150; therefore,
adopting the provisions of SFAS No. 150 had no effect on our consolidated
financial position, consolidated results of operations, or cash flows.

                                       22
<PAGE>

         Effective January 1, 2003, we adopted FASB Interpretation 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"
("FIN No. 45"). The interpretation requires that upon issuance of a guarantee,
the entity must recognize a liability for the fair value of the obligation it
assumes under that guarantee. In addition, FIN No. 45 requires disclosures about
the guarantees that an entity has issued, including a roll forward of the
entity's product warranty liabilities. This interpretation is intended to
improve the comparability of financial reporting by requiring identical
accounting for guarantees issued with separately identified consideration and
guarantees issued without separately identified consideration. Adoption of this
Interpretation had no effect on our consolidated financial position,
consolidated results of operations, or cash flows.

         In January 2003, the FASB issued FASB Interpretation No. 46,
"Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51."
("FIN No. 46"). The interpretation requires certain variable interest entities
to be consolidated by the primary beneficiary of the entity if the equity
investors in the entity do not have the characteristics of a controlling
financial interest or do not have sufficient equity at risk for the entity to
finance its activities without additional subordinated financial support from
other parties. FIN No. 46 is effective for all new variable interest entities
created or acquired after January 31, 2003. We have not utilized such entities
and therefore the adoption of FIN No. 46 had no effect on our consolidated
financial position, consolidated results of operations, or cash flows.

         In November 2002, the FASB reached a consensus on EITF Issue No. 00-21,
"Accounting for Revenue Arrangements with Multiple Deliverables." This issue
addresses how to account for arrangements that may involve the delivery or
performance of multiple products, services, and/or rights to use assets. The
final consensus of this issue is applicable to agreements entered into in fiscal
periods beginning after June 15, 2003. Additionally, companies will be permitted
to apply the consensus guidance in this issue to all existing arrangements as
the cumulative effect of a change in accounting principle in accordance with APB
Opinion No. 20, "Accounting Changes." the adoption of this issue did not have
a material impact on our consolidated financial position, consolidated
results of operations, or cash flows.

                                  OTHER MATTERS

OTHER

         You should read Note 9 to the notes to condensed consolidated financial
statements for information pertaining to commitments and contingencies.

                                       23

<PAGE>

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         We have not used derivative financial instruments for any purpose
during the three and six months ended June 30, 2003 and 2002, including trading
or speculating on changes in interest rates or commodity prices of materials.

         Purchased steel, in the form of hot-rolled coils and steel scrap,
represents the largest portion of our cost of goods sold. The price and
availability of steel coils and scrap that we use in our manufacturing processes
are highly competitive and volatile. Various factors, most of which are beyond
our control, affect the supply and price of steel coils and scrap. We believe
that changes in steel coil and scrap costs have had a significant impact on our
earnings, and we expect that future changes will continue to significantly
impact our earnings.

         We are exposed to market risk for changes in interest rates for
borrowings under our revolving credit facility. Borrowings under the credit
facility bear interest at variable rates, and the fair value of the borrowings
are not significantly affected by changes in market interest rates. If the
interest rates on our credit facility were to increase by 1%, assuming our
borrowings level at June 30, 2003, the increase in our interest expense would be
less than $0.2 million on an annualized basis.

         We purchase natural gas and electricity for our operations and,
therefore, have a limited market risk related to gas and electricity purchases
in the open market at spot prices. The prices of such purchases and futures
positions are subject to wide fluctuations due to unpredictable factors such as
weather, government policies and demand for natural gas and competitive fuels.
As a result, our earnings could be affected by changes in the price and
availability of gas and electricity. As market conditions dictate, we from time
to time will lock in future gas and electricity prices using fixed price
contracts.

ITEM 4.    CONTROLS AND PROCEDURES

         Our management, with the participation of our Chief Executive Officer
and Chief Financial Officer, has evaluated the effectiveness of our disclosure
controls and procedures as of June 30, 2003. Based on this evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures are effective for gathering, analyzing and disclosing
the information we are required to disclose in the reports we file under the
Securities Exchange Act of 1934, within the time periods specified in the SEC's
rules and forms. There were no changes in our internal control over financial
reporting that occurred during the quarter ended June 30, 2003 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

                                       24

<PAGE>

PART II -  OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

         Refer to "Legal Matters" in Note 9 to our condensed consolidated
financial statements included in Part I, Item 1 for a discussion of recent
developments related to our legal proceedings.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The annual meeting of shareholders was held on May 14, 2003. In
connection with the meeting, proxies were solicited pursuant to the Securities
Exchange Act of 1934. The shareholders elected Mr. David A. B. Brown, Mr. George
A. Helland, Jr. and Mr. Gary L. Kott as Class II Directors, to serve until the
May 2006 annual meeting. All Class I and III Directors continued in office after
the meeting. Mr. Brown, Mr. Helland, and Mr. Kott were elected by a vote of
18,081,492 shares, 18,080,042 shares and 18,081,492 shares, respectively, and
148,322 shares, 149,772 shares and 148,322 shares, respectively, withheld
authority to vote. There were no other proposals considered or voted on at the
meeting.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

         a)       Exhibits - Reference is made to the Index to Exhibits, which
                  is incorporated herein by reference.

         b)       Reports on Form 8-K

                  Current Report on Form 8-K dated April 3, 2003 furnishing
                  under Item 9 the Company's press release dated April 2, 2003,
                  announcing the early redemption call for $17.0 million of its
                  senior secured notes.

                  Current Report on Form 8-K dated April 14, 2003 furnishing
                  under Item 9 the Company's press release announcing the dates
                  and times of the Company's conference call reporting the
                  results for the quarter ended March 31, 2003.

                  Current Report on Form 8-K dated April 22, 2003 furnishing
                  under Item 9 the Company's earnings press release for the
                  quarter ended March 31, 2003.

                  Current Report on Form 8-K dated May 20, 2003 furnishing under
                  Item 9 the Company's press release dated May 20, 2003,
                  announcing the early redemption call for $16.8 million of its
                  senior secured notes.

                  Current Report on Form 8-K dated May 21, 2003 furnishing under
                  Item 9 the Company's materials in the form of a slide show
                  presentation and/or printed charts to various individual and
                  institutional investors commencing May 21, 2003.

                  Current Report on Form 8-K dated June 17, 2003 furnishing
                  under Item 9 the Company's press release announcing its
                  Chairman of its Board of Directors had entered into a formal
                  plan to sell a portion of his holdings in the Company.

                                       25

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                      NS GROUP, INC.

Date: August 8, 2003                  By: /s/ Rene J. Robichaud
                                      --------------------------
                                      Rene J. Robichaud
                                      President and Chief Executive Officer

Date: August 8, 2003                  By:  /s/ Thomas J. Depenbrock
                                      -----------------------------
                                      Thomas J. Depenbrock
                                      Vice President, Treasurer and
                                      Chief Financial Officer

                                       26

<PAGE>

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Number                                          Description
------                                          -----------
<S>           <C>
3.1(a)        Amended and Restated Articles of Incorporation of Registrant, filed as Exhibit 3.1 to
              Amendment No. 1 to Registrant's Form S-1 dated January 17, 1995, File No. 33-56637,
              and incorporated herein by this reference.

3.1(b)        Articles of Amendment to the Amended and Restated Articles of Incorporation, dated
              November 4, 1998, filed as Exhibit 3.1 to the Company's Form 10-Q for the quarter
              ended September 30, 2001, File No. 1-9838, and incorporated herein by this reference.

3.2           Amended and Restated By-Laws of Registrant, dated July 30, 2003, filed herewith.

10.1          Amendment No. 1 to Financing and Security Agreement Between The CIT Group/Business
              Credit, Inc. and Newport Steel Corporation and Koppel Steel Corporation, dated June
              20, 2003, filed herewith.

10.2          Amended and Restated Guaranty Agreement of NS Group, Inc. and Erlanger Tubular
              Corporation and Northern Kentucky Management, Inc., dated June 20, 2003, filed
              herewith.

12.1          Computation of Ratio of Earnings to Fixed Charges, filed herewith.

31.1          Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a),
              filed herewith.

31.2          Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a),
              filed herewith.

32.1          Certification Pursuant to 18 U.S.C. Section 1350 and Exchange Act Rule 13a-14(b),
              filed herewith.

32.2          Certification Pursuant to 18 U.S.C. Section 1350 and Exchange Act Rule 13a-14(b),
              filed herewith.
</TABLE>

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