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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 March 31, 2005 COMMISSION FILE NUMBER     1-9838 NS GROUP, INC.  Kentucky
(State or other jurisdiction of
incorporation or organization)
    
    61-0985936
(I.R.S. Employer
Identification No.)
 530 West Ninth Street, Newport, Kentucky 41071
(Address, including zip code, 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 þ No o Indicate by check mark whether the registrant is an accelerated filer (as defined in
Rule 12b-2 of the Exchange Act). Yes þ No o At April 27, 2005, there were 22,225,245 shares outstanding of the Companys common stock.




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NS GROUP, INC. Page No.PART I
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsCondensed Consolidated Statements of Operations
    
    3Condensed Consolidated Balance Sheets
    
    4Condensed Consolidated Statements of Cash Flows
    
    5Notes to Condensed Consolidated Financial Statements
    
    6Item 2.
    
    Management's Discussion and Analysis of Financial Condition and Results of Operations
    
    13Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    22Item 4.
    
    Controls and Procedures
    
    22PART II
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    22Item 6.
    
    Exhibits
    
    23Exhibit 12.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
 2




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PART I  FINANCIAL INFORMATION 
 ITEM 1. FINANCIAL STATEMENTS NS GROUP, INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share amounts) (Unaudited)
 Three Months EndedMarch 31,2005
    
    
    2004Net sales
    
    $
    139,024
    
    
    $
    84,517Cost of products sold
    
    
    110,561
    
    
    
    72,802Gross profit
    
    
    28,463
    
    
    
    11,715Selling, general and administrative expenses
    
    
    5,873
    
    
    
    4,354Restructuring charges
    
    
    
    
    
    
    1,897Operating income
    
    
    22,590
    
    
    
    5,464Investment income
    
    
    239
    
    
    
    36Interest expense
    
    
    (159
    )
    
    
    (318
    )Other, net
    
    
    37
    
    
    
    (38
    )Income before income taxes
    
    
    22,707
    
    
    
    5,144Provision for income taxes
    
    
    3,374
    
    
    
    103Net income
    
    $
    19,333
    
    
    $
    5,041Net income per common share -Basic
    
    $
    0.88
    
    
    $
    0.24Diluted
    
    $
    0.86
    
    
    $
    0.24Weighted average shares outstanding -Basic
    
    
    22,062
    
    
    
    20,910Diluted
    
    
    22,529
    
    
    
    21,204
 See accompanying notes to condensed consolidated financial statements. 3




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NS GROUP, INC. 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands)
 March 31,
    
    
    December 31,2005
    
    
    2004(Unaudited)ASSETSCurrent assets:Cash and equivalents
    
    $
    43,875
    
    
    $
    30,944Accounts receivable, less allowances
of $1,533 and $1,492, respectively
    
    
    58,464
    
    
    
    54,134Inventories
    
    
    122,341
    
    
    
    119,817Operating supplies and prepaid expenses
    
    
    9,019
    
    
    
    9,498Deferred income taxes
    
    
    1,625
    
    
    
    1,625Other current assets
    
    
    2,365
    
    
    
    2,379Total current assets
    
    
    237,689
    
    
    
    218,397Property, plant and equipment, net
    
    
    43,741
    
    
    
    44,260Other assets
    
    
    2,117
    
    
    
    2,190Assets held for sale
    
    
    2,055
    
    
    
    2,055Total assets
    
    $
    285,602
    
    
    $
    266,902LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    38,095
    
    
    $
    41,061Accrued liabilities and other
    
    
    24,397
    
    
    
    25,967Deferred revenue
    
    
    13,896
    
    
    
    13,641Current portion of restructuring liabilities
    
    
    916
    
    
    
    896Current portion of long-term debt
    
    
    41
    
    
    
    41Total current liabilities
    
    
    77,345
    
    
    
    81,606Long-term debt
    
    
    411
    
    
    
    421Deferred income taxes
    
    
    1,788
    
    
    
    1,788Other long-term liabilities
    
    
    8,887
    
    
    
    8,764Total liabilities
    
    
    88,431
    
    
    
    92,579Shareholders equity:Preferred stock, no par value, 2,000 shares authorized, none issued
    
    
    
    
    
    
    Common stock, no par value, 40,000 shares authorized,
25,111 shares issued at 2005 and 2004
    
    
    288,784
    
    
    
    287,897Treasury stock, at cost, 2,897 and 3,205 shares
    
    
    (24,480
    )
    
    
    (27,085
    )Unearned compensation
    
    
    (276
    )
    
    
    (307
    )Accumulated other comprehensive income
    
    
    50
    
    
    
    58Accumulated deficit
    
    
    (66,907
    )
    
    
    (86,240
    )Shareholders equity
    
    
    197,171
    
    
    
    174,323Total liabilities and shareholders equity
    
    $
    285,602
    
    
    $
    266,902
 See accompanying notes to condensed consolidated financial statements. 4




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NS GROUP, INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)(Unaudited)
 Three Months EndedMarch 31,2005
    
    
    2004CASH FLOWS  OPERATING ACTIVITIESNet income
    
    $
    19,333
    
    
    $
    5,041Adjustments to reconcile net income to net cash flows
provided (used) by operating activities:Depreciation and amortization
    
    
    1,266
    
    
    
    1,339Amortization of deferred finance costs
    
    
    72
    
    
    
    92Restructuring charges
    
    
    
    
    
    
    1,897Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (4,330
    )
    
    
    (12,995
    )Inventories
    
    
    (2,524
    )
    
    
    (13,404
    )Other current assets
    
    
    471
    
    
    
    1,078Accounts payable
    
    
    (2,966
    )
    
    
    10,084Accrued liabilities
    
    
    (1,213
    )
    
    
    3,032Deferred revenue
    
    
    255
    
    
    
    2,336Restructuring liabilities
    
    
    
    
    
    
    (167
    )Other, net
    
    
    40
    
    
    
    190Net cash flows provided (used) by operating activities
    
    
    10,404
    
    
    
    (1,477
    )CASH FLOWS  INVESTING ACTIVITIESPurchases of property, plant and equipment
    
    
    (755
    )
    
    
    (308
    )Proceeds from sales of assets held for sale
    
    
    
    
    
    
    3,500Changes in other assets
    
    
    
    
    
    
    (61
    )Net cash flows provided (used) by investing activities
    
    
    (755
    )
    
    
    3,131CASH FLOWS  FINANCING ACTIVITIESRepayments of long-term debt
    
    
    (10
    )
    
    
    (10
    )Net repayments under revolving credit facility
    
    
    
    
    
    
    (3,464
    )Decrease in other notes payable
    
    
    
    
    
    
    (106
    )Proceeds from option exercises
    
    
    3,292
    
    
    
    163Payment of financing costs
    
    
    
    
    
    
    (105
    )Net cash flows provided (used) by financing activities
    
    
    3,282
    
    
    
    (3,522
    )Increase (decrease) in cash and equivalents
    
    
    12,931
    
    
    
    (1,868
    )Cash and equivalents at beginning of period
    
    
    30,944
    
    
    
    2,628Cash and equivalents at end of period
    
    $
    43,875
    
    
    $
    760Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    2
    
    
    $
    178Cash paid during the period for income taxes
    
    $
    625
    
    
    $
    
 See accompanying notes to condensed consolidated financial statements. 5




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NOTES TO CONDENSED CONSOLIDATED 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). The significant subsidiaries
are Newport Steel Corporation (Newport) and Koppel Steel Corporation (Koppel). 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 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 accounting principles generally accepted in the United States of America.
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, 2004 for additional footnote disclosure, including a summary of
significant accounting policies. Certain reclassifications have been made to prior period balances
in order to conform to the current period presentation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America 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. 6




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Stock-Based Compensation 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. If the Company accounted for stock-based compensation using the fair value recognition
provisions of SFAS No. 123, Accounting for Stock-Based Compensation, net income and diluted
income per share would have been as follows: Three Months EndedMarch 31,(In thousands, except per share amounts)
    
    2005
    
    
    2004Net income  as reported
    
    $
    19,333
    
    
    $
    5,014Add: Stock-based employee compensation
included in reported net income, net of
related tax effects
    
    
    27
    
    
    
    31Less: Stock-based employee compensation
expense determined under the fair value
method for all awards, net of related tax effects
    
    
    (196
    )
    
    
    (399
    )Net income  pro forma
    
    $
    19,164
    
    
    $
    4,646Diluted income per share  as reported
    
    $
    0.86
    
    
    $
    0.24Effect of stock-based employee
compensation expense determined under the fair
value method for all awards, net of related tax effects
    
    
    (0.01
    )
    
    
    (0.02
    )Diluted income per share  pro forma
    
    $
    0.85
    
    
    $
    0.22
 7




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Earnings Per Share Basic earnings per share is computed by dividing net income by the weighted-average number of
common shares outstanding for the period. Diluted earnings per share is computed by dividing net
income by the weighted average number of common shares outstanding and dilutive common stock
equivalents. The following table reconciles the number of common shares outstanding at the end of
each period to the number of weighted average basic common shares outstanding and the number of
weighted average diluted common shares outstanding for the purposes of calculating basic and
diluted earnings per common share. The table also provides the number of shares of common stock
potentially issuable at the end of each period and the number of potentially issuable shares
excluded from the diluted earnings per share computation for each period. Three Months EndedMarch 31,(In thousands)
    
    2005
    
    
    2004Number of common shares outstanding at period-end
    
    
    22,214
    
    
    
    20,930Effect of using weighted average common shares outstanding
    
    
    (152
    )
    
    
    (20
    )Weighted average basic common shares outstanding
    
    
    22,062
    
    
    
    20,910Dilutive effect of common stock options and restricted
stock units
    
    
    467
    
    
    
    294Weighted average diluted common shares outstanding
    
    
    22,529
    
    
    
    21,204Potentially issuable shares
    
    
    559
    
    
    
    1,730Number of potentially issuable shares excluded from diluted
common shares outstanding
    
    
    
    
    
    
    684
 Note 2: RESTRUCTURING LIABILITIES AND ASSETS HELD FOR SALE Restructuring Liabilities During the quarter ended March 31, 2001, the Company implemented restructuring initiatives
involving certain operations of its business. One initiative was to purchase hot-rolled coils
rather than manufacture them at the Companys welded tubular operations. As a result, the Company
discontinued the production of hot-rolled coils and closed its melt shop and hot strip mill
operations at its facilities in Wilder, Kentucky, effective March 31, 2001. In addition, the
Company decided to exit the special bar quality business by June 30, 2001, which was operated from
its Koppel, Pennsylvania facility. Consequently, in the first quarter of 2001, the Company recorded $56.2 million of
restructuring charges, including $43.4 million resulting primarily from asset impairment losses
related to machinery, equipment and related spare parts inventories to be sold. The restructuring
charges include a $0.6 million write-down of special bar quality finished goods inventories that
was included in cost of products sold. 8




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Following is a summary of the accrued restructuring liabilities and activity for the period
presented: (In thousands)
    
    Current
    
    
    Noncurrent
    
    
    TotalDecember 31, 2004
    
    $
    896
    
    
    $
    1,779
    
    
    $
    2,675Payments
    
    
    (42
    )
    
    
    
    
    
    
    (42
    )Receipts
    
    
    43
    
    
    
    
    
    
    
    43Reclassifications
    
    
    19
    
    
    
    (19
    )
    
    
    March 31, 2005
    
    $
    916
    
    
    $
    1,760
    
    
    $
    2,676
 At March 31, 2005, the current restructuring liabilities of $0.9 million represent the
estimated costs for environmental remediation and monitoring costs of a closed landfill and an
operating contract. In addition, Other long-term liabilities includes $1.8 million of restructuring
costs, of which $1.4 million represents the estimated costs for post-closure maintenance and
monitoring of a landfill and $0.4 million pertains to the estimated costs to fulfill a natural gas
transportation contract into 2009. In connection with the Companys post-closure maintenance and
monitoring obligations of the landfill, at March 31, 2005, the Company had $1.6 million of
investments held in a restricted trust account which are included in Other assets on the
consolidated balance sheet. In the first quarter of 2004, the Company recorded $1.9 million in additional restructuring
charges primarily related to the settlement of an operating contract. Assets Held for Sale Assets of the closed operations, consisting of machinery and equipment, spare parts and supply
inventories, are classified as Assets Held for Sale in the Companys consolidated balance sheet.
The assets include the Companys best estimates of the amounts expected to be realized on the sale
of the assets less costs to sell. While the estimates are based on an analysis of the facilities,
including valuations by independent appraisers, the amounts the Company will ultimately realize
could differ materially from the amounts estimated. The assets are being actively marketed by an
outside broker. Note 3: SEGMENT AND CONCENTRATIONS INFORMATION The Company operates in a single reportable segment which consists of (i) welded and seamless
tubular goods used primarily in oil and natural gas drilling and production operations (oil country
tubular goods, or OCTG); and (ii) line pipe used in the transmission of oil, natural gas and other
fluids. The segment reflects the aggregation of two business units which have similar economic
characteristics such as products and services, manufacturing processes, customers and distribution
channels and is consistent with both internal management reporting and resource and budgetary
allocations. Corporate general and administrative expenses are fully absorbed by the segment. Net sales by product category for the three month periods presented are as follows: Three Months EndedMarch 31,(In thousands)
    
    2005
    
    
    2004Welded products
    
    $
    59,872
    
    
    $
    39,409Seamless products
    
    
    79,152
    
    
    
    45,108$
    139,024
    
    
    $
    84,517
 9




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Concentrations The Companys operations are conducted principally in the United States. The Company grants
trade credit to customers, the most significant of which are distributors serving the oil and
natural gas exploration and production industries. Sales to the Companys two largest customers
accounted for 26% and 12% of net sales for the three months ended March 31, 2005. Sales to the
Companys three largest customers accounted for 26%, 10% and 10% of net sales for the three months
ended March 31, 2004. The Companys two largest customers in 2005 accounted for $19.4 million of
the Companys accounts receivable balances at March 31, 2005. The Companys three largest customers
in fiscal 2004 accounted for $28.1 million of the Companys accounts receivable balances at
December 31, 2004. The Companys welded operations depend primarily on three suppliers for its steel coils with
one supplier accounting for the majority of its purchases. If the Company would suffer the loss of
a significant customer or supplier, the effect could result in reduced sales or a delay in
manufacturing which could adversely affect operating results. Approximately 90% of the Companys 987 hourly employees are represented by the United
Steelworkers of America. The collective bargaining agreements for Newport and Koppel expire in 2009
and 2010, respectively. The collective bargaining agreement for one of the Companys tubular
finishing facilities expires in May 2006. Note 4: INVENTORIES Inventories consist of the following: March 31,
    
    
    December 31,(In thousands)
    
    2005
    
    
    2004Raw materials
    
    $
    37,900
    
    
    $
    49,054Semi-finished and finished products
    
    
    84,441
    
    
    
    70,763$
    122,341
    
    
    $
    119,817
 Note 5: REVOLVING CREDIT FACILITY The Company has a revolving credit facility that provides up to $50.0 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. At March 31, 2005, the Company was in compliance with the covenants
of the credit facility. The credit facility expires in March 2007. At March 31, 2005, the Company had $6.9 million of letters of credit outstanding under the
credit facility and approximately $43.1 million in borrowing availability. The letters of credit
are issued against the credit facility as collateral for the Companys self-insured workers
compensation program. The facility is secured by a first priority lien on substantially all of the
Companys inventories, accounts receivable and property, plant and equipment and related
intangibles. 10




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Note 6: COMMITMENTS AND CONTINGENCIES 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 coverage (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 upon the Companys consolidated financial position,
results of operations or cash flows. Environmental 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. The Company has a closed hazardous waste landfill on its property in Wilder, Kentucky that is
being monitored according to a post-closure permit that was approved by the Kentucky Division of
Waste Management. The Company has accrued the estimated costs for the post-closure maintenance and
monitoring of the landfill and escrowed the funds. In late 2001, the U.S. Environmental Protection Agency (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 ongoing. Consequently, it is too early
to determine the Companys ultimate liability. The Company believes, however, that the reasonably
foreseeable resolution of this matter will not have a material adverse effect on its consolidated
financial statements. The Company had accrued liabilities of $3.7 million at March 31, 2005 and December 31, 2004
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 upon 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. Other The Company has entered into a fixed volume and base price contract with its major supplier of
steel coils for 2005 of approximately $89.0 million, excluding raw material surcharges and extras. 11




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Note 7: PENSION AND OTHER POSTRETIREMENT PLANS Pension and post-retirement health benefit costs for the three months ended March 31, 2005 and
2004 are as follows: Pension
    
    
    HealthThree Months Ended March 31,(In thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Service cost
    
    $
    99
    
    
    $
    87
    
    
    $
    5
    
    
    $
    5Interest cost
    
    
    40
    
    
    
    33
    
    
    
    5
    
    
    
    5Recognized actuarial loss
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    7$
    140
    
    
    $
    120
    
    
    $
    17
    
    
    $
    17
 Note 8: 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 product warranty and product
liability claims. The product warranty and product liability claims exposure is evaluated using
historical claim trends and information available on specifically known claims. The Company
considers the extent of insurance coverage in its estimate of the reserve. The incurrence of an
unusually large dollar claim or a large number of claims could alter the Companys exposure and the
related reserves. The following table identifies changes in warranty reserves for the three months ended March
31, 2005 and 2004: (In thousands)
    
    2005
    
    
    2004Balance, January 1
    
    $
    2,051
    
    
    $
    3,057Accruals for warranties during the period
    
    
    1,736
    
    
    
    398Settlements made during the period
    
    
    (857
    )
    
    
    (187
    )Balance, March 31
    
    $
    2,930
    
    
    $
    3,268
 Included in the balances at March 31, 2005 and 2004 is $0.5 million of valuation accounts that
are reported against accounts receivable balances in the consolidated balance sheets. 12




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS We make forward-looking statements in this report which 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 competitive pressures;
    the level and pricing 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;
    the ability to maintain an internal control framework compliant with Sarbanes-Oxley Section 404;
    general economic conditions; and
    other risks and uncertainties described under Risk Factors included in
Exhibit 99.1 of our annual report on Form 10-K for the year ended December 31, 2004. In light of these risks, uncertainties and assumptions, the future 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 analysis of financial condition and results of operations together with the unaudited
financial statements included in this report. OVERVIEW Our Products and Facilities We are a domestic producer of seamless and welded tubular steel products serving the energy
industry. We conduct our business within a single reportable business segment. Our tubular
products, commonly referred to as oil country tubular goods (OCTG), are used primarily in oil and
natural gas drilling exploration and production operations. We also manufacture line pipe, which is
used as gathering lines for the transmission of petrochemicals and hydrocarbons. Our products are manufactured and sold under two brands. Our Koppel brand is our seamless
tubular product manufactured at our facility located near Koppel, Pennsylvania. Our Newport brand
is our welded tubular product manufactured at our tubular facilities located near Newport,
Kentucky. The primary geographic market for our products is the southwestern, western and
Appalachian regions of the United States, as well as western regions of Canada. We also operate
tubular finishing facilities in the southwest United States, where we can provide further finishing
processes to our product. 13




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Economic and Industry-Wide Factors that Affect our Business Demand for Our Products Over 90% of our revenues were derived from the sale of OCTG in the first quarters of 2005 and
2004. Therefore, our revenue is directly dependent on the demand for OCTG, which is highly cyclical
in nature. There are a number of factors that we monitor to assist us in estimating the future
demand for our OCTG product. Demand for our OCTG products is 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. Shipments by domestic
producers of OCTG products may also 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 average number of oil and gas drilling rigs operating in the United States (rig count),
domestic shipments of OCTG products (excluding exports), OCTG imports and inventories for the first
quarters of 2005 and 2004 were as follows: First Quarter2005
    
    
    2004Average natural gas price per mcf
    
    $
    6.27
    
    
    $
    5.69Average U.S. rig count
    
    
    1,283
    
    
    
    1,118Domestic OCTG shipments(millions of tons)
    
    
    0.7
    
    
    
    0.7OCTG imports(millions of tons)
    
    
    0.3
    
    
    
    0.2OCTG inventories(millions of tons at period-end)
    
    
    1.7
    
    
    
    1.5Inventory tons per rig(at period-end)
    
    
    1,299
    
    
    
    1,314
 Source: Baker Hughes, Preston Pipe and Tube Report and Company estimates Economic conditions in the United States resulted in an estimated real GDP growth of 4.4%
in 2004. Relative economic conditions continued to remain strong into the first quarter of 2005,
thus supporting natural gas prices that have kept rig count at high activity levels. Based upon
current settlement prices for natural gas futures, economists forecasts of real GDP growth in
2005, as well as other factors, we estimate the rig count will average 1,290 in 2005. The rig count
as of April 29, 2005 was 1,325. The amount of OCTG inventory in the United States marketplace also affects demand for our
products. U.S. end-users obtain OCTG from domestic and foreign tubular producers and from
draw-downs of inventory from the end-user, distributor or tubular producers. While the absolute
levels of OCTG inventories at March 31, 2005 of 1.7 million tons exceeded year ago levels, the
amount of inventory tons per rig has remained virtually unchanged at 1,299 inventory tons per rig,
which we believe represents an historically low level of inventory relative to active rigs.
Therefore, we believe that current OCTG inventory levels in the marketplace will not have a
detrimental effect on our 2005 shipments assuming our estimate of 2005 drilling levels. 14




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Imports Imports command a significant portion of the domestic OCTG market. We believe import levels
are affected by, among other things:  
    currency exchange rates;
    overall world-wide demand for OCTG;
    freight costs;
    the trade practices of foreign governments and producers; and
    the presence or absence of antidumping, countervailing duty or other U.S.
government orders that raise the cost or impose limits on imports. According to published industry reports, imports of OCTG products in the first quarter of 2005
comprised an estimated 33% of total domestic market shipments, compared to 24% in the first quarter
of 2004. 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. Under the U.S. Continued Dumping and Subsidy Offset Act (CDSOA), tariffs collected on dumped
imports are required to be directed to the industries harmed. These payments are made to cover
certain operating expenses and investment in manufacturing facilities. In September 2002, the World
Trade Organization (WTO) ruled that such payments violate international trade rules. The U.S. Trade
Representative appealed this ruling; however, the WTO upheld the ruling in January 2003. We cannot predict the U.S. governments future actions regarding duties and tariffs or any
other future actions regarding import duties or other trade restrictions on imports of OCTG and
line pipe products. We expect to continue to experience high levels of competition from imports. Costs of Our Products As a manufacturer of tubular steel products, the costs of our products include steel raw
material costs, direct and indirect labor, energy costs and other direct and indirect manufacturing
costs. The primary raw material used in our seamless operations is steel scrap, which in the first
quarter of 2005 represented approximately 24% of cost of goods sold for our seamless products. At
our welded facility, purchased steel coil is the primary raw material, which represented
approximately 80% of cost of goods sold for our welded products. As a result, the steel industry,
which is highly cyclical and volatile in nature, can affect our costs both positively and
negatively. Various factors, most of which are beyond our control, affect the price of steel scrap
and coils. These factors include:  
    supply and demand factors, both domestic and global;
    freight costs and transportation availability;
    inventory levels of brokers and distributors;
    the level of imports and exports; and
    general economic conditions. 15




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Our quarterly average cost per net ton of purchased steel scrap, used in our seamless
operations, for the comparative periods was as follows: (LINE GRAPH) The following chart illustrates the average market price of steel coil, which is used in our
welded operations, for the comparative periods presented, as reported by American Metal Market.
Such prices are illustrative of trends that we have experienced with our purchased steel coil. (LINE GRAPH) Because we value our inventory on a FIFO basis, the steel component of our cost of goods sold
lags steel price changes by four to six months. Although first quarter 2005 steel scrap and coil prices declined from the 2004 fourth quarter
levels, based upon our view of the factors that impact the price of steel scrap and coils, we
believe our annual 2005 steel scrap and coil costs will approximate the average of 2004. While our customers are currently placing orders at higher prices, thus compensating us for
increases in our raw material costs, there can be no assurance that our customers will continue to
pay higher prices for our tubular products, and that raw material supply will be consistently
available to meet our customer demand. A decline in demand for our product may result in lower
selling prices which could result in an inability to fully recover our investment in inventory. 16




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RESULTS OF OPERATIONS A summary of our results of operations, revenue per ton and tons shipped for the three months
ended March 31, 2005 and 2004 are included in the following table (dollars in thousands, except for
revenue per ton): Change2005 vs 20042005
    
    
    2004
    
    
    $
    

    
    %Net salesWelded products
    
    $
    59,872
    
    
    $
    39,409
    
    
    $
    20,463
    
    
    
    51.9Seamless products(1)
    
    
    79,152
    
    
    
    45,108
    
    
    
    34,044
    
    
    
    75.5$
    139,024
    
    
    $
    84,517
    
    
    $
    54,507
    
    
    
    64.5Gross profit
    
    $
    28,463
    
    
    $
    11,715
    
    
    $
    16,748
    
    
    
    143.0Selling, general and
administrative
    
    $
    5,873
    
    
    $
    4,354
    
    
    $
    1,519
    
    
    
    34.9Operating income (2)
    
    $
    22,590
    
    
    $
    5,464
    
    
    $
    17,126
    
    
    
    313.4Net income
    
    $
    19,333
    
    
    $
    5,041
    
    
    $
    14,292
    
    
    
    283.5Net income per
diluted share
    
    $
    0.86
    
    
    $
    0.24
    
    
    $
    0.62
    
    
    
    258.3Revenue per tonWelded products
    
    $
    1,075
    
    
    $
    568
    
    
    $
    507
    
    
    
    89.3Seamless products
    
    $
    1,467
    
    
    $
    890
    
    
    $
    577
    
    
    
    64.8Tons shippedWelded products
    
    
    55,700
    
    
    
    69,400
    
    
    
    (13,700
    )
    
    
    (19.7
    )Seamless products
    
    
    53,000
    
    
    
    50,700
    
    
    
    2,300
    
    
    
    4.5108,700
    
    
    
    120,100
    
    
    
    (11,400
    )
    
    
    (9.5
    )Average rig count
    
    
    1,283
    
    
    
    1,118
    
    
    
    165
    
    
    
    14.8
   (1)
    
    Includes sales of semi-finished steel. Such amounts are deemed immaterial.(2)
    
    Includes restructuring charges of $1.9 million in the first quarter of 2004.
See Note 2: Restructuring Charges to the Condensed Consolidated Financial Statements. 17




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Results of Operations First Quarter 2005 Compared to First Quarter 2004 Summary Net sales for 2005 were $139.0 million compared to $84.5 million in 2004, an increase of $54.5
million, or 64.5%. Operating income for 2005 was $22.6 million compared to 2004 operating income of
$5.5 million, which included $1.9 million of restructuring charges. Net income for 2005 was $19.3
million, or $0.86 per diluted share, compared to 2004 net income of $5.0 million, or $0.24 per
diluted share, which included $0.09 per diluted share in restructuring charges. Net Sales The increase in net sales in 2005 of 64.5% over 2004 was primarily attributable to significant
increases in revenue per ton for both our welded and seamless tubular products, despite a 9.5%
decrease in shipments. The increase in average revenue per ton was primarily due to price increases
resulting from the increase in demand for tubular products as well as the pass through of increased
steel costs. The decline in shipments was attributable to our welded product and occurred, in part,
due to customers building inventories in the first quarter of 2004 at a greater rate when compared
to the 2005 first quarter. Gross Profit Our
gross profit for 2005 was $28.4 million, as compared to gross profit for 2004 of $11.7
million, an increase of $16.7 million. Our gross profit percent in 2005 was 20.5% compared to a
gross profit percent of 13.9% in 2004. Gross profit improved in 2005 primarily as a result of
significant increases in prices partially offset by higher steel raw material costs. Selling General and Administrative Expenses Selling, general and administrative expenses in 2005 were higher by $1.5 million compared to
2004, but decreased as a percentage of net sales to 4.2% in 2005 from 5.2% in 2004. Customer
claims, payroll taxes related to stock option exercises and professional fees accounted for the
majority of the increase. Restructuring Charges We recorded $1.9 million of restructuring charges in the first quarter of 2004 related
primarily to the settlement of an operating contract that was cancelled in connection with the
restructuring of our operations in 2001. Investment Income, Interest Expense, Other, Net Our investment income was $0.2 million in 2005, compared to income of $0.04 million in 2004.
Investment income increased in 2005 over 2004 as a result of an increase in average invested cash
balances. Our 2005 interest expense consists primarily of fees associated with outstanding letters of
credit under our revolving credit facility, as well as the amortization of deferred financing
costs. We had no borrowings under our credit facility in 2005. Our 2004 interest expense represents
the aforementioned costs as well as interest expense on outstanding loans under the credit
facility. 18




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Income Taxes Income tax expense for the first quarter of 2005 was computed at a combined federal and state
effective tax rate of approximately 14.9% compared to a combined effective rate for the first
quarter of 2004 of 2.0%. The effective rate for the first quarter of 2005 reflects managements
estimate of the rate for the full year and is based upon annual pre-tax earning estimates and the
utilization of available net operating loss carryforwards. LIQUIDITY AND CAPITAL RESOURCES Overview Our principal sources of liquidity have historically included cash flow from operating
activities, our revolving credit facility and other sources of financing through the capital
markets. Our business is highly cyclical in nature and therefore our cash flows from operating
activities can vary significantly. We consider working capital items such as accounts receivable,
inventory, accounts payable and accrued liabilities as critical components to managing our
liquidity. We currently depend on cash flows from operations and our credit facility to fund our
working capital needs. Based upon our current market outlook, we believe income from operations will improve in the
year 2005 as compared to the year 2004 due to increased revenues, resulting primarily from
increased pricing, as well as improvements in our conversion costs. As such, we believe cash flows
from operations, together with our credit facility and other sources will be sufficient to meet our
anticipated working capital and capital expenditure requirements. Working Capital Working capital at March 31, 2005 was $160.3 million, an increase of $23.5 million from the
$136.8 million at December 31, 2004, and the ratio of current assets to current liabilities at
March 31, 2005 was 3.1 to 1 compared to 2.7 to 1 at December 31, 2004. Increases in our cash and
equivalents balances, accounts receivable and inventory accounted for $19.8 million of the increase
in working capital. At March 31, 2005 we had cash and equivalents totaling $43.9 million compared to cash and
equivalents of $30.9 million at December 31, 2004. There were no borrowings on our credit facility
at March 31, 2005. Operating Cash Flows Cash provided by operating activities in 2005 was $10.4 million. We had operating income of
$22.6 million, which included depreciation and amortization charges of $1.3 million. Operating cash
flows supported a $10.3 million net increase in our operating assets and liabilities. Major
components of the changes in our operating assets and liabilities included a $4.3 million increase
in accounts receivable, a $2.5 million increase in inventories, a decrease of $3.0 million in
accounts payable and a decrease in accrued liabilities of $1.2 million, partially offset by
increases of $0.4 million and $0.3 million in other current assets and deferred revenue,
respectively. The increase in our accounts receivable balance was primarily the result of increased
pricing. Our investment in inventory increased because of higher quantities of our seamless
products on hand to meet increased shipment levels anticipated for the second quarter as well as an
overall increase in the steel raw material costs component of inventory, particularly in our welded
operations. Accrued liabilities decreased as a result of payments for hourly and salaried profit
sharing and incentive plans during the first quarter. The increase in deferred revenue resulted
primarily from increased selling prices. 19




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Cash used by operating activities in the first quarter of 2004 was $1.5 million. We had an
operating profit of $5.5 million for the quarter, which included depreciation and amortization
charges of $1.4 million and a $1.9 million accrual for restructuring charges. Operating earnings
were used to support a net increase of $9.8 million for the quarter in our operating assets and
liabilities. Major components of the changes in our operating assets and liabilities included a
$13.0 million increase in accounts receivable and a $13.4 million increase in inventories,
partially offset by increases of $10.1 million and $5.4 million in accounts payable and accrued
liabilities, respectively. The increase in our accounts receivable balance was the result of
increased sales volume and pricing in the quarter. The increase in inventories and accounts payable
was primarily the result of incremental investments made in our seamless inventory levels in
response to anticipated increased business levels. In addition, steel raw material costs
contributed to the increase in our inventories and accounts payable. Accrued liabilities increased
principally as the result of a $2.3 million increase in deferred revenue resulting from the higher
level of business activity and an increase in accruals for profit sharing and incentive plans of
$1.7 million. Investing Cash Flows Cash flows used in investing activities were $0.8 million in 2005, which were related to the
purchase of equipment. Cash flows provided by investing activities were $3.1 million in 2004,
primarily comprised of $3.5 million of proceeds from sales of assets held for sale which were
offset by $0.3 million of equipment purchases. We currently estimate that our capital spending for the year 2005 will be approximately $17.0
million, the majority of which is estimated for maintenance and improvement projects. Our sources
of funding for capital expenditures include available cash on hand, cash flows from operations and
borrowing availability under our credit facility. The amount ultimately spent will depend upon the
availability of these resources. Financing Cash Flows Cash flows from financing activities provided $3.3 million from the exercise of stock options
in 2005. We made net repayments against our revolving credit facility of $3.5 million in 2004 and had
$11.5 million in outstanding loans under the facility as of March 31, 2004. Contractual Obligations and Other Cash Requirements We have a $50.0 million revolving credit facility that expires in March 2007. As of March 31,
2005, we had no loans outstanding under the credit facility. We had outstanding letters of credit
in the amount of $6.9 million, reducing the amount of funds available under the credit facility to
approximately $43.1 million as of March 31, 2005. The facility is secured by a first priority lien
on substantially all of our inventories, accounts receivable and property, plant and equipment. Critical Accounting Policies and Estimates Our managements discussion and analysis of our financial condition and results of operations
are based upon our condensed consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of America. The
preparation of these condensed 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 customer claims,
allowance for doubtful accounts, inventories, long-lived assets, assets held for sale, income
taxes, product liability, workers compensation claims, 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. 20




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RECENTLY ISSUED ACCOUNTING STANDARDS On December 16, 2004, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standard (SFAS) No. 123®, ''Share-Based Payment, which is a revision of
SFAS No. 123 and supersedes APB Opinion No. 25. SFAS No. 123® requires all share-based payments
to employees, including grants of employee stock options, to be valued at fair value on the date of
grant, and to be expensed over the applicable vesting period. Pro forma disclosure of the income
statement effects of share-based payments is no longer an alternative. SFAS No. 123® is effective
for us January 1, 2006. In addition, companies must also recognize compensation expense related to
any awards that are not fully vested as of the effective date. Compensation expense for the
unvested awards will be measured based on the fair value of the awards previously calculated in
developing the pro forma disclosures in accordance with the provisions of SFAS No. 123. We are
currently evaluating the requirements of SFAS 123® and its transition alternatives. The adoption
of SFAS 123® could have a material impact on our consolidated results of operations and earnings
per share depending on the number and fair value of future awards. In November 2004, the FASB issued SFAS No. 151, Inventory Costs, to amend the guidance in
Chapter 4, Inventory Pricing, of FASB Accounting Research Bulletin No. 43, Restatement and Revision
of Accounting Research Bulletins, which will become effective for us on January 1, 2006. SFAS 151
clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs,
and wasted material (spoilage). The statement requires that those items be recognized as
current-period charges. Additionally, SFAS 151 requires that allocation of fixed production
overhead to the costs of conversion be based on the normal capacity of the production facilities.
We are currently evaluating the effect that the adoption of SFAS 151 will have on our consolidated
results of operations and financial condition but do not expect SFAS 151 to have a material effect
on our results of operations, cash flows or financial condition. In December 2004, the FASB issued FASB Staff Position No. FAS 109-1, Application of FASB
Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production
Activities Provided by the American Jobs Creation Act of 2004 (FSP FAS 109-1), which states that
the FASB staff believes that the qualified production activities deduction provided by the American
Jobs Creation Act of 2004 (the Act) should be accounted for as a special deduction in accordance
with FASB Statement No. 109 (FAS 109.) This FSP was effective upon issuance. The Act provides a
deduction for income from qualified domestic production activities, which will be phased in from
2005 through 2010. Accordingly, the special deduction has no effect on deferred tax assets and
liabilities existing as of the enactment date. Rather, the impact of this deduction will be
reported in the period in which the deduction is claimed on our tax return. We are currently
evaluating the effect that of FSP FAS 109-1 will have on our consolidated results of operations and
financial condition but do not expect FSP FAS 109-1 to have a material effect on our results of
operations, cash flows or financial condition. In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset
Retirement Obligations  an interpretation of FASB Statement No. 143, (FIN 47) which clarifies the
term conditional asset retirement obligation used in SFAS No. 143, Accounting for Asset
Retirement Obligations, and specifically when an entity would have sufficient information to
reasonably estimate the fair value of an asset retirement obligation. We are required to adopt FIN
47 no later than December 31, 2005. We do not expect the adoption of FIN 47 to have a material
impact on our consolidated results of operations, cash flows or financial condition OTHER MATTERS You should read Note 6 to the Consolidated Financial Statements for information pertaining to
commitments and contingencies. In May 2005 the Company entered into a new collective bargaining agreement with its hourly
employees at Newport. In April 2005, the Company entered into a new collective bargaining agreement
with its hourly employees at Koppel. The new agreements expire in 2009 and 2010, respectively. 21




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We have not used derivative financial instruments for any purpose during the periods shown,
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. In order to ensure a
portion of our expected steel coil needs for 2005, we entered into a fixed volume and base price
contract with one major supplier for a portion of our estimated requirements. The base amount of
the commitment is approximately $89 million, excluding raw material surcharges and extras. 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. Reference is made to
Overview-Economic and Industry-Wide Factors that Affect our Business  Costs of Our Products
included in Item 2 for additional comments regarding steel costs. 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. As of
March 31, 2005, we had no borrowings outstanding under our credit facility. We purchase natural gas and electricity for our operations and, therefore, have a market risk
related to natural 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 natural gas and
electricity. As market conditions dictate, we will lock in future gas and electricity prices using
fixed price contracts. 
 ITEM 4. CONTROLS AND PROCEDURES Disclosure 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 such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period
covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial
Officer have concluded that these disclosure controls and procedures are effective for the purpose
of ensuring that material information required to be in this quarterly report is made known to them
by others on a timely basis and that information required to be disclosed in the reports that we
file or submit under the Exchange Act is accumulated and communicated to our management, including
our principal executive and principal financial officers, as appropriate, to allow timely decisions
regarding required disclosure. Changes in Internal Controls. We implemented a new payroll and human resources system
at our seamless operation effective January 1, 2005. There were no other significant changes in our
internal control over financial reporting that occurred during our most recent fiscal quarter that
has materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting. 
 PART II  OTHER INFORMATION 
 ITEM 1. LEGAL PROCEEDINGS We are subject to various claims, lawsuits and administrative proceedings arising in the
ordinary course of business with respect to workers compensation, health care and product
liability coverage, each of which is self-insured to certain levels, as well as commercial and
other matters. Reference is made to Environmental in Note 6 to our unaudited consolidated
financial statements included in Part I, concerning certain proceedings we are involved in with the
EPA. Based upon evaluation of available information, we do not believe that any such matters will
have, individually or in the aggregate, a material adverse effect upon our consolidated financial
position, results of operations or cash flows. 22




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ITEM 6. EXHIBITS (a)     (1)     Exhibits  Reference is made to the Index to Exhibits, which
is included herein as part of this report 
 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the capacities and on the
dates indicated. NS GROUP, INC.Date: May 5, 2005
    
    By:/s/René J. RobichaudRené J. Robichaud, President and ChiefExecutive Officer and Director
(Principal Executive Officer)Date: May 5, 2005
    
    By: /s/Thomas J. DepenbrockThomas J. Depenbrock, Vice President Finance, Treasurer and Chief Financial Officer (Principal
Financial Officer)Date: May 5, 2005
    
    By: /s/ Gerard J. BrinkmanGerard J. Brinkman,Corporate Controller
(Principal Accounting Officer)
 23




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INDEX TO EXHIBITS Number
    
    Description3.1(a)
    
    Amended and Restated Articles of Incorporation
of the Company, filed as Exhibit 3.1 to
Amendment No. 1 to the Company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 the Company,
dated July 30, 2003, filed as Exhibit 3.2 to the
Companys Form 10-Q for the fiscal quarter ended
June 30, 2003, File No. 1-9838, and incorporated
herein by this reference.4.1
    
    Rights Agreement dated November 17, 1998 between
the Company and Registrar and Transfer Company,
filed as Exhibit 1 to the Companys Form 8-K
dated November 5, 1998, File No. 1-9838, and
incorporated herein by this reference.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), furnished herewith.32.2
    
    Certification Pursuant to 18 U.S.C. Section 1350 and Exchange Act Rule 13a-14(b), furnished herewith.
 24