<PAGE>   1

                       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, 2001


                          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 ____

At August 7, 2001, there were 20,951,888 shares outstanding of the Company's
common stock.


<PAGE>   2



                                 NS GROUP, INC.

                                      INDEX



                                                                        Page No.
                                                                        --------

PART I FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

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

Item 2. Management's Discussion and Analysis of Financial
           Condition and Results of Operations........................     20

Item 3. Quantitative and Qualitative Disclosures About
           Market Risk................................................     27



PART II OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K..............................     27





                                       2

<PAGE>   3


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,
                                                                2001           2000            2001            2000
                                                              --------        -------        --------        --------
<S>                                                          <C>              <C>           <C>             <C>
Net sales                                                     $102,727        $96,655        $184,841        $186,931
Cost of products sold                                           87,268         95,675         161,985         186,552
                                                              --------        -------        --------        --------
        Gross profit                                            15,459            980          22,856             379
Selling, general and administrative expenses                     5,476          5,304          11,101          10,870
Restructuring charges                                               --             --          55,585              --
                                                              --------        -------        --------        --------
        Operating income (loss)                                  9,983         (4,324)        (43,830)        (10,491)
Other income (expense)
   Investment income                                             1,286            571           2,124             627
   Interest expense                                             (2,580)        (2,910)         (5,102)         (5,825)
   Other, net                                                      206          1,835           1,305           2,165
                                                              --------        -------        --------        --------
        Income (loss) from continuing operations before
           income taxes and extraordinary items                  8,895         (4,828)        (45,503)        (13,524)
Provision (benefit) for income taxes                                --           (251)             --            (410)
                                                              --------        -------        --------        --------
        Income (loss) from continuing operations before
           extraordinary items                                   8,895         (4,577)        (45,503)        (13,114)
Income from discontinued operations,
   net of income taxes                                              --            460              --             766
                                                              --------        -------        --------        --------
        Income (loss) before extraordinary items                 8,895         (4,117)        (45,503)        (12,348)
Extraordinary items, net of income taxes                            --             --             (59)             --
                                                              --------        -------        --------        --------
        Net income (loss)                                     $  8,895        $(4,117)       $(45,562)       $(12,348)
                                                              ========        =======        ========        ========

Per common share - basic
        Income (loss) from continuing operations              $   0.42        $ (0.21)       $  (2.17)       $  (0.61)
        Income from discontinued operations,
              net of income taxes                                   --           0.02              --            0.04
        Extraordinary items, net of income taxes                    --             --              --              --
                                                              --------        -------        --------        --------
        Net income (loss)                                     $   0.42        $ (0.19)       $  (2.17)       $  (0.57)
                                                              ========        =======        ========        ========

Per common share - diluted
        Income (loss) from continuing operations              $   0.41        $ (0.21)       $  (2.17)       $  (0.61)
        Income from discontinued operations,
              net of income taxes                                   --           0.02              --            0.04
        Extraordinary items, net of income taxes                    --             --              --              --
                                                              --------        -------        --------        --------
        Net income (loss)                                     $   0.41        $ (0.19)       $  (2.17)       $  (0.57)
                                                              ========        =======        ========        ========

Weighted average shares outstanding
        Basic                                                   20,994         21,632          20,971          21,574
        Diluted                                                 21,689         21,632          20,971          21,574
</TABLE>





See accompanying notes to financial statements.



                                       3
<PAGE>   4



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


<TABLE>
<CAPTION>
                                                            June 30,         December 31,
                                                              2001                2000
                                                            --------           --------
<S>                                                        <C>              <C>
ASSETS
Current assets
     Cash                                                   $  3,187           $  1,451
     Short-term investments                                   63,458             43,700
     Accounts receivable, net                                 56,857             45,354
     Inventories                                              67,884             60,468
     Other current assets                                     16,710             20,591
                                                            --------           --------
        Total current assets                                 208,096            171,564

Property, plant and equipment, net                            62,355            121,052
Long-term investments                                         17,031             20,401
Other assets                                                   5,878              5,909
Assets held for disposal                                      12,610                 --
                                                            --------           --------

        Total assets                                        $305,970           $318,926
                                                            ========           ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
     Accounts payable                                       $ 30,914           $ 12,516
     Accrued liabilities                                      35,796             29,798
     Accrued restructuring charges                             7,681                 --
     Current portion of long-term debt                           110                110
                                                            --------           --------
        Total current liabilities                             74,501             42,424

Long-term debt                                                67,662             68,207
Other long-term liabilities                                    5,225              5,006
Deferred taxes                                                 6,811              6,811
                                                            --------           --------
        Total liabilities                                    154,199            122,448
                                                            --------           --------

Shareholders' equity
     Common stock, no par value                              282,907            282,750
     Treasury stock                                          (33,286)           (33,035)
     Common stock options and warrants                           572                497
     Accumulated other comprehensive loss                     (5,367)            (6,258)
     Accumulated deficit                                     (93,055)           (47,476)
                                                            --------           --------
        Total shareholders' equity                           151,771            196,478
                                                            --------           --------

        Total liabilities and shareholders' equity          $305,970           $318,926
                                                            ========           ========
</TABLE>

See accompanying notes to financial statements.




                                       4
<PAGE>   5



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



<TABLE>
<CAPTION>
                                                                       Six Months Ended June 30,
                                                                        2001               2000
                                                                      --------           --------
<S>                                                                  <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income (loss)                                                $(45,562)          $(12,348)
     Less: Income from discontinued operations,
        net of income taxes                                                 --                766
                                                                      --------           --------
     Income (loss) from continuing operations                          (45,562)           (13,114)
     Adjustments to reconcile net income (loss)
        to net cash flows from operating activities:
           Depreciation and amortization                                 8,268             10,733
           Amortization of debt discount and finance costs                 559                550
           Restructuring charges                                        55,585                 --
           Losses on sales of securities                                   511              1,247
           Changes in operating assets and liabilities
               Accounts receivable, net                                (11,231)           (12,614)
               Inventories                                              (9,103)            (2,713)
               Other current assets                                        131              2,383
               Accounts payable                                         18,399                551
               Accrued liabilities                                       1,109              5,959
                                                                      --------           --------
                    Net cash flows from operating activities            18,666             (7,018)
                                                                      --------           --------

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchases of property, plant and equipment                           (711)            (3,059)
     Proceeds from sales assets held for disposal                          972                 --
     Net sales and maturities of long-term investments                   3,752             26,228
     Changes in other assets                                              (128)               519
                                                                      --------           --------
                    Net cash flows from investing activities             3,885             23,688
                                                                      --------           --------

CASH FLOWS FROM FINANCING ACTIVITIES
     Repayments of long-term debt                                         (945)               (61)
     Proceeds from issuance of common stock                                282              1,568
     Purchase of treasury stock                                           (394)                --
                                                                      --------           --------
                    Net cash flows from financing activities            (1,057)             1,507
                                                                      --------           --------

Net cash provided by discontinued operations                                --                 64
                                                                      --------           --------

Net increase in cash and short-term investments                         21,494             18,241

Cash and short-term investments at beginning of period                  45,151             20,971
                                                                      --------           --------

Cash and short-term investments at end of period                      $ 66,645           $ 39,212
                                                                      ========           ========

Cash paid for:
           Interest                                                   $  4,714           $  5,056
           Income taxes                                               $     --           $    150
</TABLE>




See accompanying notes to financial statements.



                                       5
<PAGE>   6



                                 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 (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 Company sold its wholly owned subsidiary, Imperial Adhesives, Inc.
in October 2000. The consolidated financial statements have been restated to
reflect the disposition of Imperial as discontinued operations. Accordingly, the
revenues, costs and expenses, and cash flows of Imperial are reported through
September 30, 2000, as "Income from Discontinued Operations, Net of Taxes", and
"Net Cash Provided by Discontinued Operations."

         The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the interim period are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2001. Reference should be made to NS Group, Inc.'s Annual
Report to Shareholders included in its Form 10-K for the fiscal year ended
September 30, 2000 for additional footnote disclosure, including a summary of
significant accounting policies.

         The preparation of financial statements in conformity with generally
accepted accounting principles requires that management make certain estimates
and assumptions that affect the amounts reported in the condensed consolidated
financial statements and accompanying notes. Actual results could differ from
those estimates.

         CHANGE IN FISCAL YEAR-END

         The Company's fiscal years prior to October 1, 2000 ended on the last
Saturday of September. On November 20, 2000, the Company announced that it had
changed its fiscal year-end to a calendar year ending on December 31. The
results previously reported for the period from April 1, 2000 through July 1,
2000 and the period from January 2, 2000 through July 1, 2000 are being referred
to in this Form 10-Q as the quarter and six months ended June 30, 2000,
respectively. The Company's next full fiscal year will be for the calendar year
ended December 31, 2001.

         RECLASSIFICATIONS

         In accordance with EITF 00-10, "Accounting for Shipping and Handling
Fees and Costs", the Company changed its accounting for freight in the quarter
ended December 31, 2000. EITF 00-10 requires that a seller of goods should
classify in the income statement amounts billed to a customer for shipping and



                                       6
<PAGE>   7


handling as revenue and costs incurred for shipping and handling as an expense.
One of NS Group's subsidiaries had reported shipping charges billed to customers
as revenue, net of the actual costs incurred. The Company now reports the actual
costs incurred to ship its products as a component of cost of sales and prior
period amounts have been reclassified to conform to the 2001 presentation. This
change had no effect on the Company's gross profit margins and the effect on the
Company's reported revenues and cost of sales for prior periods was not
material.

         In addition to the reclassification of freight costs, certain other
amounts in the prior year's consolidated financial statements have been
reclassified to conform to the presentation in the current year.

         EARNINGS PER SHARE

         Basic earnings per share are computed by dividing net income (loss) by
the weighted-average number of common shares outstanding for the period. Diluted
earnings 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 only.

         Securities that could potentially dilute basic earnings per share in
the future through the issuance of 2.3 million shares of the Company's common
stock were not included in the computation of diluted net loss per share for the
six month period ended June 30, 2001, because to do so would have been
anitdilutive. In addition, 2.4 million shares were excluded for the three and
six month periods of 2000 because they were also antidilutive.

NOTE 2:  RESTRUCTURING CHARGES

         During the quarter ended March 31, 2001, the Company implemented
restructuring initiatives involving certain operations of its businesses. 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 welded tubular 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 charges, $43.4 million of which were non-cash charges. The non-cash
charges represent primarily asset impairment losses resulting from the
write-downs of the net book value of machinery, equipment and related spare
parts inventories to be sold. The asset impairment loss was determined based
upon an independent appraisal. In addition, a $0.6 million non-cash write-down
of special bar quality finished goods inventories is included in costs of
products sold. Following is a summary of the accrued restructuring liabilities
and activity through June 30, 2001:

                                            Facility
                              Employee       closing
(in thousands)               separation     and other        Total
                             ----------     ---------        -----

Balance, March 31, 2001       $ 4,941        $ 7,798        $12,739

Charged to reserves            (3,811)        (1,247)        (5,058)
                              -------        -------        -------

Balance, June 30, 2001        $ 1,130        $ 6,551        $ 7,681
                              =======        =======        =======



                                       7
<PAGE>   8


         During the quarter ended June 30, 2001, the company paid severance
related to the 205 hourly and 65 salaried employees whose positions were
eliminated by the restructuring. The restructuring liabilities for facility
closing and other costs consist primarily of estimated cancellation costs of
operating contracts and environmental remediation costs. The restructuring
liabilities will be settled by the end of 2001 except for the environmental
costs that will extend beyond 2001.

         Assets related to the operations closed, consisting of machinery and
equipment, related raw materials, spare parts and supply inventories, are
included in the category Assets Held for Disposal in the Company's June 30, 2001
consolidated balance sheet. During the quarter ended June 30, 2001, the Company
received $1.0 million of proceeds from sales of these assets, primarily the
result of scrap inventory sales.

NOTE 3: OTHER INCOME, NET

         The Company received claim settlements pertaining to its purchases of
electrodes in the years from 1992 to 1997, in the quarter ended March 31, 2001
and the quarter ended June 30, 2000. The settlements increased Other income, net
by $1.1 million, or $.05 per diluted share in 2001, and $1.7 million or $.08 per
diluted share in 2000.

NOTE 4: EXTRAORDINARY CHARGE

         During the quarter ended March 31, 2001, the Company purchased $890,000
in principal amount of its 13.5% Senior Secured Notes ("Notes") in an open
market transaction. The purchase of the Notes was accomplished through the use
of short-term investments. In connection with the purchase of the Notes, the
Company recorded an extraordinary charge of $59,000 for the premium incurred and
write-off of associated original discount and deferred finance charges.

NOTE 5: COMPREHENSIVE INCOME

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

<TABLE>
<CAPTION>
                                   Three Months Ended               Six Months Ended
                                         June 30,                        June 30,
(in thousands)                      2001           2000            2001             2000
                                   ------        -------         --------         --------
<S>                               <C>           <C>             <C>              <C>
Net Income (loss)                  $8,895        $(4,117)        $(45,562)        $(12,348)
Unrealized gains (losses)              24           (164)             891           (1,398)
                                   ------        -------         --------         --------

Comprehensive income (loss)        $8,919        $(4,281)        $(44,671)        $(13,746)
                                   ======        =======         ========         ========
</TABLE>


NOTE 6: BUSINESS SEGMENT INFORMATION

         Through June 30, 2001, The Company operated in two reportable segments.
The Company's Energy Products Segment consists primarily 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 Energy
Products Segment reflects the aggregation of two business units which have
similar products and services, manufacturing processes, customers and
distribution channels and is consistent with both internal management reporting
and resource



                                       8
<PAGE>   9


and budgetary allocations. Two Energy Products Segment customers accounted for
approximately 18% and 17%, respectively, of the segment's sales for the six
months ended June 30, 2001. The Company's Industrial Products Segment consisted
of special bar quality (SBQ) products used primarily in the manufacture of heavy
industrial equipment. This business operation was shut down in June 2001. See
Note 2 for more information.

The following table sets forth selected segment financial information for the
three and six months ended June 30, 2001 and 2000. Reference is made to Note 2
included therein concerning the Company's restructuring initiatives in 2001.


Three Months Ended June 30

<TABLE>
<CAPTION>
                                            Energy        Industrial
(in thousands)                             Products        Products        Corporate          Total
                                           --------        --------        ---------          -----
2001
<S>                                       <C>              <C>             <C>             <C>
      Net sales                            $ 98,866         $ 3,861         $    --         $102,727
      Operating income (loss)                13,267            (981)         (2,303)           9,983
      Assets                                213,369           2,114          90,487          305,970
      Depreciation and amortization           2,826              --             304            3,130
      Capital expenditures                      359              --              --              359

2000
      Net sales                            $ 82,526         $14,129         $    --         $ 96,655
      Operating income (loss)                (1,069)         (1,504)         (1,751)          (4,324)
      Assets                                213,134          43,053          86,640          342,827
      Depreciation and amortization           4,539             767             335            5,641
      Capital expenditures                      726              75              --              801
</TABLE>

Six Months Ended June 30

<TABLE>
<CAPTION>
                                            Energy         Industrial
(in thousands)                             Products         Products        Corporate         Total
                                           --------         --------        ---------         -----
<S>                                       <C>             <C>              <C>              <C>
2001
      Net sales                            $174,992         $  9,849         $    --         $184,841

      Operating income (loss)
        before restructuring items         $ 20,125         $ (3,714)        $(4,017)        $ 12,394

            Inventory mark-down                  --             (639)             --             (639)
            Restructuring charges           (44,499)          (9,486)         (1,600)         (55,585)
                                           --------         --------         -------         --------
      Operating income (loss)              $(24,374)        $(13,839)        $(5,617)        $(43,830)
                                           --------         --------         -------         --------

      Depreciation and amortization        $  7,253         $    941         $   633         $  8,827
      Capital expenditures                      711               --              --              711

2000
      Net sales                            $155,268         $ 31,663         $    --         $186,931
      Operating income (loss)                (3,346)          (3,349)         (3,796)         (10,491)
      Depreciation and amortization           9,022            1,591             670           11,283
      Capital expenditures                    2,922              137              --            3,059
</TABLE>







                                       9
<PAGE>   10



NOTE 7:  INVENTORIES

         Inventories consist of the following:

                                          June 30,       December 31,
                 (in thousands)            2001              2000
                                          -------          -------

                Raw materials             $ 1,923          $ 6,930
                Semi-finished and
                   finished products       65,961           53,538
                                          -------          -------

                                          $67,884          $60,468
                                          =======          =======



NOTE 8:  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 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 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.

         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 wastewater 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.

         As with other steel mills in the industry, the Company operates a steel
mini-mill 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 disposed of at EPA-approved
facilities.

         The Company believes that it is currently in compliance in all material
respects with all applicable environmental regulations. The Company cannot
predict the level of required capital expenditures or operating costs that may
result from future environmental regulations.




                                       10
<PAGE>   11



         Capital expenditures for environmental control facilities over the next
twelve months are not expected to be significant. New or revised environmental
regulations and laws or new information or developments with respect to the
Company's operating facilities could influence such expenditures.

         Based upon its evaluation of available information, management does not
believe that any of the Company's environmental contingency matters 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.

NOTE 9: SUPPLEMENTARY INFORMATION - CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
        (UNAUDITED)

         The Company's Notes are unconditionally guaranteed in full, jointly and
severally, by each of the Company's subsidiaries (Subsidiary Guarantors), each
of which is wholly owned. Set forth below are the condensed consolidating
financial statements of NS Group, Inc. including the Subsidiary Guarantors. The
Subsidiary Guarantors include all subsidiaries of the Company (Newport Steel
Corporation, Koppel Steel Corporation, Erlanger Tubular Corporation and Northern
Kentucky Management, Inc.). Separate financial statements and other disclosures
relating to the Guarantor Subsidiaries have not been presented because
management has determined that this information would not be material. See Note
1 regarding the sale of Imperial Adhesives, Inc.

         The following unaudited condensed consolidating financial statements
present the results of operations, financial position and cash flows of (a) NS
Group, Inc. (Parent), reflecting investments in its consolidated subsidiaries
under the equity method of accounting, (b) the guarantor subsidiaries of the
Parent and (c) the eliminations necessary to arrive at the information for the
Parent on a consolidated basis. Income tax expense (benefit) is allocated among
the consolidating entities based upon taxable income (loss) within the
companies. These condensed consolidating financial statements should be read in
conjunction with the accompanying condensed consolidated financial statements of
NS Group. All significant intercompany accounts and transactions have been
eliminated.




                                       11
<PAGE>   12


                                 NS Group, Inc.
                 Unaudited Condensed Consolidating Balance Sheet
                                  June 30, 2001


<TABLE>
<CAPTION>
(In thousands)                                                   Guarantor
                                                Parent          Subsidiaries      Eliminations     Consolidated
                                                ------          ------------      ------------     ------------
<S>                                           <C>              <C>               <C>              <C>
ASSETS
Current assets
      Cash and investments                     $  63,821         $   2,824         $      --         $ 66,645
      Accounts receivable, net                       917            55,940                --           56,857
      Inventories                                     --            67,884                --           67,884
      Other current assets                         6,521            10,189                --           16,710
                                               ---------         ---------         ---------         --------
        Total current assets                      71,259           136,837                --          208,096
Property, plant and equipment                         --           191,294                --          191,294
Accumulated depreciation                              --          (128,939)               --         (128,939)
Long-term investments                             16,491               540                --           17,031
Investment in subsidiaries                       (49,383)               --            49,383               --
Other assets                                       2,737             3,141                --            5,878
Assets held for disposal                              --            12,610                --           12,610
Intercompany, net                                198,781                --          (198,781)              --
                                               ---------         ---------         ---------         --------
        Total assets                           $ 239,885         $ 215,483         $(149,398)        $305,970
                                               =========         =========         =========         ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
      Accounts payable                         $    (109)        $  31,023         $      --         $ 30,914
      Accrued liabilities                          8,550            27,246                --           35,796
      Accrued restructuring charges                  431             7,250                --            7,681
      Current portion of long-term debt               --               110                --              110
                                               ---------         ---------         ---------         --------
        Total current liabilities                  8,872            65,629                --           74,501
Other long-term liabilities                        5,225                --                --            5,225
Long-term debt                                    67,206               456                --           67,662
Intercompany, net                                     --           198,781          (198,781)              --
Deferred taxes                                     6,811                --                --            6,811
Shareholders' equity                             151,771           (49,383)           49,383          151,771
                                               ---------         ---------         ---------         --------
   Total liabilities and
      shareholders' equity                     $ 239,885         $ 215,483         $(149,398)        $305,970
                                               =========         =========         =========         ========
</TABLE>







                                       12




<PAGE>   13


                                 NS Group, Inc.
                 Unaudited Condensed Consolidating Balance Sheet
                                December 31, 2000


<TABLE>
<CAPTION>
(In thousands)                                                   Guarantor
                                                Parent          Subsidiaries     Eliminations       Consolidated
                                                ------          ------------     ------------       ------------
<S>                                           <C>              <C>              <C>                <C>
ASSETS
Current assets
      Cash and investments                     $  42,543         $   2,608         $      --         $  45,151
      Accounts receivable                            823            44,531                --            45,354
      Inventories                                     --            60,468                --            60,468
      Other current assets                         5,154            15,437                --            20,591
                                               ---------         ---------         ---------         ---------
        Total current assets                      48,520           123,044                --           171,564

Property, plant and equipment                         --           330,757                --           330,757
Accumulated depreciation                              --          (209,705)               --          (209,705)
Long-term investments                             19,751               650                --            20,401
Investment in subsidiaries                       (16,252)               --            16,252                --
Other assets                                       2,729             3,180                --             5,909
Intercompany, net                                230,007                --          (230,007)               --
                                               ---------         ---------         ---------         ---------

        Total assets                           $ 284,755         $ 247,926         $(213,755)        $ 318,926
                                               =========         =========         =========         =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
      Accounts payable                         $     196         $  12,320         $      --         $  12,516
      Accrued liabilities                          8,568            21,230                --            29,798
      Current portion of long-term debt               --               110                --               110
                                               ---------         ---------         ---------         ---------
        Total current liabilities                  8,764            33,660                --            42,424

Other long-term liabilities                        5,006                --                --             5,006
Long-term debt                                    67,696               511                --            68,207
Intercompany, net                                     --           230,007          (230,007)               --
Deferred taxes                                     6,811                --                --             6,811
Shareholders' equity                             196,478           (16,252)           16,252           196,478
                                               ---------         ---------         ---------         ---------
     Total liabilities
      and shareholders' equity                 $ 284,755         $ 247,926         $(213,755)        $ 318,926
                                               =========         =========         =========         =========
</TABLE>


                                       13

<PAGE>   14


                                 NS Group, Inc.
            Unaudited Condensed Consolidating Statement of Operations
                    For the Three Months Ended June 30, 2001


<TABLE>
<CAPTION>
                                                                       Guarantor
(In thousands)                                           Parent       Subsidiaries    Eliminations      Consolidated
                                                         ------       ------------    ------------      ------------

<S>                                                    <C>           <C>             <C>               <C>
Net sales                                               $    --         $102,727         $    --         $102,727
Cost of products sold                                        --           87,268              --           87,268
                                                        -------         --------         -------         --------
        Gross Profit                                         --           15,459              --           15,459

Selling, general and administrative expenses                 --            5,476              --            5,476
Restructuring charges                                        --               --              --               --
                                                        -------         --------         -------         --------
        Operating income (loss)                              --            9,983              --            9,983

Other income (expense)
   Equity in earnings of subsidiaries                     3,448               --          (3,448)              --
   Investment income                                      1,254               32              --            1,286
   Interest expense                                      (2,577)              (3)             --           (2,580)
   Other, net                                               167               39              --              206
   Intercompany interest                                  4,747           (4,747)             --               --
                                                        -------         --------         -------         --------
        Income (loss) before income taxes                    --
           and extraordinary items                        7,039            5,304          (3,448)           8,895
Provision (benefit) for income taxes                     (1,856)           1,856              --               --
                                                        -------         --------         -------         --------
        Income (loss) before extraordinary items          8,895            3,448          (3,448)           8,895
Extraordinary items, net of income taxes                     --               --              --               --
                                                        -------         --------         -------         --------

        Net income (loss)                               $ 8,895         $  3,448         $(3,448)        $  8,895
                                                        =======         ========         =======         ========
</TABLE>


                                       14

<PAGE>   15


                                 NS Group, Inc.
            Unaudited Condensed Consolidating Statement of Operations
                    For the Three Months Ended June 30, 2000



<TABLE>
<CAPTION>
                                                                     Guarantor
(In thousands)                                         Parent       Subsidiaries   Eliminations   Consolidated
                                                       ------       ------------   ------------   ------------
<S>                                                  <C>           <C>            <C>            <C>
Net sales                                             $    --         $96,655         $   --        $96,655
Cost of products sold                                      --          95,675             --         95,675
                                                      -------         -------         ------        -------
        Gross Profit                                       --             980             --            980

Selling, general and administrative expenses              234           5,070             --          5,304
                                                      -------         -------         ------        -------
        Operating income (loss)                          (234)         (4,090)            --         (4,324)

Other income (expense)
   Equity in earnings of subsidiaries                  (4,362)             --          4,362             --
   Investment income                                      572              (1)            --            571
   Interest expense                                    (2,908)             (2)            --         (2,910)
   Other, net                                              (1)          1,836             --          1,835
   Intercompany interest                                5,162          (5,162)            --             --
                                                      -------         -------         ------        -------
      Income (loss) from continuing operations
           before income taxes                         (1,771)         (7,419)         4,362         (4,828)
Provision (benefit) for income taxes                    2,346          (2,597)            --           (251)
                                                      -------         -------         ------        -------
      Income (loss) from continuing operations         (4,117)         (4,822)         4,362         (4,577)

Income from discontinued operations,
      net of income taxes                                  --             460             --            460
                                                      -------         -------         ------        -------

        Net income (loss)                             $(4,117)        $(4,362)        $4,362        $(4,117)
                                                      =======         =======         ======        =======
</TABLE>




                                       15




<PAGE>   16


                                 NS Group, Inc.
            Unaudited Condensed Consolidating Statement of Operations
                     For the Six Months Ended June 30, 2001


<TABLE>
<CAPTION>
                                                                        Guarantor
(In thousands)                                           Parent        Subsidiaries     Eliminations    Consolidated
                                                         ------        ------------     ------------    ------------
<S>                                                    <C>            <C>              <C>             <C>
Net sales                                               $     --         $ 184,841         $    --        $184,841
Cost of products sold                                         --           161,985              --         161,985
                                                        --------         ---------         -------        --------
        Gross Profit                                          --            22,856              --          22,856

Selling, general and administrative expenses                  --            11,101              --          11,101
Restructuring charges                                      1,600            53,985              --          55,585
                                                        --------         ---------         -------        --------
        Operating income (loss)                           (1,600)          (42,230)             --         (43,830)

Other income (expense)
   Equity in earnings of subsidiaries                    (33,021)               --          33,021              --
   Investment income                                       2,059                65              --           2,124
   Interest expense                                       (5,096)               (6)             --          (5,102)
   Other, net                                                167             1,138              --           1,305
   Intercompany interest                                   9,769            (9,769)             --              --
                                                        --------         ---------         -------        --------
        Income (loss) before income taxes                     --
           and extraordinary items                       (27,722)          (50,802)         33,021         (45,503)
Provision (benefit) for income taxes                      17,781           (17,781)             --              --
                                                        --------         ---------         -------        --------
        Income (loss) before extraordinary items         (45,503)          (33,021)         33,021         (45,503)
Extraordinary items, net of income taxes                     (59)               --              --             (59)
                                                        --------         ---------         -------        --------

        Net income (loss)                               $(45,562)        $ (33,021)        $33,021        $(45,562)
                                                        ========         =========         =======        ========
</TABLE>



                                       16

<PAGE>   17


                                 NS Group, Inc.
            Unaudited Condensed Consolidating Statement of Operations
                     For the Six Months Ended June 30, 2000


<TABLE>
<CAPTION>
                                                                      Guarantor
(In thousands)                                         Parent        Subsidiaries     Eliminations    Consolidated
                                                       ------        ------------     ------------    ------------
<S>                                                  <C>            <C>              <C>             <C>
Net sales                                             $     --         $ 186,931         $    --        $ 186,931
Cost of products sold                                       --           186,552              --          186,552
                                                      --------         ---------         -------        ---------
        Gross Profit                                        --               379              --              379

Selling, general and administrative expenses               541            10,329              --           10,870
                                                      --------         ---------         -------        ---------
        Operating income (loss)                           (541)           (9,950)             --          (10,491)

Other income (expense)
   Equity in earnings of subsidiaries                  (10,928)               --          10,928               --
   Investment income                                       609                18              --              627
   Interest expense                                     (5,819)               (6)             --           (5,825)
   Other, net                                              263             1,902              --            2,165
   Intercompany interest                                 9,955            (9,955)             --               --
                                                      --------         ---------         -------        ---------
      Income (loss) from continuing operations
           before income taxes                          (6,461)          (17,991)         10,928          (13,524)
Provision (benefit) for income taxes                     5,887            (6,297)             --             (410)
                                                      --------         ---------         -------        ---------
      Income (loss) from continuing operations         (12,348)          (11,694)         10,928          (13,114)

Income from discontinued operations,
      net of income taxes                                   --               766              --              766
                                                      --------         ---------         -------        ---------

        Net income (loss)                             $(12,348)        $ (10,928)        $10,928        $ (12,348)
                                                      ========         =========         =======        =========
</TABLE>



                                       17


<PAGE>   18


                                 NS Group, Inc.
            Unaudited Condensed Consolidating Statement of Cash Flows
                     For the Six Months Ended June 30, 2001


<TABLE>
<CAPTION>
                                                                         Guarantor
(In thousands)                                            Parent        Subsidiaries   Eliminations     Consolidated
                                                          ------        ------------   ------------     ------------

<S>                                                     <C>            <C>            <C>              <C>
Net Cash Flows from Operating Activities                 $ 18,695         $   (29)        $    --         $ 18,666
                                                         --------         -------         -------         --------

Cash Flows from Investing Activities:
     Purchases of property,
          plant and equipment                                  --            (711)             --             (711)
     Proceeds from sale of assets held for disposal            --             972              --              972
     Net long-term investment activity                      3,752              --              --            3,752
     Change in other assets                                  (167)             39              --             (128)
                                                         --------         -------         -------         --------
     Net cash from investing activities                     3,585             300              --            3,885
                                                         --------         -------         -------         --------

Cash Flows from Financing Activities:
     Repayments of long-term debt                            (890)            (55)             --             (945)
     Proceeds from issuance of common
          stock                                               282              --              --              282
     Purchase of treasury stock                              (394)             --              --             (394)
                                                         --------         -------         -------         --------
     Net cash from financing activities                    (1,002)            (55)             --           (1,057)
                                                         --------         -------         -------         --------

Net increase (decrease) in cash and
     short-term investments                                21,278             216              --           21,494
Cash and short-term investments -
     beginning of period                                   42,543           2,608              --           45,151
                                                         --------         -------         -------         --------
Cash and short-term investments -                              --
     end of period                                       $ 63,821         $ 2,824         $    --         $ 66,645
                                                         ========         =======         =======         ========

Cash paid (received) during the period:
     Interest                                            $  4,708         $     6                         $ 4,714
     Income taxes                                        $     --         $    --                         $    --
</TABLE>


                                       18
<PAGE>   19



                                 NS Group, Inc.
            Unaudited Condensed Consolidating Statement of Cash Flows
                     For the Six Months Ended June 30, 2000


<TABLE>
<CAPTION>
                                                                Guarantor
(In thousands)                                   Parent        Subsidiaries   Eliminations    Consolidated
                                                 ------        ------------   ------------    ------------

<S>                                            <C>            <C>            <C>             <C>
Net Cash Flows from Operating Activities        $(11,794)        $ 4,776         $    --        $ (7,018)
                                                --------         -------         -------        --------

Cash Flows from Investing Activities:
     Purchases of property,
          plant and equipment                         --          (3,059)             --          (3,059)
     Net long-term investment activity            26,228              --              --          26,228
     Change in other assets                          519              --              --             519
                                                --------         -------         -------        --------
     Net cash from investing activities           26,747          (3,059)             --          23,688
                                                --------         -------         -------        --------

Cash Flows from Financing Activities:
     Repayments of long-term debt                     --             (61)             --             (61)
     Proceeds from issuance of common
          stock                                    1,568              --              --           1,568
                                                --------         -------         -------        --------
     Net cash from financing activities            1,568             (61)             --           1,507
                                                --------         -------         -------        --------

Net cash used by discontinued operations              --              64              --              64
                                                --------         -------         -------        --------

Net increase (decrease) in cash and
     short-term investments                       16,521           1,720              --          18,241
Cash and short-term investments -
     beginning of period                          18,570           2,401              --          20,971
                                                --------         -------         -------        --------
Cash and short-term investments -
     end of period                              $ 35,091         $ 4,121         $    --        $ 39,212
                                                ========         =======         =======        ========

Cash paid (received) during the period:
     Interest                                   $  5,039         $    17                        $ 5,056
     Income taxes                               $    150         $    --                        $   150
</TABLE>





                                       19


<PAGE>   20


                                 NS GROUP, INC.

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:

         o   world-wide and domestic supplies of and demand for natural gas
             and oil;
         o   fluctuations in industry-wide inventory levels;
         o   domestic and foreign competitive pressures;
         o   the level of imports and the presence or absence of
             governmentally imposed trade restrictions;
         o   manufacturing efficiencies;
         o   steel coil and steel scrap price volatility;
         o   costs of compliance with environmental regulations;
         o   asserted and unasserted claims;
         o   general economic conditions;
         o   those other risks and uncertainties described under "Risk Factors"
             included in Exhibit 99.1 of the Company's Form 10-K for its fiscal
             year ended September 30, 2000.

         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. We undertake no obligation to publicly update or
revise any forward-looking statements, whether the result of new information,
future events or otherwise.

         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.

         In November 2000, we changed our fiscal year from ending on the last
Saturday in September to a calendar year ending on December 31. References in
this Form 10-Q to the quarter and six months ended June 30, 2000 represent the
periods previously reported as from April 2, 2000 through July 1, 2000 and
January 2, 2000 through July 1, 2000. We believe that the prior year periods
provide a meaningful comparison to the current periods.

                              RESULTS OF OPERATIONS

RESTRUCTURING OF OPERATIONS

         During the quarter ended March 31, 2001, we implemented restructuring
initiatives involving certain operations of our businesses. One initiative was
to purchase hot rolled coils rather than manufacture them at our welded tubular
operations. As a result, we discontinued the production of hot-rolled coils and
closed the melt shop and hot strip mill operations at our welded tubular
facilities in Wilder, Kentucky effective March 31, 2001. In addition, we decided
to exit the special bar quality business by June 30, 2001, which was operated
from our Koppel, Pennsylvania facility.




                                       20
<PAGE>   21

         The restructuring was initiated to make us a stronger competitor with a
lower, more flexible cost structure, thereby enhancing our profit potential.
When fully implemented, the restructuring was projected to produce annual cost
savings of $16 million to $18 million, of which half would be in reduced
depreciation charges. We believe that the results for the quarter ended June 30,
2001, reflect cost savings, on an annualized basis, that approach our original
estimates.

         In the March 2001 quarter, we recorded total restructuring charges of
$56.2 million, including $43.4 million of non-cash charges resulting primarily
from the write-down of fixed assets. The closures resulted in total workforce
reductions of approximately 270 positions at the welded tubular operations in
Newport, Kentucky and the SBQ operations in Koppel, Pennsylvania.

DISCONTINUED OPERATIONS

         On October 12, 2000, we sold our wholly owned subsidiary, Imperial
Adhesives, Inc. As a result, the sales, costs and expenses and cash flows of the
Industrial Products - Adhesives Segment have been classified as discontinued
operations in our financial statements. See Note 1 to the financial statements.
Accordingly, the discussion and analysis that follow focus on the continuing
operations of our remaining segments.

GENERAL OVERVIEW / OUTLOOK

         Through June 30, 2001, we have conducted our business within two
reportable business segments - the Energy Products Segment and the Industrial
Products Segment. The Industrial Products Segment consisted of our SBQ business,
which ceased operations in June 2001.

         Our Energy Products Segment includes welded and seamless tubular goods,
primarily used in oil and natural gas drilling and production operations,
referred to as oil country tubular goods, or OCTG. We also produce welded and
seamless line pipe products used in the transmission of oil and natural gas, as
well as a limited amount of other tubular products. Our energy products are sold
primarily to distributors who supply end-users in the energy industry.

         Demand for our OCTG products is cyclical in nature and 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. Also, 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 the amount of foreign imports of OCTG products.

         Demand for OCTG products has risen steadily from the prior year as
increasing oil and natural gas prices have led to an increase in domestic
drilling activity. The average number of oil and natural gas drilling rigs in
operation in the United States, which is referred to as "rig count", rose to
1,239 in the quarter ended June 30, 2001, compared to 848 for the comparable
prior year period. However, in spite of the increase in rig count, our June 30,
2001 quarter shipments were only slightly above those of the comparable quarter
of 2000. In the June 2001 quarter, we had record shipments of seamless tubular
products that resulted from higher demand, which was almost completely offset by
lower shipments of welded carbon grade OCTG products resulting from increased
imports and high inventory levels in the marketplace. According to published
industry reports, we estimate that imports of OCTG represented 30% of the total
domestic shipments in the June 2001 quarter compared to 25% for the June 2000
quarter.



                                       21
<PAGE>   22

         Although energy product shipments for the June 2001 quarter were
comparable to the prior year period, stronger pricing along with lower costs
primarily attributable to our restructuring, enabled us to achieve record
quarterly net income in the June 2001 quarter. Recently, natural gas prices have
been negatively affected by the slowdown in the economy, milder weather and
switching to alternative fuels, and have resulted in strong injection rates into
natural gas storage. We believe that these factors may result in a reduction in
rig count over the next two quarters, which would decrease demand for OCTG
products, particularly our welded tubular products. If this occurs, we believe
our sales and operating profits will be negatively affected for at least the
next two quarters.

         Our Industrial Products Segment includes Special Bar Quality (SBQ)
products used in a variety of industrial applications such as farm equipment,
heavy machinery, construction and off-road vehicles. Our Industrial Products
Segment shipments for the June 30, 2001 quarter declined over 70% from the prior
year comparable quarter due to decreased demand and our decision to exit the SBQ
business in June 2001.

         You should read Note 6 to the unaudited condensed consolidated
financial statements included in this report for selected financial information
by business segment.


















                                       22
<PAGE>   23



         The Company's net sales, gross profit (loss), operating income (loss)
and tons shipped by business segment for the three months and six months ended
June 30, 2001 and 2000 are summarized in the following table:


<TABLE>
<CAPTION>
                                         Three Months Ended                  Six Months Ended
(dollars in thousands)                        June 30,                            June 30,
                                      -------------------------         ----------------------------
                                        2001             2000             2001                2000
                                        ----             ----             ----                ----
<S>                                  <C>              <C>              <C>                 <C>
Net sales
     Energy Products                  $ 98,866         $ 82,526         $174,992            $155,268
     Industrial Products - SBQ           3,861           14,129            9,849              31,663
                                      --------         --------         --------            --------
                                      $102,727         $ 96,655         $184,841            $186,931
                                      ========         ========         ========            ========

Gross profit (loss)
     Energy Products                  $ 16,008         $  1,978         $ 26,120            $  2,616
     Industrial Products - SBQ            (549)            (998)          (3,264)(1)          (2,237)
                                      --------         --------         --------            --------
                                      $ 15,459         $    980         $ 22,856            $    379
                                      ========         ========         ========            ========

Operating income (loss)
     Energy Products                  $ 13,267         $ (1,069)        $ 20,125            $ (3,346)
     Industrial Products - SBQ            (981)          (1,504)          (3,714)             (3,349)
                                      --------         --------         --------            --------
                                        12,286           (2,573)          16,411              (6,695)
     Restructuring charges                  --               --          (56,224)(1)              --
     Corporate allocations              (2,303)          (1,751)          (4,017)             (3,796)
                                      --------         --------         --------            --------
                                      $  9,983         $ (4,324)        $(43,830)           $(10,491)
                                      ========         ========         ========            ========

Tons shipped
     Energy Products
          Welded products               95,900          110,200          170,100             215,900
          Seamless products             57,000           41,700          102,000              79,200
          Other                            300              700              500               1,300
                                      --------         --------         --------            --------
                                       153,200          152,600          272,600             296,400
     Industrial Products - SBQ           9,900           33,900           23,900              76,300
                                      --------         --------         --------            --------
                                       163,100          186,500          296,500             372,700
                                      ========         ========         ========            ========
</TABLE>

(1)  Includes restructuring charge of $0.6 million recorded to cost of products
     sold.



         Net sales in the quarter ended June 30, 2001 were $102.7 million, an
increase of 19.8% from the second quarter of 2000. Operating income was $10.0
million for the quarter compared to an operating loss of $4.3 million in the
prior year period. Income from continuing operations before extraordinary items
was $8.9 million, or $0.41 per diluted share, in the three months ended June 30,
2001 compared to a $4.6 million loss, or a $0.21 loss per diluted share in the
prior year period.

         Net sales in the six months ended June 30, 2001 were $184.8 million, a
decrease of 1.1% from the first six months of 2000. We reported an operating
loss of $43.8 million for the six months ended June 30, 2001 compared to $10.5
million in 2000. We reported a loss from continuing operations before
extraordinary items of $45.5 million, or a $2.17 loss per basic and diluted
share, in the six months ended June 30, 2001. Excluding restructuring charges,
operating income and income from continuing operations before extraordinary
items would have been $12.4 million and $10.7 million, or $0.49 per diluted
share,



                                       23
<PAGE>   24


respectively, for the six months ended June 30, 2001. A small extraordinary
charge related to the early extinguishment of debt was recorded in the March 31,
2001 quarter.

ENERGY PRODUCTS

         Energy Products Segment sales were $98.9 million and $175.0 million in
the three and six month periods ended June 30, 2001, respectively, increases of
19.8% and 12.7%, respectively, from the comparable periods in 2000. The increase
in Energy Product Segment sales was attributable to an increase in selling
prices and an increase in shipments of seamless tubular products, offset by a
decline in welded tubular product shipments.

         Total shipments of energy products for the quarter and six months were
153,200 and 272,600 tons, respectively, an increase of 0.4% and a decrease of
8.0%, respectively, from the comparable periods in 2000. The decrease was
primarily the result of lower shipments of our welded energy products, which
declined 21.2% from the comparable prior year period. The decline in welded
energy product shipments resulted primarily from a focus by distributors on
slowing the growth in inventories of welded carbon grade OCTG products. In
addition, the level of imports negatively impacted our shipments of welded OCTG
products. During the quarter ended June 30, 2001, we shipped a record 57,000
tons of seamless products, which are substantially alloy grade products, which
was a 36.7% increase from the comparable quarter in 2000.

         Revenue per ton for our welded and seamless tubular products was $490
and $899 per ton, respectively, for the quarter ended June 30, 2001. This is an
increase of 11.1% for welded products, and a 12.1% increase for seamless
products, from the comparable quarter in 2000. Revenue per ton for both welded
and seamless showed little change from the first quarter of 2001. The improved
pricing from the prior year is directly related to the improvement in the demand
for OCTG products.

         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 United States International Trade Commission (ITC) voted to
continue these duties for five more years.

         In June 2001, a Section 201 investigation was initiated that includes
numerous steel product groups, including carbon and alloy grades of both flat
products and tubular products. The ITC is expected to vote on the form of
relief, if any, by the fourth quarter of 2001.

         In response to petitions filed with the U.S. government by us and
certain other line pipe producers, import relief was granted to the line pipe
industry effective March 1, 2000. This relief is in the form of tariffs applied
for three years to certain imports of line pipe from countries other than Canada
and Mexico.

         While the above mentioned actions have benefited or have the potential
to benefit domestic OCTG and line pipe producers, we cannot predict the U.S.
government's future actions regarding these duties and tariffs or any other
future actions regarding import duties or other trade restrictions on imports of
OCTG and line pipe products.

         The Energy Products segment recorded a gross profit of $16.0 million
and an operating profit of $13.3 million in the quarter ended June 30, 2001.
This compares to a gross profit of $2.0 million and an operating loss of $1.1
million, respectively, in the quarter ended June 30, 2000. The improvement in
our results from the prior year period was due to improved pricing for welded
and seamless tubular products and an increase in seamless energy product
shipments. In addition, steel scrap costs were significantly





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<PAGE>   25

lower in the current quarter compared to the comparable prior year period and
our welded tubular products operations benefited from purchasing steel coils in
place of using more costly internally manufactured steel coils.

         Selling, general and administrative expense for the Energy Products
segment in the quarter and six months ended June 30, 2001 increased $0.9 million
and $1.4 million, respectively for the comparable periods in 2000.

INDUSTRIAL PRODUCTS - SBQ

         The Industrial Products segment sales were $3.9 million for the quarter
ended June 30, 2001, a decrease of 72.7% from the quarter ended June 30, 2000.
SBQ product shipments for the quarter ended June 30, 2001 decreased 70.8% from
the comparable prior year period. The average selling price for SBQ products for
the quarter was $428 per ton, a 3.4% increase over the comparable period of a
year ago. The decline in shipments was primarily the result of our decision to
exit the SBQ business.

         The Industrial Products segment recorded a gross loss of $0.5 million
and an operating loss of $1.0 million in the quarter ended June 30, 2001
compared to a gross loss of $1.0 million and an operating loss of $1.5 million
in the quarter ended June 30, 2000. As previously noted, we ceased our SBQ
operations in June 2001.

INVESTMENT INCOME

         Investment income for the quarter and six months ended June 30, 2001
was $1.3 million and $2.1 million, respectively, compared to $0.6 million for
both comparable prior year periods. Income is higher in 2001 periods primarily
as a result of higher average investment balances and lower realized losses on
sales of securities, included in investment income, which were $0.5 million in
2001 compared to $1.2 million in 2000.

INCOME TAXES

         We exhausted our federal income tax refund capability in 1999, and as
such, tax benefits from operating losses normally are offset by valuation
allowances resulting in no net federal tax benefit being recorded for losses.
The recorded amounts for income taxes in the three and six months ended June 30,
2000 represent state and local income taxes.

                         LIQUIDITY AND CAPITAL RESOURCES

         Working capital at June 30, 2001 was $133.6 million compared to $129.1
million at December 31, 2000. The current ratio was 2.8 to 1 at June 30, 2001
compared to 4.0 to 1 at December 31, 2000. At June 30, 2001, we had cash and
investments totaling $ 83.7 million and had no advances against our $50 million
revolving credit facility.

         A major source of cash from operating activities from continuing
operations for the six months ended June 30, 2001 was $8.3 million in
depreciation and amortization charges. Primarily as a result of our decision to
purchase rather than produce hot rolled coils, inventories and accounts payable
increased by $9.1 million and $18.3 million, respectively. Accrued restructuring
liabilities were reduced by $5.1 million of payments during second quarter of
2001, primarily for employee separation costs. The majority of the $7.7 million
in accrued restructuring liabilities will be reduced by cash payments over the
remainder of 2001.



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<PAGE>   26

         We made capital investments in the Energy Products segment totaling
$0.4 million in the six months ended June 30, 2001. We currently estimate
capital spending for 2001 to be approximately $4.0 million, primarily for
maintenance capital in our Energy Segment.

         Our financing activities for the six months ended June 30, 2001
included the purchase of $0.9 million in principal amount of our 13.5% Senior
Secured Notes in an open market transaction. The purchase of the Senior Secured
Notes was accomplished through the use of short-term investments.

         In February 2001, our board of directors authorized the repurchase of
up to two million shares of our common stock over the next twelve months.
Repurchases are authorized to be made from time to time in open market purchases
or through privately negotiated transactions, when, in the opinion of
management, market conditions warrant. Repurchased shares will be available for
general corporate purposes.

         We calculate EBITDA as income before extraordinary items plus net
interest expense, taxes, depreciation and amortization, and excluding
restructuring charges. EBITDA was $22.0 million for the six months ended June
30, 2001 compared to $4.0 million in the comparable period ended June 30, 2000.
EBITDA provides additional information for determining our ability to meet debt
service requirements. EBITDA does not represent and should not be considered as
an alternative to net income, any other measure of performance as determined by
generally accepted accounting principles, as an indicator of operating
performance, as an alternative to cash flows from operating, investing or
financing activities or as a measure of liquidity.

         We believe that our current available cash and investments, our cash
flow from operations and our borrowing sources will be sufficient to meet
anticipated operating cash requirements, including capital expenditures, for at
least the next twelve months.

                    RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         In June 2001, the Financial Accounting Standards Board issued SFAS No.
141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 141 requires that all business combinations initiated after
June 30, 2001 be accounted for under the purchase method and addresses the
initial recognition and measurement of goodwill and other intangible assets
acquired in a business combination. Goodwill acquired subsequent to June 30,
2001 will not be amortized. SFAS No. 142 addresses the initial recognition and
measurement of intangible assets acquired outside of a business combination and
the accounting for goodwill and other intangible assets subsequent to their
acquisition. SFAS No. 142 provides that intangible assets with finite useful
lives be amortized and that goodwill and intangible assets with indefinite lives
will not be amortized, but will rather be tested at least annually for
impairment. We currently have no recorded goodwill, therefore, the provisions of
FAS 142 that are effective January 1, 2002 will have no effect on our results of
operations and financial position.

                                  OTHER MATTERS

         You should read Note 8 to the notes to condensed consolidated financial
statements for information pertaining to commitments and contingencies.



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<PAGE>   27

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Our long-term investments and long-term debt, all of which are for
other than trading purposes, are subject to interest rate risk. We utilize
professional investment advisors and consider our net interest rate risk when
selecting the type and maturity of securities to purchase for our portfolio.
Other factors considered include, but are not limited to, the timing of the
expected need for the funds invested and the repricing and credit risks of the
securities.

         As of June 30, 2001, we were not engaged in any activities which would
cause exposure to the risk of material earnings or cash flow loss due to changes
in interest rates, foreign currency exchange rates or market commodity prices.

         We purchase natural gas for our operations and therefore have market
risk related to those purchases. The prices of such gas purchases are subject to
wide fluctuations at times 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 such gas. As market conditions dictate, we from time to time will lock-in
future gas prices using fixed price contracts. We do not use financial
instruments for trading purposes and are not a party to any leveraged
derivatives.


PART II - OTHER INFORMATION

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 4, 2001 reporting under Item
            9 certain information to be presented to various individuals and
            institutional investors beginning on April 4, 2001.

            Current Report on Form 8-K dated April 18, 2001 reporting under Item
            9 the Company's press release regarding a conference call to be held
            on April 23, 2001.

            Current Report on Form 8-K dated April 23, 2001 reporting under Item
            9 the Company's earnings press release for the quarter ended
            March 31, 2001.






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                                   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 10, 2001                 By: /s/ Rene J. Robichaud
     ------------------------            ------------------------------
                                          Rene J. Robichaud
                                          President and Chief Executive Officer



Date: August 10, 2001                 By: /s/ Thomas J. Depenbrock
     ------------------------            ------------------------------
                                          Thomas J. Depenbrock
                                          Vice President, Treasurer and
                                          Chief Financial Officer



                                INDEX TO EXHIBITS


   Number         Description
   ------         -----------

    3.1           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. Articles of Amendment
                  to the Amended and Restated Articles of Incorporation, dated
                  November 4, 1988, filed herewith.

    3.2           Amended and Restated By-Laws of Registrant, dated November 4,
                  1999, filed as Exhibit 3.2 to Company's Form 10-Q for the
                  fiscal quarter ended January 1, 2000, File No. 1-9838, and
                  incorporated herein by this reference.





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