Edgar Filing: NN INC

As filed with the Securities and Exchange Commission on July 15, 2002
Registration No. 333-89950

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

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Amendment No. 1
to
FORM S-3

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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NN, Inc.
(Exact name of registrant as specified in its charter)

Delaware 62-1096725
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)

2000 Waters Edge Drive
Johnson City, Tennessee 37604
(423) 743-9151
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

Roderick R. Baty
President and Chief Executive Officer
2000 Waters Edge Drive
Johnson City, Tennessee 37604
(423) 743-9151
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

With Copies to:

James M. Ash John J. Jenkins
Blackwell Sanders Peper Calfee, Halter & Griswold
Martin LLP LLP
2300 Main Street, Suite 1400 McDonald Investment
1000 Center
Kansas City, Missouri 800 Superior Avenue
64108
(816) 983-8000 Cleveland, Ohio 44114
(216) 622-8200

Approximate date of commencement of proposed sale to the public: As soon as
possible after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest investment plans, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.

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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JULY 15, 2002

[LOGO] NN Inc

6,500,000 Shares

NN, INC.

Common Stock

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NN, Inc. is selling 2,600,000 shares of common stock and the selling
stockholders named in this prospectus are selling 3,900,000 shares. We will not
receive any proceeds from the sale of the shares by the selling stockholders.

Our common stock is quoted on the Nasdaq National Market under the symbol
"NNBR." On July 12, 2002, the closing price of our common stock on the Nasdaq
National Market was $11.20 per share.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

Investing in our common stock involves risks. See "Risk Factors" beginning
on page 6.

Per Share Total
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Public offering price................................ $ $
Underwriting discounts and commissions............... $ $
Proceeds to NN, before expenses...................... $ $
Proceeds to the selling stockholders, before expenses $ $

The Company and the selling stockholders have granted the underwriters an
option to purchase up to 975,000 additional shares of common stock to cover
over-allotments.

We expect that the common stock will be ready for delivery on or about
, 2002.

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McDonald Investments Inc. Legg Mason Wood Walker
Incorporated

The date of this Prospectus is , 2002

[Photographs of the Company's products]

TABLE OF CONTENTS

Page
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Prospectus Summary................................................................... 1
Risk Factors......................................................................... 6
Use of Proceeds...................................................................... 10
Capitalization....................................................................... 11
Price Range of Common Stock and Dividends............................................ 12
Selected Consolidated Financial Data................................................. 13
Management's Discussion and Analysis of Financial Condition and Results of Operations 14
Business............................................................................. 25
Management........................................................................... 31
Selling Stockholders................................................................. 34
Description of Our Capital Stock..................................................... 35
Underwriting......................................................................... 36
Legal Matters........................................................................ 39
Experts.............................................................................. 39
Where You Can Find More Information.................................................. 39
Incorporation of Certain Documents by Reference...................................... 40

You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information contained in this prospectus is accurate as of any date other than
the date on the front of this prospectus.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus
or incorporated by reference in this prospectus. Because this is a summary, it
is not complete and does not contain all of the information that may be
important to you. You should read this entire prospectus carefully, including
the information under "Risk Factors" and the consolidated financial statements
and the notes thereto included elsewhere in this prospectus before making an
investment decision. Unless the context otherwise requires, references to "we,"
"us," "our," "NN" or the "Company" refer collectively to NN, Inc. and its
subsidiaries, including Industrial Molding Group, L.P. ("IMC"), The Delta
Rubber Company ("Delta"), NN Arte S.De R.L. De D.V. ("NN Arte"), and NN
Euroball, ApS ("Euroball"). Unless otherwise specified, all information assumes
the underwriters do not exercise the over-allotment option.

The Company

NN manufactures and supplies high precision bearing components, consisting
of balls, rollers, seals and retainers, for leading bearing manufacturers on a
global basis. We are the leading independent manufacturer of precision steel
bearing balls for the North American and European markets. In 1998, we began
implementing a strategic plan designed to position us as a worldwide supplier
of a broad line of bearing components. Through a series of acquisitions
executed as part of that plan, we have built on our strong core ball business
and greatly expanded our bearing component product offering. Today, we offer
the industry's most complete line of bearing components. We emphasize
engineered products that take advantage of our competencies in product design
and high tolerance manufacturing processes. Our bearing customers use our
components in fully assembled ball and roller bearings, which serve a wide
variety of industrial applications in the transportation, electrical,
agricultural, construction, machinery, mining and aerospace markets.

Our bearing component products accounted for approximately 90% of our
revenue in 2001 and sales of high precision plastic products accounted for the
balance. We estimate that the size of the global market for balls, rollers,
seals and plastic retainers is $3.5 billion. Captive component production of
bearing manufacturers accounts for approximately 65% of this market, while
independent manufacturers currently serve approximately 35% of the market. We
believe that we are a leader in the independent segment of the market with an
approximate 14% market share. We also believe that the percentage of the market
served by independent manufacturers is growing due to the ongoing component
outsourcing trend among our major customers. Outsourcing components enables our
global bearing customers to focus on their core competencies in the design and
engineering of finished bearing technologies. In addition, outsourcing provides
them with significant financial advantages, including lower long-term component
costs and improved returns on invested capital.

We intend to continue to capitalize on this growing trend of outsourcing
within our global bearing customer base. Recent successes include joining with
our two largest bearing customers, SKF and INA/FAG, to create our
majority-owned subsidiary, Euroball. In forming Euroball, we contributed our
Ireland ball manufacturing facility, while SKF and INA/FAG contributed their
captive ball manufacturing facilities in Italy and Germany. Both SKF and
INA/FAG independently entered into long-term supply agreements designating
Euroball as their primary supplier of ball products in Europe. Through
Euroball, we are Europe's leading provider of precision balls.

We operate eight North American and European manufacturing facilities. Our
two U.S. ball and roller production facilities are located in Tennessee and our
Euroball subsidiary operates three manufacturing facilities located in Ireland,
Germany and Italy. Our seal, retainer and plastic products are manufactured in
three facilities located in Connecticut, Texas and Mexico.

Our Competitive Strengths

We believe that the following elements provide us with significant
competitive strengths in our markets:

. High Precision, Low-Cost Manufacturing Capabilities. Our focus on lean
manufacturing and continuous improvement have earned us a reputation as a
supply chain partner that our customers can rely upon to deliver
value-added components. We believe that our proprietary machinery,
manufacturing processes and attention to quality and service are
competitive advantages that allow us to consistently provide high quality
precision products that meet exacting tolerances. For example, our grade
3 balls are manufactured to within three-millionths (0.000003) of an inch
of roundness and our seal, retainer and plastic products are known for
meeting the strict tolerances demanded by our customers. Our efforts to
eliminate inefficient processes and improve productivity have enabled us
to maintain our status as a low-cost producer.

. Leading Outsourcing Alternative to Captive Manufacturing. Euroball is
the bearing industry's largest component outsourcing initiative and is an
important milestone for the bearing component industry. This innovative
model has enhanced the industry's awareness of the benefits of
outsourcing and has established us as a proven, independent alternative
to captive manufacturing. Our ability to focus solely on component
manufacturing allows us to provide our customers with lower cost, higher
quality products and improved customer service levels over captive
manufacturing operations. Outsourcing also enables our customers to
redirect critical capital investments.

. Uniquely Positioned as Integrated Supplier of Bearing
Components. Through our recent acquisitions, we have become a leading
independent supplier with the industry's most complete line of bearing
components. Our core ball and roller product offerings, complemented by
our more recently acquired bearing retainer and seal products, have
allowed us to expand our key customer relationships by offering them the
value of a single supply chain partner for a wide variety of components.

. Established Operating Expertise. Our experienced management team
continues to be successful in implementing our strategic plan by
completing and integrating three major acquisitions since 1998 and
executing significant cost rationalization programs domestically and in
Europe. Our nine senior managers average over 13 years of experience in
the bearing component industry, which has allowed us to establish
excellent working relationships with major bearing companies. Our
management team has a proven track record of successfully managing our
global businesses through international economic cycles, including the
most recent economic downturn.

Our Business Strategy

Our strategic plan is designed to increase our revenues, income and
long-term shareholder value by:

. Expanding Our Global Presence. We believe that maintaining production
facilities in proximity to our major customers' manufacturing operations
is essential. We see significant opportunities to increase market share
and maintain our competitive cost advantage by expanding our global
presence. We established our European presence in 1997 and, through
Euroball, have become Europe's leading provider of precision balls to the
bearing industry. We see further opportunities to expand our global
manufacturing base to Asia, Eastern Europe and other geographic regions
to more effectively serve the customers in these markets.

. Expanding Our Bearing Component Product Offerings. We seek to build on
existing customer relationships and our core manufacturing and service
competencies by diversifying into additional bearing component
businesses. Our acquisitions have given us full-service design and
production capabilities in bearing seals and plastic bearing retainers.
These products serve the same global bearing customers as our core ball
and roller products. As a result, we are able to provide, as a single
independent company, a more diversified product offering to our global
bearing customers.

. Continuing to Pursue Strategic Acquisitions and Alliances. Because much
of the world's bearing production capacity is located outside of the
U.S., we have sought to develop an effective way to serve our customers
on a global basis and expand these critical customer relationships. We
believe that outsourcing transactions and strategic acquisitions
represent the most effective way to expand these relationships. The
success of our approach, as in the case of Euroball, provides a framework
for future strategic alliances and for future acquisitions of our
customers' captive bearing component operations.

Corporate Information

Our principal executive offices are located at 2000 Waters Edge Drive,
Johnson City, Tennessee 37604 and our telephone number is (423) 743-9151. Our
website address is www.nnbr.com. Information contained on our website is not
part of this prospectus.

The Offering

Common stock being offered by:
The Company................................... 2,600,000 shares
The selling stockholders...................... 3,900,000 shares
Total..................................... 6,500,000 shares(1)

Common stock to be outstanding after this offering 17,967,273 shares(1)(2)

Use of Proceeds................................... We will use the estimated net proceeds of
$27.2 million to repay a portion of our
outstanding bank indebtedness. We will not
receive any proceeds from the sale of shares
by any of the selling stockholders. See "Use
of Proceeds."

Nasdaq National Market symbol..................... NNBR

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(1) Does not include up to 975,000 shares the underwriters have the option to
purchase to cover over-allotments.
(2) Based on the number of shares outstanding as of July 12, 2002, excluding
1,321,000 shares which may be issued upon exercise of currently outstanding
options granted under our Stock Incentive Plan and options granted to our
non-employee directors.

Cautionary Statement Concerning Forward-Looking Statements

This prospectus includes and incorporates by reference "forward-looking
statements" as that term is defined in the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are based on our current
expectations, estimates and projections about the industry and markets in which
we operate. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates" and variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and involve risks,
uncertainties and assumptions, which are difficult to predict and many of which
are beyond our control, including those described in "Risk Factors" on pages 6
through 9 of this prospectus. Therefore, actual outcomes and results may differ
materially from what is expressed, forecasted or implied in such
forward-looking statements. We undertake no obligation to publicly update any
forward-looking statements, whether as a result of new information, future
events or otherwise, expect as required by applicable law.

Summary Consolidated Financial Data

The summary consolidated financial data presented below have been derived
from our consolidated financial statements. Our consolidated financial
statements as of and for the years ended December 31, 2000 and 2001 have been
audited by KPMG LLP. Our consolidated financial statements as of and for the
years ended December 31, 1997, 1998 and 1999 have been audited by
PricewaterhouseCoopers LLP. Data for the three-month periods ended March 31,
2001 and 2002 have been derived from unaudited consolidated financial
statements which, in our opinion, reflect all adjustments necessary for a fair
presentation. Results for the three-month periods are not necessarily
indicative of results for the full year. You should read the summary
consolidated financial data presented below in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations," our
consolidated financial statements and the notes thereto and other financial
information included elsewhere in this prospectus or incorporated by reference.

Three Months
Year Ended December 31, Ended March 31,
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1997 1998 1999 2000 2001 2001 2002
------- ------- ------- -------- -------- ------- -------

Statement of Income Data: (in thousands, except per share data)
Net sales........................................... $75,252 $73,006 $85,294 $132,129 $180,151 $50,227 $47,200
Cost of products sold............................... 51,707 50,353 59,967 93,926 137,591 38,184 35,532
------- ------- ------- -------- -------- ------- -------
Gross profit........................................ 23,545 22,653 25,327 38,203 42,560 12,043 11,668
Selling, general and administrative expenses........ 5,518 5,896 6,854 11,571 16,382 4,014 4,498
Depreciation and amortization....................... 4,106 4,557 6,131 9,165 13,340 3,310 2,825
Restructuring and impairment costs.................. -- -- -- -- 2,312 -- 78
------- ------- ------- -------- -------- ------- -------
Income from operations.............................. 13,921 12,200 12,342 17,467 10,526 4,719 4,267
Interest expense.................................... 29 64 523 1,773 4,006 1,182 601
Equity in earnings of unconsolidated affiliates..... -- -- -- (48) -- (49) --
Net gain on involuntary conversion.................. -- -- -- (728) (3,901) -- --
Other income........................................ -- -- -- (136) (186) (132) (355)
------- ------- ------- -------- -------- ------- -------
Income before provision for income taxes............ 13,892 12,136 11,819 16,606 10,607 3,718 4,021
Provision for income taxes.......................... 5,382 4,480 4,060 5,959 4,094 1,636 1,505
Minority interest in consolidated subsidiaries...... -- -- -- 660 1,753 536 668
------- ------- ------- -------- -------- ------- -------
Income before cumulative effect of change in
accounting principle............................... 8,510 7,656 7,759 9,987 4,760 1,546 1,848
Cumulative effect of change in accounting principle. -- -- -- -- 98 98 --
------- ------- ------- -------- -------- ------- -------
Net income.......................................... $ 8,510 $ 7,656 $ 7,759 $ 9,987 $ 4,662 $ 1,448 $ 1,848
======= ======= ======= ======== ======== ======= =======

Earnings Per Share:
Diluted............................................. $ 0.57 $ 0.52 $ 0.52 $ 0.64 $ 0.30 $ 0.09 $ 0.12
Basic............................................... $ 0.57 $ 0.52 $ 0.52 $ 0.66 $ 0.31 $ 0.10 $ 0.12
Weighted average common shares outstanding--
diluted............................................ 14,809 14,804 15,038 15,531 15,540 15,396 15,735
Weighted average common shares
outstanding--basic................................. 14,804 14,804 15,021 15,247 15,259 15,247 15,341

Other Data:
EBITDA(1)........................................... $18,027 $16,757 $18,473 $ 26,632 $ 26,178 $ 8,029 $ 7,170
Capital expenditures................................ 8,775 5,758 2,394 17,910 6,314 1,978 849
Cash dividends per share............................ $ 0.32 $ 0.32 $ 0.32 $ 0.32 $ 0.32 $ 0.08 $ 0.08

As of March 31, 2002
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As
Actual Adjusted (2)
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Balance Sheet Data:
Working capital............ $ 20,692 $ 25,814
Total assets............... 189,420 189,420
Total debt................. 54,047 26,797
Total stockholders' equity. 62,728 89,978

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(1) EBITDA is defined as the sum of income before income taxes, interest
expense and depreciation and amortization. EBITDA as measured in this
prospectus also excludes restructuring and impairment costs, equity in
earnings of unconsolidated affiliates, net gain on involuntary conversion
and other income and is not necessarily comparable with similarly titled
measures for other companies. EBITDA is commonly used as an analytical
indicator and also serves as a measure of leverage capacity and debt
servicing ability. EBITDA should not be considered as a measure of
financial performance under accounting principles generally accepted in the
United States. The items excluded from EBITDA are significant components in
understanding and assessing financial performance. EBITDA should not be
considered in isolation or as an alternative to net income, cash flows
generated by operating, investing or financing activities or other
financial statement data presented in the consolidated financial statements
as an indicator of financial performance or liquidity.
(2) Adjusted to reflect the sale of 2,600,000 shares of our common stock in
this offering at an assumed offering price of $11.20 per share (the last
reported sale price on July 12, 2002) less underwriting commissions and
estimated offering expenses payable by us and the application of the
estimated net proceeds as discussed in "Use of Proceeds."

RISK FACTORS

You should carefully consider the following risks and uncertainties, and
all other information contained in this prospectus or incorporated herein by
reference, before making an investment in our common stock. The risks described
below are not the only ones facing our Company. Additional risks and
uncertainties not presently known to us or that we currently believe to be
immaterial may also impair our business operations. Any of the following risks
could have a material adverse effect on our business, financial condition or
operating results. In such case, the trading price of our common stock could
decline and you may lose all or part of your investment.

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

Sales to various U.S. and foreign divisions of SKF, which is one of the
largest bearing manufacturers in the world, accounted for approximately 35% of
net sales in 2001, and sales to INA/FAG accounted for approximately 19% of net
sales. During 2001, our ten largest customers accounted for approximately 73%
of our consolidated net sales. None of our other customers accounted for more
than 5% of our net sales for 2001. The loss of all or a substantial portion of
sales to these customers would have a material adverse effect on our business.

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

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

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

Acquiring businesses that complement or expand our operations has been and
continues to be an important element of our business strategy. We bought our
plastic bearing component business in 1999, formed Euroball in 2000 and
acquired our bearing seal operations in 2001. We cannot assure you that we will
be successful in identifying attractive acquisition candidates or completing
acquisitions on favorable terms in the future. In addition, we may borrow funds
to acquire other businesses, increasing our interest expense and debt levels.
Our inability to acquire businesses, or to operate them profitably once
acquired, could have a material adverse effect on our business, financial
condition and results of operations.

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

We cannot assure you that any future acquisition will enhance our financial
performance. Our ability to effectively integrate any future acquisitions will
depend on, among other things, the adequacy of our implementation plans, the
ability of our management to oversee and operate effectively the combined
operations and our ability to achieve desired operating efficiencies and sales
goals. If we are not able to integrate the operations of acquired companies
successfully into our business, our future earnings and profitability could be
materially and adversely affected.

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

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

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

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

. adverse foreign currency fluctuations;

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

. the imposition of trade restrictions or prohibitions;

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

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

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

We do not have a hedging program in place to help limit the risk associated
with consolidating the operating results of our foreign businesses into U.S.
dollars. An increase in the value of the U.S. dollar and/or the Euro relative
to other currencies may adversely affect our ability to compete with our
foreign-based competitors for international, as well as domestic, sales. Also,
a decline in the value of the Euro relative to the U.S. dollar will negatively
impact our consolidated financial results, which are denominated in U.S.
dollars.

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

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

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

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

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

We have significantly expanded our ball and roller production facilities
and capacity over the last several years. During 1997, we built an additional
manufacturing plant in Kilkenny, Ireland, and we continued this expansion in
2000 through the formation of Euroball with SKF and INA/FAG. Our ball and
roller facilities currently are not operating at full capacity and our results
of operations for 2001 were adversely affected by the under-utilization of our
production facilities, and we face risks of further under-utilization or
inefficient utilization of our production facilities in future years.

The price of our common stock may be volatile.

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

. our operating and financial performance and prospects;

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

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

. loss of any member of our senior management team;

. speculation in the press or investment community;

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

. sales of our common stock by stockholders;

. general market conditions; and

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

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

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

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

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

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

USE OF PROCEEDS

We estimate that the net proceeds we will receive from this offering, after
deducting underwriting discounts, commissions and our estimated offering
expenses, based on an assumed offering price to the public of $11.20 per share
(the last reported sale price on July 12, 2002), will be approximately $27.2
million (or approximately $33.1 million if the over-allotment option is
exercised in full). We will not receive any proceeds from the sale of the
shares of common stock being sold by the selling stockholders.

We intend to use the net proceeds from this offering to repay a majority of
the borrowings outstanding under the term loan portion of our existing U.S.
credit facilities as required under those arrangements. The term loan under our
credit facility expires on July 1, 2006 and bears interest at a floating rate
equal to LIBOR (1.88% at March 31, 2002) plus an applicable margin of 0.75% to
2.00% based upon calculated financial ratios. Approximately $29.1 million was
outstanding under the term loan as of March 31, 2002. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

On July 12, 2002, we amended our U.S. credit facility to convert the term
loan portion into a reducing revolving credit line providing initial
availability equivalent to the balance of the term loan prior to the offering.

CAPITALIZATION

The following table shows our capitalization as of March 31, 2002 on an
actual basis and on an as adjusted basis, giving effect to the sale of
2,600,000 shares of our common stock in this offering at an assumed offering
price of $11.20 per share (the last reported sale price on July 12, 2002) less
underwriting commissions and estimated offering expenses payable by us and the
application of the estimated net proceeds received by us to repay indebtedness
under our credit facility. See "Use of Proceeds." You should read this table
together with "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our consolidated financial statements and the notes
thereto included elsewhere in this prospectus.

As of March 31, 2002
--------------------
Actual As Adjusted
-------- -----------
(in thousands)

Current portion of U.S. long-term debt............................ $ 7,000 $ 1,878
Long-term debt:
Euroball credit facilities.................................... 11,033 11,033
U.S. revolving credit facility................................ 13,886 13,886
U.S. term loan................................................ 22,128 --
-------- --------
Total debt.................................................... $ 54,047 $ 26,797
======== ========
Stockholders' equity:
common stock, par value $0.01 per share; 45,000 shares
authorized; 15,341 shares issued; 17,941 shares issued and
outstanding, as adjusted...................................... $ 154 $ 180
Additional paid-in capital........................................ 30,989 58,213
Retained earnings................................................. 36,760 36,760
Accumulated other comprehensive loss.............................. (5,175) (5,175)
-------- --------
Total stockholders' equity................................ 62,728 89,978
-------- --------
Total capitalization................................... $116,775 $116,775
======== ========

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

Our common stock is traded on the Nasdaq National Market under the symbol
"NNBR." The following table sets forth, for the calendar periods indicated, the
high and low sale prices per share for our common stock as reported on the
Nasdaq National Market, and the cash dividends per share.

Price Range Cash
------------- Dividends
High Low Per Share
------ ------ ---------

Year ended December 31, 1999
First quarter.................. $ 6.75 $ 4.75 $0.08
Second quarter................. 6.75 5.38 0.08
Third quarter.................. 7.63 5.88 0.08
Fourth quarter................. 7.44 6.25 0.08

Year ended December 31, 2000
First quarter.................. 10.88 6.75 0.08
Second quarter................. 11.38 8.03 0.08
Third quarter.................. 10.50 7.50 0.08
Fourth quarter................. 9.50 7.03 0.08

Year ended December 31, 2001
First quarter.................. 9.17 6.53 0.08
Second quarter................. 10.81 6.50 0.08
Third quarter.................. 10.84 7.25 0.08
Fourth quarter................. 11.30 7.75 0.08

Year ended December 31, 2002
First quarter.................. 11.19 8.75 0.08
Second quarter................. 12.88 9.11 0.08
Third quarter (through July 12) 12.45 11.05

On July 12, 2002, the last reported sale price of our common stock on the
Nasdaq National Market was $11.20 per share. As of July 12, 2002, there were
160 holders of record of our common stock.

Since October 1994, we have declared quarterly cash dividends of $0.08 per
share on our common stock. Payment of future dividends is entirely at the
discretion of our board of directors. We may reconsider or revise this policy
from time to time based upon conditions then existing, including, without
limitation, our earnings, financial condition, cash position, capital
requirements, future prospects or other conditions our board of directors may
deem relevant. In addition, our revolving credit facility contains covenants
that limit the amount of any dividends paid in any fiscal year to $5.5 million
and require us to maintain certain financial ratios relating to our ability to
pay our current obligations. Although we expect to continue to declare and pay
cash dividends on our common stock in the future if earnings are available, we
cannot assure you that either cash or stock dividends will be paid in the
future on our common stock or that, if paid, the dividends will be in the same
amount or at the same frequency as paid in the past.

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data presented below have been derived
from our consolidated financial statements. Our consolidated financial
statements as of and for the years ended December 31, 2000 and 2001 have been
audited by KPMG LLP. Our consolidated financial statements as of and for the
years ended December 31, 1997, 1998 and 1999 have been audited by
PricewaterhouseCoopers, LLP. Data for the three-month periods ended March 31,
2001 and 2002 have been derived from unaudited consolidated financial
statements which, in our opinion, reflect all adjustments necessary for a fair
presentation. Results for the three-month periods are not necessarily
indicative of results for the full year. You should read the selected
consolidated financial data presented below in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations," our
consolidated financial statements and the notes thereto and other financial
information included elsewhere in this prospectus or incorporated by reference.

Three Months
Ended
Year Ended December 31, March 31,
------------------------------------------ ----------------
1997 1998 1999 2000 2001 2001 2002
------- ------- ------- -------- -------- ------- -------

Statement of Income Data: (in thousands, except per share data)
Net sales............................................... $75,252 $73,006 $85,294 $132,129 $180,151 $50,227 $47,200
Cost of products sold................................... 51,707 50,353 59,967 93,926 137,591 38,184 35,532
------- ------- ------- -------- -------- ------- -------
Gross profit............................................ 23,545 22,653 25,327 38,203 42,560 12,043 11,668
Selling, general and administrative expenses............ 5,518 5,896 6,854 11,571 16,382 4,014 4,498
Depreciation and amortization........................... 4,106 4,557 6,131 9,165 13,340 3,310 2,825
Restructuring and impairment costs...................... -- -- -- -- 2,312 -- 78
------- ------- ------- -------- -------- ------- -------
Income from operations.................................. 13,921 12,200 12,342 17,467 10,526 4,719 4,267
Interest expense........................................ 29 64 523 1,773 4,006 1,182 601
Equity in earnings of unconsolidated affiliates......... -- -- -- (48) -- (49) --
Net gain on involuntary conversion...................... -- -- -- (728) (3,901) -- --
Other income............................................ -- -- -- (136) (186) (132) (355)
------- ------- ------- -------- -------- ------- -------
Income before provision for income taxes................ 13,892 12,136 11,819 16,606 10,607 3,718 4,021
Provision for income taxes.............................. 5,382 4,480 4,060 5,959 4,094 1,636 1,505
Minority interest in consolidated subsidiaries.......... -- -- -- 660 1,753 536 668
------- ------- ------- -------- -------- ------- -------
Income before cumulative effect of change in accounting
principle.............................................. 8,510 7,656 7,759 9,987 4,760 1,546 1,848
Cumulative effect of change in accounting principle..... -- -- -- -- 98 98 --
------- ------- ------- -------- -------- ------- -------
Net income.............................................. $ 8,510 $ 7,656 $ 7,759 $ 9,987 $ 4,662 $ 1,448 $ 1,848
======= ======= ======= ======== ======== ======= =======
Earnings Per Share:
Diluted................................................. $ 0.57 $ 0.52 $ 0.52 $ 0.64 $ 0.30 $ 0.09 $ 0.12
Basic................................................... $ 0.57 $ 0.52 $ 0.52 $ 0.66 $ 0.31 $ 0.10 $ 0.12
Weighted average common shares outstanding--diluted..... 14,809 14,804 15,038 15,531 15,540 15,396 15,735
Weighted average common shares outstanding--basic....... 14,804 14,804 15,021 15,247 15,259 15,247 15,341

Other Data:
EBITDA(1)............................................... $18,027 $16,757 $18,473 $ 26,632 $ 26,178 $ 8,029 $ 7,170
Capital expenditures.................................... 8,775 5,758 2,394 17,910 6,314 1,978 849
Cash dividends per share................................ $ 0.32 $ 0.32 $ 0.32 $ 0.32 $ 0.32 $ 0.08 $ 0.08

As of March 31, 2002
--------------------

Balance Sheet Data:
Working capital............ $ 20,692
Total assets............... 189,420
Total debt................. 54,047
Total stockholders' equity. 62,728

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

The following discussion should be read in conjunction with, and is
qualified in its entirety by, our consolidated financial statements and the
notes thereto and other financial data included elsewhere in this prospectus or
incorporated by reference. Historical operating results and percentage
relationships among any amounts included in the consolidated financial
statements are not necessarily indicative of future operating results.

Overview

Our core business is the manufacture and sale of high quality, precision
steel balls and rollers. In 2001, sales of balls and rollers accounted for
approximately 77% of our total net sales, with 74% and 3% of sales from balls
and rollers, respectively. Sales of seals, retainers and plastic products
accounted for the remaining 23% of our sales.

Beginning with the third quarter of 2000, we have reported our financial
results in three segments: Domestic Ball and Roller, Euroball and Plastics. Our
reportable segments are based on differences in product lines and geographic
locations. The Domestic Ball and Roller segment comprises our United States
ball and roller manufacturing operations. The Euroball segment comprises our
European manufacturing operations. Our Domestic Ball and Roller and Euroball
segments make precision balls and rollers used primarily in the bearing
industry. The Plastics segment comprises the operations of IMC, NN Arte and
Delta. IMC and NN Arte manufacture plastic products for the bearing,
automotive, instrumentation, fiber optic and consumer hardware markets. Delta
manufactures engineered bearing seals used principally in automotive,
industrial, agricultural, mining and aerospace applications.

In 1998, we developed and implemented a strategic plan designed to position
us as a worldwide supplier of a broad line of bearing components. As part of
this strategy, we sought to augment our internal growth with complementary
acquisitions. In July 1999, we acquired substantially all of IMC's assets. In
August 2000, we acquired a 51% ownership interest in NN Mexico LLC, which owns
99% of NN Arte, and in February 2001, we acquired all of Delta's outstanding
common stock.

We formed Euroball in July 2000 and own 54% of that entity. The parent
companies of SKF and INA/FAG each owns a 23% interest. We report the financial
results of Euroball on a consolidated basis due to our majority ownership.
Under the terms of a shareholder agreement, both SKF and INA/FAG have the
right, beginning January 2003, to require us to purchase their interest in
Euroball.

All of our acquisitions were accounted for using the purchase method, with
goodwill being amortized on a straight line basis over 20 years. Our results of
operations for 1999, 2000 and 2001 include $325,000, $904,000 and $1.9 million,
respectively, of goodwill amortization related to these acquisitions. Upon
implementation of the Financial Accounting Standards Board ("FASB") Statement
No. 142, "Goodwill and Other Intangible Assets" in January 2002, we stopped
goodwill amortization. We currently believe that we will record no impairment
of asset value pursuant to Statement No. 142.

In December 2001, we closed our Walterboro, South Carolina ball
manufacturing facility in keeping with our strategy to redistribute our global
productive capacity. Because of the shift in production from the U.S. to Europe
in connection with the establishment of our Ireland facility and

Euroball operations, the Walterboro facility was no longer needed. The
precision ball production of the Walterboro facility has been fully absorbed by
our remaining U.S. ball and roller manufacturing facilities. In 2001, we
recorded pre-tax charges associated with the closing of $1.9 million, including
a $1.1 million asset impairment charge and $750,000 related to employee
severance costs. These amounts are reflected as restructuring and impairment
costs in our consolidated financial statements. The building, along with
certain machinery and equipment, is held for sale as of December 31, 2001.
These assets are carried on our balance sheet with an aggregate value of $4.3
million as of March 31, 2002.

In December 2001, we sold our minority interest in a Chinese ball
manufacturer to our partner for cash of $622,000 and a note of $3.3 million. In
2001, we recorded a non-cash, after-tax loss on this sale of $144,000.

Critical Accounting Policies

Our critical accounting policies, including the assumptions and judgments
underlying them, are disclosed in the notes to the financial statements. These
policies have been consistently applied in all material respects and address
such matters as revenue recognition, useful lives of depreciable assets,
inventory valuation, asset impairment recognition, accounts receivable,
business combination accounting and pension and post-retirement benefits. Due
to the estimation processes involved, we consider the following summarized
accounting policies and their application to be critical to understanding our
business operations, financial condition and results of operations. There can
be no assurance that actual results will not significantly differ from the
estimates used in these critical accounting policies.

Accounts Receivable

In establishing allowances for doubtful accounts, we continuously perform
credit evaluations of our customers, considering numerous inputs when available
including the customers' financial position, past payment history, relevant
industry trends, cash flows, management capability, historical loss experience
and economic conditions and prospects. Due to the bankruptcy of one plastic
clip customer and other write-offs, we experienced $1.7 million of bad debt
expense during 2001 versus none during 2000.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out method. Our inventories are not generally subject
to obsolescence due to spoilage or expiring product life cycles. We operate
generally as a make-to-order business. However, we also stock products for
certain customers in order to meet delivery schedules.

Acquisitions and Acquired Intangibles

Our acquisitions typically result in intangible assets and goodwill which
may affect the amount of possible future impairment expense that we may incur.
The determination of the value of such intangible assets and goodwill as well
as the determination of their useful lives require us to make estimates that
affect our consolidated financial statements.

Impairment of Long-Lived Assets

Our long-lived assets include property, plant and equipment and goodwill.
The recoverability of such long-term investments is dependent on the
performance of the assets in question, as well as volatility inherent in the
external markets served by those assets. In assessing potential impairment for
these investments, we will consider these factors as well as forecasted
financial performance. Future adverse changes in market conditions or adverse
operating results of the underlying investments could result in our having to
record impairment charges not previously recognized.

Pension and Post-retirement Obligations

We use several assumptions in determining our periodic pension and
post-retirement expense and obligations. These assumptions include determining
an appropriate discount rate and rate of compensation increase, as well as the
remaining service period of active employees. We use an independent actuary to
calculate the periodic pension and post-retirement expense and obligations
based upon these assumptions and actual employee census data.

Useful Lives of Depreciable Assets

We use judgment in determining the estimated useful lives of our
depreciable long-lived assets. The estimate of useful lives is determined by
our historical experience with the type of asset purchased, which is impacted
by our preventative maintenance programs. We begin depreciation on our
long-lived assets when they are substantially put into service.

Results of Operations

The following table shows, for the periods indicated, selected financial
data and the percentage of the Company's net sales represented by each income
statement line item presented.

As a percentage of Net Sales
------------------------------------
Quarter Ended
Year Ended December 31, March 31,
---------------------- ------------
1999 2000 2001 2001 2002
----- ----- ----- ----- -----

Net sales.......................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of products sold.............................. 70.3 71.1 76.4 76.0 75.3
----- ----- ----- ----- -----
Gross profit....................................... 29.7 28.9 23.6 24.0 24.7
Selling, general and administrative expenses....... 8.0 8.8 9.1 8.0 9.5
Depreciation and amortization...................... 7.2 6.9 7.4 6.6 6.0
Restructuring and impairment costs................. -- -- 1.3 -- 0.2
----- ----- ----- ----- -----
Income from operations............................. 14.5 13.2 5.9 9.4 9.0
Interest expense................................... 0.6 1.3 2.2 2.4 1.3
Equity in earnings of unconsolidated affiliates.... -- -- -- (0.1) --
Net gain on involuntary conversion................. -- (0.6) (2.2) -- --
Other income....................................... -- (0.1) 0.1 (0.3) (0.8)
----- ----- ----- ----- -----
Income before provision for income taxes........... 13.9 12.6 5.9 7.4 8.5
Provision for income taxes......................... 4.8 4.5 2.3 3.3 3.2
Minority interest in income of consolidated
subsidiaries..................................... -- 0.5 1.0 1.1 1.4
----- ----- ----- ----- -----
Income before cumulative effect of change in
accounting principle............................. 9.1 7.6 2.6 3.1 3.9
Cumulative effect of change in accounting principle -- -- -- 0.2 --
----- ----- ----- ----- -----
Net income......................................... 9.1% 7.6% 2.6% 2.9% 3.9%
===== ===== ===== ===== =====

Three Months Ended March 31, 2002 Compared to the Three Months Ended March 31,
2001

Net Sales. Net sales decreased by approximately $3.0 million, or 6.0%,
from $50.2 million for the first quarter of 2001 to $47.2 million for the first
quarter of 2002. By segment, sales decreased $2.6 million and $3.6 million for
our Domestic Ball and Roller and Euroball segments, respectively. These
decreases were due mainly to decreased demand for our products as a result of
the economic environment. This decrease was partially offset by a $3.2 million
increase in the Plastics segment's sales resulting from the inclusion of a full
quarter of Delta's results in 2002 as well as sales increases at NN Arte and
IMC.

Gross Profit. Gross profit decreased approximately $375,000, or 3.1%, from
$12.0 million for the first quarter of 2001 to $11.7 million for the first
quarter of 2002. Sales volume decreases in our Domestic Ball and Roller segment
were offset by cost savings associated with the closing of the Walterboro
facility, resulting in a net $627,000 decrease. Sales volume decreases in the
Euroball segment were similarly offset by cost reductions, resulting in a net
$784,000 decrease. These decreases were partially offset by the Plastic
segment's operations, where gross profit improved by approximately $1.0
million. The inclusion of a full quarter of Delta's results accounted for
$515,000 of the increase while improved profitability at NN Arte and IMC
accounted for the balance of the

increase. As a percentage of net sales, gross profit increased from 24.0% in
the first quarter of 2001 to 24.7% for the same period in 2002. This increase
in gross profit as a percentage of sales was due primarily to cost savings
associated with the closing of the Walterboro facility as well as other cost
reduction and containment programs initiated during 2001.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by approximately $484,000, or 12.1%, from
$4.0 million in the first quarter of 2001 to $4.5 million in the first quarter
of 2002. Expense increases included $260,000 for strategic planning and
information technology initiatives at Euroball,$172,000 for advisory services
associated with our analysis of strategic alternatives, and $168,000 for
expenses associated with the inclusion of a full quarter of Delta's operations.
Offsetting these increases were savings from various cost reduction and
containment programs. Reflecting our lower sales levels, selling, general and
administrative expenses as a percentage of net sales, increased from 8.0% for
the first quarter of 2001 to 9.5% for the same period in 2002.

Depreciation and Amortization. Depreciation and amortization expense
decreased by approximately $485,000, or 14.6%, from $3.3 million for the first
quarter of 2001 to $2.8 million for the same period in 2002. The adoption of
FASB Statement No. 142 eliminated the amortization of goodwill and contributed
$405,000 of the decrease. Reclassification of the Walterboro facility and
certain equipment as assets held for sale reduced depreciation and amortization
expense by an additional $325,000. Partially offsetting these reductions were
$203,000 of depreciation and amortization expenses associated with the
inclusion of a full quarter of Delta's results in 2002. As a percentage of net
sales, depreciation and amortization expense decreased from 6.6% in the first
quarter of 2001 to 6.0% in the first quarter of 2002.

Restructuring and Impairment Costs. We recorded a restructuring charge of
$78,000 in the first quarter of 2002. The restructuring costs principally
pertain to our decision to close the Walterboro facility in 2001. The $78,000
charge represents the accrual for additional severance costs related to the
closing of this facility. Restructuring costs represent 0.2% of net sales in
the first quarter of 2002. There were no similar charges during the first
quarter of 2001.

Interest Expense. Interest expense decreased by approximately $581,000
from $1.2 million in the first quarter of 2001 to $601,000 during the same
period in 2002. This was due to lower interest rates on our credit facilities,
as well as a decline in outstanding indebtedness. Total debt decreased from
$70.4 million at March 31, 2001 to $54.0 million at March 31, 2002. As a
percentage of net sales, interest expense decreased from 2.4% in the first
quarter of 2001 to 1.3% for the same period in 2002.

Equity in Earnings of Unconsolidated Affiliates. Equity in earnings of
unconsolidated affiliates decreased from earnings of $49,000 in the first
quarter of 2001 to none during the same period of 2002. The decrease is due to
the sale of our minority interest in a Chinese ball manufacturer, effective
December 21, 2001.

Minority Interest in Consolidated Subsidiaries. Minority interest in
consolidated subsidiaries represents the interest of the minority partners of
Euroball and the minority partners of NN Arte's parent company. Reflecting
Euroball's increased earnings, minority interest in consolidated subsidiaries
increased $182,000 from $536,000 for the first quarter of 2001 to $668,000 for
the first quarter of 2002.

Net Income. Net income increased by $400,000, or 27.6%, from $1.4 million
for the first quarter of 2001 to $1.8 million for the same period in 2002. As a
percentage of net sales, net income increased from 2.9% in the first quarter of
2001 to 3.9% for the first quarter of 2002.

Year Ended December 31, 2001 Compared to the Year Ended December 31, 2000

Net Sales. Our net sales increased $48.0 million, or 36.3%, from $132.1
million in 2000 to $180.2 million in 2001. The inclusion of a full year of
Euroball sales contributed $46.1 million of the increase, excluding the
performance of our facility in Ireland, which we owned prior to the formation
of Euroball. In addition, the inclusion of 10.5 months of Delta's net sales in
2001 contributed $14.0 million of the increase. Offsetting this increase were
decreased sales in the Domestic Ball and Roller and Plastics segments in the
last half of the year due to slowing demand related to the overall economic
environment in the U.S. Decreased sales during the year for the Plastics
segment were also due to decreased sales to one customer.

Gross Profit. Gross profit increased by $4.4 million, or 11.4%, from $38.2
million in 2000 to $42.6 million in 2001. Euroball contributed $10.1 million
of gross profit, net of the contribution of our Ireland facility. The inclusion
of 10.5 months of Delta's results contributed $3.3 million in gross profit.
Offsetting these increases, sales volume deterioration in the Domestic Ball and
Roller and Plastics segments decreased gross profit $9.0 million. Gross profit
decreased from 28.9% of net sales in 2000 to 23.6% of net sales in 2001 due to
the aforementioned sales volume deterioration and to a lesser degree, product
mix changes at the Plastics segment.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $4.8 million, or 41.6%, from $11.6 million
in 2000 to $16.4 million in 2001. The inclusion of a full year of Euroball
results, net of the contribution of our Ireland facility, accounted for
$3.5 million of the increase. The inclusion of 10.5 months of Delta's results
accounted for $1.2 million of the increase. Additionally, bad debt expense
primarily related to the bankruptcy filing of a major Plastics segment customer
contributed $814,000. Offsetting these increases were decreased spending
related to various cost reduction and cost containment efforts. As a percentage
of net sales, selling, general and administrative expenses increased from 8.8%
in 2000 to 9.1% in 2001.

Depreciation and Amortization. Depreciation and amortization expenses
increased $4.2 million, or 45.6%, from $9.2 million in 2000 to $13.3 million in
2001. The inclusion of a full year of Euroball results, net of the contribution
of our facility in Ireland, accounted for $2.8 million of the increase. The
inclusion of 10.5 months of Delta's results accounted for $1.1 million of the
increase. As a percentage of net sales, depreciation and amortization increased
from 6.9% in 2000 to 7.4% in 2001.

Restructuring and Impairment Costs. Restructuring and impairment costs
increased by $2.3 million from none in 2000 to $2.3 million in 2001. The
increase includes a $1.1 million charge for the recording of impairment on our
Walterboro facility, a $750,000 charge related to employee severance costs
related to the closing of the Walterboro facility and a $365,000 charge related
to Euroball. Restructuring and impairment costs were 1.3% of net sales during
2001.

Interest Expense. Interest expense increased by $2.2 million from $1.8
million in 2000 to $4.0 million in 2001. Interest expense related to the
purchase of Delta accounted for $1.0 million of the increase. Additionally, the
inclusion of a full year of interest expense related to the debt incurred by
Euroball accounted for approximately $1.0 million of the increase. As a
percentage of net sales, interest expense increased from 1.3% in 2000 to 2.2%
in 2001.

Equity in Earnings of Unconsolidated Affiliates. Equity in earnings of
unconsolidated affiliates decreased from $48,000 in 2000 to none in 2001. The
decrease is due to the sale of our minority interest in a Chinese ball
manufacturer, effective December 21, 2001.

Net Gain on Involuntary Conversion. We recognized a net gain on
involuntary conversion of $3.9 million in 2001 related to insurance proceeds as
a result of the March 12, 2000 fire at the Erwin facility.

Minority Interest in Consolidated Subsidiaries. Minority interest in
consolidated subsidiaries increased $1.1 million from $660,000 in 2000 to $1.8
million in 2001. This increase is due entirely to Euroball, which has been
consolidated since its formation on August 1, 2000.

Net Income. Net income decreased $5.3 million, or 53.3%, from $10.0
million in 2000 to $4.7 million in 2001. As a percentage of net sales, net
income decreased from 7.6% in 2000 to 2.6% in 2001.

Year Ended December 31, 2000 Compared to the Year Ended December 31, 1999

Net Sales. Our net sales increased $46.8 million, or 54.9%, from $85.3
million in 1999 to $132.1 million in 2000. The formation of Euroball in August
2000 contributed $30.4 million of the increase, adjusting for the third and
fourth quarter sales of our facility in Ireland, which were consolidated into
our results prior to the formation of Euroball. Additionally the inclusion of a
full year of IMC's net sales contributed $12.9 million of the increase. The
remainder of the increase was due to increased ball and roller sales in the
first half of the year, offset by slowing domestic demand for balls and rollers
in the second half of the year. We experienced decreased sales in the second
half of the year for the Plastics segment due primarily to the bankruptcy of
one customer.

Gross Profit. Gross profit increased by $12.9 million, or 50.8%, from
$25.3 million in 1999 to $38.2 million in 2000. Adjusting for our Ireland
facility's third and fourth quarter gross profit, Euroball accounted for $7.5
million of the increase. The inclusion of a full year of IMC's gross profit
contributed $4.0 million in gross profit. The remainder of the increase was
primarily attributed to increased sales at the Domestic Ball and Roller
segment. To a lesser degree, decreased costs at the Domestic Ball and Roller
segment contributed to the increase in gross profit. As a percentage of net
sales, gross profit decreased from 29.7% in 1999 to 28.9% in 2000.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $4.7 million, or 68.8%, from $6.9 million
in 1999 to $11.6 million in 2000. The Euroball segment, net of the contribution
of our Ireland facility, accounted for $2.4 million of the increase. The
inclusion of a full year of IMC's results accounted for $1.6 million of the
increase. The remainder of the increase was primarily attributed to increased
administrative expenses associated with our business development activity
during the year. As a percentage of net sales, selling, general and
administrative expenses increased from 8.0% in 1999 to 8.8% in 2000.

Depreciation and Amortization. Depreciation and amortization expenses
increased $3.0 million, or 49.5%, from $6.1 million in 1999 to $9.2 million in
2000. The addition of Euroball, net of the contribution of our facility in
Ireland, accounted for $2.4 million of the increase. The inclusion of a full
year of IMC's results accounted for the remainder of the increase. As a
percentage of net sales, depreciation and amortization decreased from 7.2% in
1999 to 6.9% in 2000.

Interest Expense. Interest expense increased by $1.3 million from $523,000
in 1999 to $1.8 million in 2000. Interest expense related to the debt incurred
by Euroball accounted for $622,000 of the

increase. Additionally, the inclusion of a full year of interest expense
related to the purchase of the IMC business accounted for approximately
$500,000 of the increase. The remainder of the increase was due to increased
expenditures associated with our business development activity during 2000.
Additionally, the timing of expenditures associated with the March 12, 2000
fire and the reimbursement of insurance proceeds caused an increase in the
amount outstanding under our domestic line of credit. As a percentage of net
sales, interest expense increased from 0.6% in 1999 to 1.3% in 2000.

Equity in Earnings of Unconsolidated Affiliates. Equity in earnings of
unconsolidated affiliates increased from none in 1999 to $48,000 in 2000. The
increase was due to our share of earnings from our interest in a Chinese ball
manufacturer. Earnings from this interest were offset by losses incurred from
the start-up of the marketing arm of this venture and losses sustained from
start-up expenses from the investment in Mexico.

Net Gain on Involuntary Conversion. We had a gain on involuntary
conversion of $728,000 in 2000 related to the excess of insurance proceeds over
the net book value of assets destroyed and direct costs incurred as a result of
the March 12, 2000 fire at the Erwin facility.

Minority Interest in Consolidated Subsidiaries. Minority interest in
consolidated subsidiaries increased from none in 1999 to $660,000 in 2000. This
increase is due entirely to Euroball.

Net Income. Net income increased $2.2 million, or 28.7%, from $7.8 million
in 1999 to $10.0 million in 2000. As a percentage of net sales, net income
decreased from 9.1% in 1999 to 7.6% in 2000.

Liquidity and Capital Resources

We have a $25 million senior non-secured revolving credit facility,
expiring on July 25, 2003, and a senior non-secured term loan for $35 million
expiring on July 1, 2006. Amounts outstanding under the revolving facility and
the term loan facility bear interest at a floating rate equal to LIBOR (1.88%
at March 31, 2002) plus an applicable margin of 0.75% to 2.00% based upon
calculated financial ratios. The loan agreement contains customary financial
and non-financial covenants. Restrictive covenants specify, among other things,
restrictions on the incurrence of indebtedness, payment of dividends, capital
expenditures, and the maintenance of certain financial ratios. We were in
compliance with all such covenants as of March 31, 2002. At March 31, 2002,
$11.1 million was available under these facilities.

We intend to use the net proceeds to the Company from this offering to
reduce the term loan portion of our borrowings. On July 12, 2002, we amended
our U.S. credit facility to convert the term loan portion into a reducing
revolving credit line providing initial availability equivalent to the balance
of the term loan prior to the offering. Amounts available for borrowing under
this facility will be reduced by $7.0 million per annum and the facility will
expire on July 1, 2006. This facility will provide us with access to funds for
future strategic acquisitions and outsourcing alliances involving captive
production businesses that offer us the opportunity to further penetrate
existing markets or expand into new geographic markets. We are engaged in
preliminary discussions with a number of prospective acquisition candidates,
but have not entered into a preliminary or definitive agreement for any
potential acquisition at the present time. We cannot assure you concerning when
or whether any potential acquisition might be completed.

In addition, our partners in Euroball have the right to require us to
purchase their interests in that entity beginning in January 2003, based on a
formula using Euroball's historical net income and cash flow. As a result, the
exact amount of the purchase price cannot be determined until the put right is
exercised. Applying the formula at March 31, 2002, the amount payable in the
event both parties exercised their put rights would have been Euro 22.8 million
or $18.9 million (applying the exchange rate for Euros on that date).

In July 2000, Euroball and its subsidiaries entered into a senior secured
revolving credit facility of Euro 5.0 million, expiring on July 15, 2006, and a
senior secured term loan of Euro 36.0 million, expiring on July 15, 2006. On
July 31, 2000, upon closing of the joint venture, Euroball borrowed a total of
Euro 31.5 million against these facilities for acquisition financing.
Additional working capital and capital expenditure financing are provided for
under the facility. Amounts outstanding under the facilities accrue interest at
a floating rate equal to EURIBOR (3.36% at March 31, 2002) plus an applicable
margin of 1.125% to 2.25% based upon calculated financial ratios. The loan
agreement contains various restrictive covenants that specify, among other
things, restrictions on the incurrence of indebtedness and the maintenance of
certain financial ratios. These facilities also include certain negative
pledges. Euroball was in compliance with all such covenants as of March 31,
2002. At March 31, 2002, Euro 3.6 million was available to Euroball under these
facilities.

To date, cash generated by Euroball and its subsidiaries has been used
exclusively for general Euroball-specific purposes including investments in
plant, property and equipment and prepayment of the Euroball senior secured
term loan, which is secured by Euroball and its subsidiaries. Accordingly, no
dividends have been declared or paid that may have been used by the Company to
pay down our domestic credit facilities. While the Company controls the
declaration of such dividends, we only receive 54% of the cash distributed--in
accordance with our ownership percentage in Euroball. We anticipate future cash
generated by Euroball will continue to be used for Euroball-specific activities.

Distributions of cash by Euroball to the Company are subject to U.S.
corporate income taxes. Therefore, our ability to deploy cash generated by
Euroball to meet the funding needs of our domestic operations is limited by the
tax effects associated with the repatriation of those funds.

Our arrangements with our domestic customers typically provide that
payments are due within 30 days following the date we ship the goods, while
arrangements with foreign customers served from our U.S. facilities generally
provide that payments are due within either 90 or 120 days following the date
of shipment. Euroball provides its customers with 30 day payment terms from
product shipment. Under our inventory management program with certain European
customers, payments typically are due within 30 days after the customer uses
the product. Our net sales and receivables can be influenced by seasonality due
to our relative percentage of European business coupled with many foreign
customers ceasing or significantly slowing production during the month of
August.

We bill and receive payment from some of our foreign customers in Euro or
other currencies. To date, we have not been materially adversely affected by
currency fluctuations or foreign exchange restrictions. To manage risks
associated with currency fluctuations and foreign exchange restrictions, we
have strategies in place, including a hedging program, which allows management
to hedge foreign currencies when exposures reach certain levels. However, we
have not entered into any currency hedges in 2001 or during the current year. A
strengthening of the U.S. dollar against foreign currencies could impair the
ability of the Company to compete with international competitors for foreign as
well as domestic sales.

Working capital, which consists principally of accounts receivable,
inventories and accounts payable was $20.7 million at March 31, 2002 as
compared to $17.9 million at December 31, 2001. The ratio of current assets to
current liabilities increased from 1.47 to 1 at December 31, 2001 to 1.53 to 1
at March 31, 2002. Cash flow from operations decreased from $3.5 million during
the first three months of 2001 to $1.1 million during the first three months of
2002.

During 2002, we plan to spend approximately $6.8 million on capital
expenditures (of which approximately $849,000 has been spent through March 31,
2002) including the purchase of additional machinery and equipment at all of
our domestic and international ball facilities. We intend to finance these
activities with cash generated from operations and funds available under the
credit facilities described above. We believe that funds generated from
operations, borrowings from the credit facilities and the proceeds of this
offering will be sufficient to finance our working capital needs and projected
capital expenditure requirements through December 2003.

The Euro

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

Seasonality and Fluctuation in Results of Operations

Our net sales historically have been seasonal in nature, and as foreign
sales have increased as a percentage of total sales, seasonality has become a
more significant factor for the Company in that many foreign customers cease
production during the month of August.

Inflation and Changes in Prices

While our operations have not been affected by inflation during recent
years, prices for 52100 chrome steel and other raw materials are subject to
change. For example, during 1995, due to an increase in worldwide demand for
52100 chrome steel and the decrease in the value of the U.S. dollar relative to
foreign currencies, we experienced an increase in the price of 52100 chrome
steel and some difficulty in obtaining an adequate supply of 52100 chrome steel
from our existing suppliers. In our U.S. operations, our typical pricing
arrangements with steel suppliers are subject to adjustment once every six
months. In an effort to limit our exposure to fluctuations in steel prices, we
have generally avoided the use of long-term, fixed price contracts with our
customers. Instead, we typically reserve the right to increase product prices
periodically in the event of increases in our raw material costs.

Historically, we have been able to minimize the impact on our operations
resulting from the 52100 chrome steel price increases by taking such measures.
Certain sales agreements are in effect with SKF and INA/FAG which provide for
minimum purchase quantities and specified, annual sales price adjustments that
may be modified up or down for changes in material costs. These agreements
expire during 2006.

Recently Issued Accounting Standards

In June 2000, the FASB issued Statement No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activity, an Amendment of SFAS 133."
Statement No. 133 and Statement No. 138 require that all derivative instruments
be recorded on the balance sheet at their respective fair values. Statement No.
133 and Statement No. 138 became effective for us January 1, 2001.

In June 2001, the FASB issued Statement No. 141, "Business Combinations"
and Statement No. 142, "Goodwill and Other Intangible Assets." Statement No.
141 requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. Statement No. 141 also specifies
criteria that intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill.
Statement No. 142 requires that goodwill and intangible assets with indefinite
useful lives no longer be amortized, but rather, periodically tested for
impairment. The effective date of Statement No. 142 is January 1, 2002. As of
the date of adoption, we had unamortized goodwill of approximately $39.8
million, which will be subject to the provisions of Statement No. 142. As a
result of adopting these standards in the first quarter of 2002, we no longer
amortize goodwill. We estimate that amortization expense for goodwill would
have been approximately $2.1 million (or $1.2 million net of tax and minority
interest) for 2002. We are currently evaluating the impact of adoption of
Statement No. 142 related to the transitional goodwill impairment review
required by the new standards during the first six months after adoption.

In June 2001, the FASB issued Statement No. 143, "Accounting for Asset
Retirement Obligations." Statement No. 143 requires capitalizing any asset
retirement costs as part of the total cost of the related long-lived asset and
subsequently allocating the total expense to future periods using a systematic
and rational method. Adoption of Statement No. 143 is required for fiscal years
beginning after June 15, 2002. We are currently evaluating the impact of
adoption of Statement No. 143.

In August 2001, the FASB issued Statement No. 144, "Accounting for the
Impairment or Disposal of Long-lived Assets." Statement No. 144 supercedes
Statement No. 121 but retains many of its fundamental provisions. Additionally,
Statement No. 144 expands the scope of discontinued operations to include more
disposal transactions. The provisions of Statement No. 144 are effective for
financial statements issued for fiscal years beginning after December 15, 2001.
We have adopted Statement No. 144 effective January 1, 2002. We believe that no
asset impairment exists under the provisions of Statement No. 144 that would
materially affect our financial condition.

BUSINESS

The Company

Our Competitive Strengths

We believe that the following elements provide us with significant
competitive strengths in our markets:

and in Europe. Our nine senior managers average over 13 years of
experience in the bearing component industry, which has allowed us to
establish excellent working relationships with major bearing companies.
Our management team has a proven track record of successfully managing
our global businesses through international economic cycles, including
the most recent economic downturn.

Our Business Strategy

Our strategic plan is designed to increase our revenues, income and
long-term shareholder value by:

Products

Precision Steel Balls. We offer high quality, precision steel balls
ranging in diameter from 1/8 of an inch to 12 1/2 inches. We produce and sell
balls in grades ranging from grade 3 to grade 1000 as established by the
American Bearing Manufacturers Association. The grade number for a ball or a
roller indicates the degree of spherical or cylindrical precision of the ball
or roller; for example, grade 3 balls are manufactured to within
three-millionths of an inch of roundness and grade 50 rollers are manufactured
to within fifty-millionths of an inch of roundness. Our steel balls are used
primarily by manufacturers of anti-friction bearings where precise spherical,
tolerance and surface finish accuracies are required.

Steel Rollers. We manufacture rollers in a wide variety of sizes, ranging
from grade 50 to grade 1000, that are the primary components of anti-friction
bearings that are subjected to heavy load conditions. Our roller products are
used primarily for applications similar to those of our ball product lines,
plus hydraulic pumps and motors.

Bearing Seals and Retainers. We manufacture and sell a wide range of
precision bearing seals produced through a variety of compression and injection
molding processes and adhesion technologies to create rubber-to-metal bonded
bearing seals. The seals are used in applications for automotive, industrial,
agricultural, mining and aerospace markets. We also manufacture and sell high
precision plastic retainers for ball and roller bearings used in a wide variety
of industrial applications. Retainers are used to separate and space balls or
rollers within a fully assembled bearing.

Precision Plastic Components. We also manufacture and sell a wide range of
specialized plastic products including automotive under-the-hood components,
electronic instrument cases and precision electronic connectors and lenses, as
well as a variety of other specialized parts.

Customers

Our bearing component products are supplied primarily to bearing
manufacturers for use in a broad range of industrial applications, including
transportation, electrical, agricultural, construction, machinery, mining and
aerospace. We supply over 500 customers; however, our top 10 customers account
for approximately 73% of our revenue. These top 10 customers include SKF,
INA/FAG, Torrington, GKN, SNR, Koyo, NTN, Timken, Delphi, and NSK. In 2001, 40%
of our products was sold to customers in North America, 50% to customers in
Europe, and the remaining 10% to customers located throughout the rest of the
world, primarily Asia. As seen in the chart below, our top two customers
constituted approximately 54% of sales in 2001, demonstrating our long-term,
strategic relationships with these key customers. Historically, we have
increased our supply to SKF and INA/FAG on an annual basis and we have almost
tripled our sales to these two companies since 1999. These gains are directly
attributed to the success of Euroball and our efforts to develop a closer
partnering relationship with our global bearing customers.

[CHART]

SFK 35.0%
Other 27.0%
INA/FAG 19.0%
NSK 2.375%
AP 2.375%
Torrington 2.375%
Delphi 2.375%
Timken 2.375%
NTN 2.375%
SNR 2.375%
GKN 2.375%

Certain customers have contracted to purchase all of their bearing
component requirements from us, although they are not obligated to purchase any
specific amounts. While firm orders are generally received on a monthly basis,
we are normally aware of future order levels well in advance of the placement
of a firm order. For our domestic ball and roller operations, we maintain a
computerized, bar coded inventory management system with most of our major
customers that enables us to determine on a day-to-day basis the amount of
these components remaining in a customer's inventory. When such inventories
fall below certain levels, we automatically ship additional product.

Euroball has entered into six-year supply agreements with SKF and INA/FAG
providing for the purchase of Euroball products in amounts and at prices that
are subject to adjustment on an annual basis. The agreements contain provisions
obligating Euroball to maintain specified quality standards and comply with
various ordering and delivery procedures, as well as other customary
provisions. SKF may terminate its agreement if, among other things, Euroball
acquires or becomes acquired by a competitor. INA/FAG may terminate its
agreement if , among other things, Euroball assigns its rights under the
agreement, whether voluntarily or by operation of law.

As shown in the chart below, the addition of the retainer and seal product
lines have further enhanced many of our key customer relationships, making us a
more complete and integrated supplier of bearing component parts.

Products
-------------------------------
Name Country Description Balls & Rollers Seals Retainers
---------- ------- ----------------------------- --------------- ----- ---------

SKF Sweden Global bearing manufacturer X X X
INA/FAG Germany Global bearing manufacturer X X X
Torrington USA Global bearing manufacturer X X X
NTN Japan Global bearing manufacturer X X X
SNR France Global bearing manufacturer X
Timken USA Global bearing manufacturer X X
Delphi USA Automotive component supplier X X X
Koyo Japan Global bearing manufacturer X X X
AP USA Automotive component supplier X
NSK Japan Global bearing manufacturer X X

Sales and Marketing

A primary emphasis of our marketing strategy is to expand key customer
relationships by offering them the value of a single supply chain partner for a
wide variety of components. As a result, we have integrated our sales
organization on a global basis across all of our product lines. Our sales
organization includes seven direct sales and 12 customer service
representatives. Due to the technical nature of many of our products, our
engineers and manufacturing management personnel also provide technical sales
support functions, while internal sales employees handle customer orders and
other general sales support activities.

Our bearing component marketing strategy focuses on increasing our
outsourcing relationships with global bearing manufacturers that maintain
captive bearing component manufacturing operations. Our marketing strategy for
our other precision plastic products is to offer custom manufactured, high
quality, precision parts to niche markets with high value-added characteristics
at competitive price

levels. This strategy focuses on relationships with key customers that require
the production of technically difficult parts, enabling us to take advantage of
our strengths in custom product development, tool design, and precision molding
processes.

Manufacturing Process

We have become a leading independent bearing component manufacturer through
exceptional service and high quality manufacturing processes. We are recognized
throughout the industry as a low-cost producer. For example, with balls, we
have the ability to design and build our own production machinery at a lower
overall cost than the equivalent machines in the commercial marketplace. In
addition to the significant capital cost savings associated with our
proprietary machine design, a more significant benefit is the reduced
manufacturing time needed to produce our high precision balls and rollers.
Because our ball and roller manufacturing processes incorporate the use of
standardized tooling, load sizes, and process technology, we are able to
produce large volumes of products while maintaining high quality standards.

The key to our low-cost, high quality production of seals and retainers is
the incorporation of customized engineering into our manufacturing processes.
We employ 20 skilled engineers who design and customize the tooling necessary
to meet the needs of each customer's product. This design process includes the
testing and quality assessment of each product.

Suppliers

The primary raw material used in our ball and roller business is 52100
chrome steel in rod and wire form, and in 2001 it accounted for approximately
97% of the steel we use. The 52100 chrome steel balls have a high degree of
hardness, provide excellent resistance to wear and deformation and are used
primarily by manufacturers of anti-friction ball bearings where precise
spherical and tolerance accuracies are required. Our other steel requirements
include type 440C stainless steel and type S2 rock bit steel.

We purchase substantially all of our 52100 chrome steel requirements from
foreign sources in Europe and Japan. Because the vast majority of the 52100
chrome steel we use has been exempted from recent U.S. tariffs on imported
steel, we have not been materially affected by import regulations. We allocate
steel purchases among suppliers on the basis of price and, more significantly,
composition and quality. The pricing arrangements with our suppliers are
typically subject to adjustment once every six months. In general, we do not
enter into written supply agreements with suppliers or commit to maintain
minimum monthly purchases of steel.

We have established a supply alliance with The Torrington Company, a
subsidiary of Ingersoll-Rand, to leverage our combined supply requirements. The
purchasing entity is empowered to negotiate and execute supply agreements for
both companies. Because we both use similar raw materials from many common
sources, we believe the potential synergies in raw material procurement will be
of significant value.

The primary raw materials used in our plastic products are engineered
resins. We purchase substantially all of our resin requirements from domestic
manufacturers and the majority of these suppliers are international companies
with resin manufacturing facilities located throughout the world. Our seal
operation uses a variety of rubber molds and metal stampings that we purchase
from four main suppliers with which we have had long-term relationships.

Competition

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

Our primary foreign competitors include Amatsuji Steel Ball Manufacturing
Company, Ltd. ("AKS") and Tsubaki Nakashima Company, Ltd. ("Tsubaki"), and our
main domestic competitor is Hoover Precision Products, Inc., a wholly-owned
subsidiary of Tsubaki. While AKS and Tsubaki control a majority of the market
share in Asia, and Tsubaki, through its Hoover subsidiary, has comparable share
to ours in the Americas, neither has significant market share in Europe. We
compete effectively through our precision manufacturing capabilities,
reputation for consistent quality and reliability, and high employee
productivity.

Seal and retainer manufacturers compete on price, custom quality, tool
engineering capabilities, and lead-time. Our primary competitor in the bearing
retainer segment is Nakanishi Manufacturing Corporation. Nypro, Inc. and Key
Plastics are our main competitors in the automotive segment. We believe we
compete effectively through our product development capabilities, tool design
and fabrication, precision molding processes, and reputation in the marketplace
as a quality producer of technically difficult products.

Facilities

We operate a total of eight facilities in North America and Europe, and our
corporate headquarters is located in Johnson City, Tennessee. Our ball and
roller facilities consist of over 180,000 square feet in two Tennessee plants
and 630,000 square feet in three European plants. Our plastic and rubber
bearing components and other products are produced in three plants in
Connecticut, Texas and Mexico that total almost 300,000 square feet.

Employees

As of June 30, 2002, we employed a total of 1,349 full-time employees. Our
U.S. ball and roller operations employed 234 workers, Euroball employed 671
workers, our other product operations employed 439 workers, and there were five
employees at the Company's corporate headquarters. Of our total employment, 19%
are management/staff employees and 81% are production employees. We believe we
are able to attract and retain high quality employees because of our quality
reputation, technical expertise, history of financial and operating stability,
attractive employee benefit programs, and our progressive, employee-friendly
working environment. Only the employees in the Eltmann, Germany and Pinerolo,
Italy plants are unionized and we have never experienced any involuntary work
stoppage. We consider our relations with our employees to be excellent.

MANAGEMENT

Board of Directors

Our board of directors is divided into three classes, with the members of
each class serving three-year terms. The following table sets forth information
as of the date of this prospectus concerning our directors.

Term as Director
Name Age Position Expires
---- --- -------- ----------------

Roderick R. Baty... 48 Chairman, Chief Executive Officer, 2003
President and Director
Richard D. Ennen(1) 74 Director 2003
Michael D. Huff(1). 54 Director 2004
Michael E. Werner.. 57 Director 2004
James L. Earsley... 56 Director 2005
G. Ronald Morris... 65 Director 2005
Steven T. Warshaw.. 53 Director 2005

--------
(1) Mr. Ennen and Mr. Huff are also selling stockholders.

Roderick R. Baty has served as President and Chief Executive Officer since
July 1997 and was elected Chairman of the Board in September 2001. He joined
the Company in July 1995 as Vice President and Chief Financial Officer, and was
elected to the Board of Directors in 1995. Prior to joining the Company, Mr.
Baty served as President and Chief Operating Officer of Hoover Precision
Products, Inc. from 1990 until January 1995, and as Vice President and General
Manager of Hoover Precision Products, Inc. from 1985 to 1990.

Richard D. Ennen is the principal founder of the Company and has been a
director of the Company since its formation in 1980. He served as Chairman of
the Board from its inception until September 2001, Chief Executive Officer from
the Company's inception until 1997, and as President from the Company's
inception until 1990. Prior to forming the Company, Mr. Ennen held various
management and executive positions with Hoover Precision Products, Inc.
(formerly Hoover Universal, Inc.), a division of Tsubakimoto Precision Products
Co. Ltd., including Corporate Vice President and General Manager of the ball
and roller division. Mr. Ennen has over 40 years of experience in the
anti-friction bearing industry.

Michael D. Huff has served as a director of the Company since its formation
in 1980. From 1980 until his retirement in January 1995, Mr. Huff served as the
Chief Financial Officer, Treasurer and Secretary of the Company. Before joining
the Company, Mr. Huff served as a division controller of Hoover Precision
Products, Inc. from 1975 until 1980. Mr. Huff is a member of the American
Institute of Certified Public Accountants and the Tennessee Society of
Certified Public Accountants.

Michael E. Werner is a management consultant with Werner Associates, a
management consulting firm that Mr. Werner co-founded in 1982 specializing in
manufacturing companies. Prior to forming Werner Associates, Mr. Werner served
as Director of Strategic Planning and Business Development for the Uniroyal
Chemical Company. He also has held positions with the New York Central Company,
Western Electric Company and the Continental Group.

James L. Earsley spent his entire career with, and is the retired chairman
of IMC, which was acquired by the Company in July 1999.

G. Ronald Morris retired in 1999 from Western Industries, Inc., a contract
manufacturer of metal and plastic products. Mr. Morris had served as President,
Chief Executive Officer and director of Western Industries, Inc. since July
1991. From 1989 to 1991, Mr. Morris served as Chairman of the Board of
Integrated Technologies, Inc., a manufacturer of computer software, and from
1988 to 1989, he served as Vice Chairman of Rexnord Corporation, a manufacturer
of mechanical power transmission components and related products, including
anti-friction bearings. From 1982 to 1988, Mr. Morris served as President and
Chief Executive Officer of PT Components, Inc., a manufacturer of mechanical
power transmission components and related products that was acquired by Rexnord
Corporation in 1988.

Steven T. Warshaw served as President of Hexcel Schwebel, a global producer
of advanced structural materials, from April 2000 to November 2001. Prior to
this position, he served from February 1999 as Senior Vice President of
Photronics, Inc., a global supplier to the semiconductor industry. From 1996 to
1999, Mr. Warshaw served as President of Olin Microelectronic Materials, a
company supplying technologically advanced chemicals, products, and services to
semiconductor manufacturers. Mr. Warshaw served in a variety of positions at
Olin since 1974, including President of OCG Microelectronic Materials and Vice
President of Olin's Chemicals Division.

Management

The following table sets forth information as of the date of this
prospectus concerning certain of our key management personnel.

Name Age Position
---- --- --------

Roderick R. Baty..... 48 Chairman, Chief Executive Officer and President
Frank T. Gentry, III. 46 Vice President--Manufacturing
Robert R. Sams....... 44 Vice President--Market Services
David L. Dyckman..... 37 Vice President--Corporate Development and Chief
Financial Officer
William C. Kelly, Jr. 43 Treasurer, Secretary and Chief Accounting Officer
Calvin Leach......... 44 Vice President and General Manager--IMC
Paul N. Fortier...... 40 Vice President and General Manager--Delta
Dario Galetti........ 47 Managing Director--Euroball
Larry B. Emerick..... 54 Vice President and General Manager--NN Arte

Frank T. Gentry, III was appointed Vice President--Manufacturing in August
1995. He is responsible for the global operations of our Ball and Roller and
Euroball segments. Mr. Gentry's responsibilities include purchasing, inventory
control and transportation. Mr. Gentry joined the Company in 1981, and held
various production control positions within the Company from 1981 to August
1995.

Robert R. Sams has served as Vice President--Market Services since 1999. He
joined the Company in 1996 as Plant Manager of the Mountain City, Tennessee
facility, and in 1997, became Managing Director of our Kilkenny, Ireland
facility. Prior to joining the Company, Mr. Sams held various positions with
Hoover Precision Products, Inc. from 1980 to 1994 and was Vice President of
Production for Blum, Inc. from 1994 to 1996.

David L. Dyckman was appointed Vice President--Corporate Development and
Chief Financial Officer in April 1998. Prior to joining the Company, Mr.
Dyckman served from January 1997 until April 1998 as Vice President--Marketing
and International Sales for the Veeder-Root Division of the Danaher
Corporation. From 1987 until 1997, Mr. Dyckman held various positions with
Emerson Electric Company including General Manager and Vice President of the
Gearing Division of Emerson's Power Transmission subsidiary.

William C. Kelly, Jr. has served as Treasurer since 1995 and as the
Company's Chief Accounting Officer since 1994. Prior to that, he was the
Company's Assistant Treasurer and Manager of Investor Relations. Prior to
joining the Company, Mr. Kelly served from 1988 to 1993 as a Staff Accountant
and as a Senior Auditor with the accounting firm of PricewaterhouseCoopers LLP.

Calvin Leach was named Vice President and General Manager--IMC in January
of 2002. Prior to being named Vice President and General Manager, from 1989 to
2002 Mr. Leach held increasingly responsible positions in materials,
manufacturing, and operations management at IMC.

Paul N. Fortier was appointed Vice President and General Manager--Delta in
May 2001 shortly after the Company's acquisition of Delta in February 2001.
Prior to joining the Company, from 1988 to 2001, Mr. Fortier held a variety of
quality, manufacturing, marketing, and general management positions with
Siemens AG in its precision materials and general lighting divisions.

Dario Galetti was named Managing Director--Euroball in August 2000. From
1993 to 2000, he served as the Factory Manager Director of SKF's Pinerolo,
Italy ball facility. From 1990 to 1993 he was Factory Manager of the SKF Bari
Bearing Factory.

Larry B. Emerick was named Vice President and General Manager--NN Arte in
September 2000. From 1984 to 1988, Mr. Emerick served in a variety of
manufacturing management positions with B.F. Goodrich. He held the position of
Plant Manager for Oiles Bearing from 1990 to 2000. Mr. Emerick has more than 25
years of cumulative experience in the plastics, metal forming and bearing
industries.

SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of our common stock as of July 15, 2002, and as by the stockholders
who are selling shares of common stock in this offering, and as adjusted to
reflect the sale of shares offered in this prospectus. Unless otherwise noted,
to our knowledge, each selling stockholder has sole voting and investment power
over the shares shown.

Shares Beneficially Owned Shares Beneficially
Prior to Offering Shares Owned After Offering
------------------------ Being -------------------
Number Percent (%) Offered(1) Number Percent (%)
--------- ----------- ---------- ------- -----------

Richard D. Ennen(2)... 2,788,868(3) 18.2 2,524,470 264,398 1.5
Michael D. Huff(4).... 427,227(5) 2.8 374,790 52,437 *
Charles L. Edmisten(6) 416,386(7) 2.7 365,430 50,956 *
Leonard Bowman........ 300,085 2.0 226,200 73,885 *
Janet M. Huff......... 225,000 1.5 203,580 21,420 *
Monica C. Ennen....... 129,900 * 117,780 12,120 *
Deborah E. Bagierek... 96,869 * 87,750 9,119 *

--------
* Amounts are less than one percent.
(1) If the underwriters exercise their over-allotment option in full, Mr. Ennen
will sell an additional 264,398 shares, Mr. Huff will sell an additional
39,437 shares, Mr. Edmisten will sell an additional 50,956 shares, Mr.
Bowman will sell an additional 23,800 shares, Ms. Huff will sell an
additional 21,420 shares, Ms. Ennen will sell an additional 12,120 shares,
and Ms. Bagierek will sell an additional 9,119 shares. The Company will pay
the SEC registration fee related to the shares of the selling stockholders.
(2) Mr. Ennen currently sits on the Company's Board of Directors and has since
the Company's formation in 1980. He was Chairman of the Board from the
formation of the Company until September 2001.
(3) Includes 1,800,000 shares held by the Richard D. Ennen Charitable Remainder
Unitrust of which Mr. Ennen is the trustee and 200,000 shares held by the
Ennen Charitable Trust of which Mr. Ennen is the trustee.
(4) Mr. Huff currently sits on the Company's Board of Directors and has since
the Company's formation in 1980.
(5) Includes 13,000 shares subject to presently exercisable options. Excludes
10,000 shares subject to options that are not currently exercisable.
(6) Mr. Edmisten has been employed by the Company as a technical advisor since
resigning as an officer of the Company in 1999.
(7) Includes 403,753 shares held by the C/D Edmisten Charitable Remainder
Unitrust of which Mr. Edmisten is the trustee. Includes 12,633 shares
subject to presently exercisable options. Excludes 3,667 shares subject to
options that are not currently exercisable.

DESCRIPTION OF OUR CAPITAL STOCK

Our authorized capital stock consists of 45 million shares of common stock
and 5 million shares of undesignated preferred stock, $.01 par value per share.
As of July 12, 2002, there were 15,367,273 shares of common stock issued and
outstanding. Upon completion of this offering, there will be 17,967,273 shares
of common stock issued and outstanding, assuming no exercise of the
underwriters' over-allotment option. There are no shares of our preferred stock
outstanding.

Common Stock

Voting Rights. Each share of common stock is entitled to one vote on all
matters submitted to a vote of our stockholders, including the election of
directors. Holders of shares of our common stock have no cumulative voting
rights. Therefore, the holders of a majority of the shares of common stock
voted in an election of directors can elect all of the directors then standing
for election, subject to any rights of the holders of any preferred stock that
may be outstanding in the future. Directors are divided into three classes.
Each year the terms of the members of a different class of directors expire and
the directors for that class are elected to three-year terms.

Dividends. Holders of shares of common stock are entitled to receive
dividends, if, as and when such dividends are declared by our Board of
Directors out of assets legally available therefor, after payment of any
dividends required to be paid on shares of preferred stock that may be
outstanding in the future.

Liquidation. In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the corporation after payment of
our debts and other liabilities and making provision for the holders of
preferred stock that may be outstanding in the future our remaining assets will
be distributed among the holders of our common stock.

Preferred Stock

Our Board of Directors has authority to issue preferred stock in one or
more series and to establish the rights and restrictions granted to or imposed
on any unissued shares of preferred stock and to fix the number of shares
constituting any series, without any further vote or action by our
stockholders. Our Board of Directors has the authority, without approval of our
stockholders, to issue preferred stock that has voting, dividend and conversion
rights superior to our common stock, which could have the effect of deterring,
delaying or preventing a change in control. We currently have no plans to issue
any shares of preferred stock.

Transfer Agent and Registrar

The Transfer Agent and Registrar for our common stock is SunTrust Bank,
Atlanta, Georgia.

UNDERWRITING

Subject to the terms and conditions set forth in an underwriting agreement
among the selling stockholders, us and McDonald Investments Inc. and Legg Mason
Wood Walker, Incorporated, as representatives of the underwriters named in the
agreement, we and the selling stockholders have agreed to sell to each
underwriter, and each underwriter has severally agreed to purchase from the
selling stockholders and us, the number of shares of common stock set forth
opposite its name in the table below.

Number of Shares
Underwriter of Common Stock
----------- ----------------

McDonald Investments Inc............
Legg Mason Wood Walker, Incorporated
-------------
Total........................... 6,500,000
=============

Under the terms of the underwriting agreement, the underwriters are
committed to purchase all of the shares of common stock if any are purchased.
If an underwriter defaults, the underwriting agreement provides that the
purchase commitments of the nondefaulting underwriters may be increased or the
underwriting agreement may be terminated.

We and the selling stockholders have agreed to indemnify the underwriters
against certain liabilities, including liabilities under the Securities Act of
1933, as amended, or to contribute to payments the underwriters may be required
to make in respect thereof.

The underwriting agreement provides that the underwriters' obligations to
purchase the shares of common stock depend on the satisfaction of the
conditions contained in the underwriting agreement.

The conditions contained in the underwriting agreement include the requirement
that the representations and warranties made by us and the selling stockholders
to the underwriters are true, that there is no material change in the financial
markets and that we deliver to the underwriters customary closing documents.

The underwriters propose to offer our shares of common stock directly to
the public at $ per share and to certain dealers at such price less a
concession not in excess of $ per share. The underwriters may allow, and
such dealers may reallow, a concession not in excess of $ per share to
certain dealers.

The following table shows the per share and total underwriting discount we
and the selling stockholders will pay to the underwriters. Such amounts are
shown assuming both no exercise and full exercise of the underwriters' option
to purchase 975,000 additional shares of common stock.

Total
Without Total With
Option Option
Per Share Exercised Exercised
--------- --------- ----------

Public offering price........... $ $ $
Underwriting discount(1)........ $ $ $
Proceeds to us (before expenses) $ $ $

--------
(1) The underwriting discount is %, or $ per share.

We expect to incur expenses of approximately $310,000 in connection with
this offering.

We and the selling stockholders have granted the underwriters an option to
purchase up to 975,000 additional shares of common stock at the public offering
price less the underwriting discount. The underwriters may exercise the option
for 30 days from the date of this prospectus solely to cover any
over-allotments. If the underwriters exercise this option, each will be
obligated, subject to conditions contained in the underwriting agreement, to
purchase a number of additional shares of common stock proportionate to that
underwriter's initial amount reflected in the above table.

Each of our officers and directors, and each of the selling stockholders,
has agreed with the underwriters, for a period of 90 days after the date of
this prospectus, subject to certain exceptions, not to sell any shares of
common stock or any securities convertible into or exchangeable for shares of
common stock owned by the holders, without the prior written consent of the
underwriters. However, the underwriters may, in their sole discretion and at
any time without notice, release all or any portion of the securities subject
to these agreements.

Until the distribution of the shares of common stock is completed,
Securities and Exchange Commission rules may limit the underwriters and selling
group members from bidding for and purchasing our shares of common stock.
However, the underwriters may engage in transactions that stabilize the price
of the shares of common stock, such as bids or purchases to peg, fix or
maintain that price.

If the underwriters create a short position in the shares of common stock
in connection with the offering, i.e., if they sell more shares than are listed
on the cover of this prospectus, the underwriters may reduce that short
position by purchasing shares in the open market. The underwriters may also
elect to reduce any short position by exercising all or part of the
over-allotment option described above. Purchases of the shares of common stock
to stabilize the price or to reduce a short position may cause the price of the
shares of common stock to be higher than it might be in the absence of such
purchases.

Neither we nor the underwriters makes any representation or prediction as
to the effect the transactions described above may have on the price of the
shares of common stock. These transactions may occur on the Nasdaq National
Market or otherwise. If such transactions are commenced, they may be
discontinued without notice at any time.

Royce & Associates, LLC, an affiliate of Legg Mason Wood Walker,
Incorporated, manages accounts that beneficially own 911,800 shares of our
common stock as of June 4, 2002. In addition, some of the underwriters and
their affiliates have engaged in, and may in the future engage in, investment
banking and other commercial dealings in the ordinary course of business with
us. They have received customary fees and commissions for these transactions.

LEGAL MATTERS

Certain legal matters in connection with the common stock offered hereby
will be passed upon for us by Blackwell Sanders Peper Martin LLP, Two Pershing
Square, 2300 Main Street, Suite 1000, Kansas City, Missouri 64108. Certain
legal matters in connection with this offering will be passed upon for the
underwriters by Calfee, Halter & Griswold LLP, 1400 McDonald Investment Center,
800 Superior Avenue, Cleveland, Ohio 44114.

EXPERTS

Our consolidated financial statements as of December 31, 2001 and 2000, and
for each of the years in the two-year period ended December 31, 2001, have been
included and incorporated by reference in this prospectus and the registration
statement on Form S-3, and have been so included in reliance on the report of
KPMG LLP, independent accountants included and incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing. The audit report covering the December 31, 2001 financial statements
refers to a change in the Company's method of accounting for derivative
investments and hedging activities.

Our consolidated financial statements as of December 31, 1999 and for the
year then ended have been incorporated in this registration statement by
reference to the Annual Report on Form 10-K for the year ended December 31,
2001, and have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any of these materials at the
SEC's Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the SEC's regional offices in New York, New York and Chicago, Illinois. You
may obtain information on the operation of the public reference rooms by
calling the SEC at 1-800-SEC-0330. Our SEC filings, including the registration
statement, will also be available to you on the SEC's website. The address of
this website is http://www.sec.gov.

We have filed a registration statement on Form S-3 with the SEC to register
shares of our common stock. This prospectus is part of that registration
statement and, as permitted by the SEC's rules, does not contain all of the
information included in the registration statement. For further information
about us and this offering, you may refer to the registration statement and its
exhibits. You can review and copy the registration statement and its exhibits
at the public reference rooms maintained by the SEC or on the SEC's website
described above.

This prospectus may contain summaries of contracts or other documents.
Because they are summaries, they will not contain all of the information that
may be important to you. If you would like complete information about a
contract or other document, you should read the copy filed as an exhibit to the
registration statement.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information we incorporate by reference
is considered to be a part of this prospectus, and information that we file
with the SEC at a later date will automatically update or supersede this
information. We incorporate by reference the following documents as well as any
future filing we will make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934:

. Our Annual Report on Form 10-K for the year ended December 31, 2001, as
amended by Form 10-K/A filed with the SEC on April 1, 2002;

. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2002
filed with the SEC on May 10, 2002;

. Our Current Report on Form 8-K filed with the SEC on June 7, 2002; and

. The description of our common stock contained in the registration
statement on Form 8-A filed with the SEC on February 28, 1994.

You may request a copy of these filings, at no cost, by written or
telephone request to:

NN, Inc.
Attn: Corporate Secretary
2000 Waters Edge Drive
Johnson City, Tennessee 37604
(423) 743-9151

This prospectus may contain information that updates, modifies or is
contrary to information in one or more of the documents incorporated by
reference in this prospectus. Reports we file with the SEC after the date of
this prospectus may also contain information that updates, modifies or is
contrary to information in this prospectus or in documents incorporated by
reference in this prospectus. Investors should review these reports as they may
disclose a change in our business, prospects, financial condition or other
affairs after the date of this prospectus.

Index to Financial Statements
NN, Inc.

Page
----

Report of Independent Auditors for the years ended December 31, 2001 and
December 31, 2000..................................................................... F-2

Report of Independent Accountants for the year ended December 31, 1999.................. F-3

Consolidated Balance Sheets at December 31, 2001 and 2000............................... F-4

Consolidated Statements of Income and Comprehensive Income for the three years ended
December 31, 2001..................................................................... F-5

Consolidated Statements of Changes in Stockholders' Equity for the three years ended
December 31, 2001..................................................................... F-6

Consolidated Statements of Cash Flows for the three years ended December 31, 2001....... F-7

Notes to Consolidated Financial Statements.............................................. F-8

Consolidated Statements of Income and Comprehensive Income (Loss) for each of the
three month periods ended March 31, 2002 and 2001..................................... F-30

Condensed Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001........ F-31

Consolidated Statements of Changes in Stockholders' Equity for the three month periods
ended March 31, 2001 and 2002......................................................... F-32

Consolidated Statements of Cash Flows for the three month periods ended March 31,
2001 and 2002......................................................................... F-33

Notes to Consolidated Financial Statements.............................................. F-34

F-1

Independent Auditors' Report

The Board of Directors
NN, Inc.:

We have audited the accompanying consolidated balance sheets of NN, Inc. as of
December 31, 2001 and 2000 and the related consolidated statements of income
and comprehensive income, consolidated statements of changes in stockholders'
equity, and consolidated statements of cash flows for the years then ended.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of NN, Inc. as of
December 31, 2001 and 2000 and the results of their operations and their cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for derivative instruments and hedging
activities in 2001.

/s/ KPMG LLP

Charlotte, North Carolina
February 28, 2002

F-2

Report of Independent Accountants

To the Board of Directors and
Stockholders of NN, Inc.

In our opinion, the consolidated statements of income and comprehensive income,
of changes in stockholders' equity and of cash flows for the year ended
December 31, 1999, (as listed in the accompanying index) present fairly, in all
material respects, the results of operations and cash flows of NN, Inc.
(formerly known as NN Ball & Roller, Inc.) for the year ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Charlotte, North Carolina
February 4, 2000

F-3

NN, Inc.

Consolidated Balance Sheets

December 31, 2001 and 2000

(In thousands, except per share data)

2001 2000
-------- --------

Assets
Current assets:
Cash and cash equivalents............................................ $ 3,024 $ 8,273
Accounts receivable, net............................................. 24,832 29,549
Inventories, net..................................................... 23,418 23,742
Other current assets................................................. 3,034 1,512
Current deferred tax asset........................................... 1,309 790
-------- --------
Total current assets............................................. 55,617 63,866
Property, plant and equipment, net....................................... 82,770 91,693
Assets held for sale..................................................... 4,348 --
Goodwill, net of accumulated amortization of $3,009 in 2001 and $1,297 in
2000................................................................... 39,805 27,865
Other non-current assets................................................. 4,862 4,212
Non-current deferred tax asset........................................... 733 172
-------- --------
Total assets............................................................. $188,135 $187,808
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable..................................................... $ 15,829 $ 16,883
Bank overdraft....................................................... 1,141 454
Accrued salaries, wages and benefits................................. 3,813 2,248
Income taxes payable................................................. 2,074 1,341
Payable to affiliates................................................ 1,277 1,762
Short-term loans..................................................... -- 2,000
Short term portion of long term debt................................. 7,000 --
Other liabilities.................................................... 6,552 9,038
Current deferred tax liability....................................... 50 114
-------- --------
Total current liabilities........................................ 37,736 33,840
Minority interest in consolidated subsidiaries........................... 30,932 30,257
Non-current deferred tax liability....................................... 6,499 5,239
Long-term debt........................................................... 47,661 50,515
Accrued pension.......................................................... 2,390 2,133
Other.................................................................... 878 578
-------- --------
Total liabilities................................................ 126,096 122,562
-------- --------
Stockholders' equity:
Common stock--$0.01 par value, authorized 45,000 shares, issued and
outstanding 15,317 shares in 2001 and 15,247 shares in 2000........ 154 153
Additional paid-in capital........................................... 30,841 30,414
Retained earnings.................................................... 36,139 36,364
Accumulated other comprehensive loss................................. (5,095) (1,685)
-------- --------
Total stockholders' equity....................................... 62,039 65,246
-------- --------
Total liabilities and stockholders' equity....................... $188,135 $187,808
======== ========

See accompanying notes to consolidated financial statements.

F-4

NN, Inc.

Consolidated Statements of Income and Comprehensive Income

Years ended December 31, 2001, 2000 and 1999

(In thousands, except per share data)

2001 2000 1999
-------- -------- -------

Net sales........................................................ $180,151 $132,129 $85,294
Cost of products sold............................................ 137,591 93,926 59,967
-------- -------- -------
Gross profit................................................. 42,560 38,203 25,327
Selling, general and administrative.............................. 16,382 11,571 6,854
Depreciation and amortization.................................... 13,340 9,165 6,131
Restructuring and impairment costs............................... 2,312 -- --
-------- -------- -------
Income from operations........................................... 10,526 17,467 12,342
Interest expense................................................. 4,006 1,773 523
Equity in earnings of unconsolidated affiliates.................. -- (48) --
Net gain on involuntary conversion............................... (3,901) (728) --
Other income..................................................... (186) (136) --
-------- -------- -------
Income before provision for income taxes......................... 10,607 16,606 11,819
Provision for income taxes....................................... 4,094 5,959 4,060
Minority interest in consolidated subsidiaries................... 1,753 660 --
-------- -------- -------
Income before cumulative effect of change in
accounting principle....................................... 4,760 9,987 7,759
Cumulative effect of change in accounting principle, net of
income tax benefit of $112 and related minority interest
impact of $84.............................................. 98 -- --
-------- -------- -------
Net income....................................................... 4,662 9,987 7,759
Other comprehensive income (loss):
Additional minimum pension liability, net of tax of $31...... (53) -- --
Foreign currency translation................................. (3,357) (7) (1,563)
-------- -------- -------
Comprehensive income..................................... $ 1,252 $ 9,980 $ 6,196
======== ======== =======
Basic income per share:
Income before cumulative effect of change in accounting
principle.................................................. $ 0.31 $ 0.66 $ 0.52
Cumulative effect of change in accounting principle.......... (0.01) -- --
-------- -------- -------
Net income................................................... $ 0.31 $ 0.66 $ 0.52
======== ======== =======
Weighted average shares outstanding.......................... 15,259 15,247 15,021
======== ======== =======
Diluted income per share:
Income before cumulative effect of change in accounting
principle.................................................. $ 0.31 $ 0.64 $ 0.52
Cumulative effect of change in accounting principle.......... (0.01) -- --
-------- -------- -------
Net income................................................... $ 0.30 $ 0.64 $ 0.52
======== ======== =======
Weighted average shares outstanding.............................. 15,540 15,531 15,038
======== ======== =======

See accompanying notes to consolidated financial statements.

F-5

NN, Inc.

Consolidated Statements of Changes in Stockholders' Equity

Years ended December 31, 2001, 2000 and 1999

(In thousands)

Common Stock Accumulated
--------------- Additional Other
Number Par Paid-In Retained Comprehensive
of shares Value Capital Earnings Loss Total
- --------- ----- ---------- -------- ------------- -------

Balance at December 31, 1998............ 14,804 $149 $27,902 $28,306 $ (115) $56,242
Shares Issued........................ 440 4 2,496 -- -- 2,500
Net income........................... -- -- -- 7,759 -- 7,759
Dividends paid....................... -- -- -- (4,810) -- (4,810)
Cumulative translation loss.......... -- -- -- -- (1,563) (1,563)
------ ---- ------- ------- ------- -------

Balance, December 31, 1999.............. 15,244 $153 $30,398 $31,255 $(1,678) $60,128
Shares Issued........................ 3 -- 16 -- -- 16
Net income........................... -- -- -- 9,987 -- 9,987
Dividends paid....................... -- -- -- (4,878) -- (4,878)
Cumulative translation loss.......... -- -- -- -- (7) (7)
------ ---- ------- ------- ------- -------

Balance, December 31, 2000.............. 15,247 $153 $30,414 $36,364 $(1,685) $65,246
Shares Issued........................ 70 1 427 -- -- 428
Net income........................... -- -- -- 4,662 -- 4,662
Dividends paid....................... -- -- -- (4,887) -- (4,887)
Additional minimum pension liability. -- -- -- -- (53) (53)
Cumulative translation loss.......... -- -- -- -- (3,357) (3,357)
------ ---- ------- ------- ------- -------
Balance, December 31, 2001.............. 15,317 $154 $30,841 $36,139 $(5,095) $62,039
====== ==== ======= ======= ======= =======

See accompanying notes to consolidated financial statements.

F-6

NN, Inc.

Consolidated Statements of Cash Flows

Years Ended December 31, 2001, 2000 and 1999

(In thousands)

2001 2000 1999
-------- -------- --------

Cash flows from operating activities:
Net Income........................................................... $ 4,662 $ 9,987 $ 7,759
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization...................................... 13,340 9,165 6,131
Cumulative effect of change in accounting principle................ 98 -- --
Loss on disposals of property, plant and equipment................. -- 1,194 43
Loss on sale of NNG................................................ 222 -- --
Equity in earnings of unconsolidated affiliates.................... -- (48) --
Deferred income tax................................................ 433 1,185 (369)
Interest income on receivable from unconsolidated affiliates....... (104) (159) --
Minority interest in consolidated subsidiary....................... 1,753 660 --
Restructuring costs and impairment costs........................... 2,312 -- --
Changes in operating assets and liabilities:.......................
Accounts receivable.............................................. 6,838 1,955 (641)
Inventories...................................................... 1,175 (3,021) 5,121
Other current assets............................................. (1,461) (106) 471
Other assets..................................................... (618) (1,719) 19
Accounts payable................................................. (2,846) 5,544 (1,439)
Other liabilities................................................ (1,187) 2,227 750
-------- -------- --------
Net cash provided by operating activities...................... 24,617 26,864 17,845
-------- -------- --------

Cash flows from investing activities:
Acquisition of businesses, net of cash acquired...................... (23,496) (57,788) (27,535)
Acquisition of property, plant and equipment......................... (6,314) (17,910) (2,394)
Sale of NNG.......................................................... 622 -- --
Long-term note receivable............................................ -- (3,440) --
Investment in unconsolidated affiliates.............................. -- (172) --
Proceeds from disposals of property, plant and equipment............. 106 -- 46
-------- -------- --------
Net cash used by investing activities.......................... (29,082) (79,310) (29,883)
-------- -------- --------

Cash flows from financing activities:
Net proceeds under revolving line of credit.......................... -- 7,547 17,151
Minority shareholders contributions.................................. -- 29,600 --
Proceeds from long-term debt......................................... 71,430 25,817 --
Bank overdrafts...................................................... 687 (785) 1,239
Repayment of long-term debt.......................................... (65,946) -- --
Proceeds (repayment) of short-term debt.............................. (2,000) 2,000 --
Proceeds from issuance of stock...................................... 428 16 --
Cash dividends....................................................... (4,887) (4,878) (4,810)
-------- -------- --------
Net cash provided (used) by financing activities............... (288) 59,317 13,580
-------- -------- --------
Effect of exchange rate changes...................................... (496) (7) (1,563)
Net change in cash and cash equivalents.............................. (5,249) 6,864 (21)
Cash and cash equivalents at beginning of period..................... 8,273 1,409 1,430
-------- -------- --------
Cash and cash equivalents at end of period........................... $ 3,024 $ 8,273 $ 1,409
======== ======== ========

Supplemental schedule of non-cash investing and financing activities:
Note received related to sale of NNG................................. $ 3,300 $ -- $ --
======== ======== ========
Stock issued related to acquisition of IMC........................... $ -- $ -- $ 2,500
======== ======== ========

See accompanying notes to consolidated financial statements.

F-7

NN, Inc.
Notes to Consolidated Financial Statements
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

(1) Summary of Significant Accounting Policies and Practices

(a) Description of Business

The Company is a manufacturer of precision balls, rollers, plastic
injection molded products, and precision bearing seals. The Company's
balls, rollers, and bearing seals are used primarily in the domestic
and international anti-friction bearing industry. The Company's plastic
injection molded products are used in the bearing, automotive,
instrumentation and fiber optic industries. The Domestic Ball and
Roller segment is comprised of two manufacturing facilities located in
the eastern United States. The Company's Euroball segment, which was
acquired in July 2000, (see Note 2) is comprised of manufacturing
facilities located in Kilkenny, Ireland, Eltmann, Germany, and
Pinerolo, Italy. All of the facilities in the Euroball segment are
engaged in the production of precision balls and rollers. The Plastics
segment consists of IMC, acquired in July 1999, NN Arte, formed in
August 2000 and Delta, acquired in February 2001. IMC has two
production facilities in Texas, NN Arte has one production facility in
Guadalajara, Mexico and Delta has two production facilities in
Connecticut (see Note 2). All of the Company's segments sell to foreign
and domestic customers.

(b) Cash and Cash Equivalents

The Company considers all highly liquid investments with an original
maturity of three months or less as cash equivalents.

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

(d) Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated
depreciation. Assets held for sale are stated at lower of cost or fair
market value less selling cost. Expenditures for maintenance and
repairs are charged to expense as incurred. Major renewals and
betterments are capitalized. When a major property item is retired, its
cost and related accumulated depreciation or amortization are removed
from the property accounts and any gain or loss is recorded in income
or expense, respectively. The Company reviews the carrying values of
long-lived assets for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be
recoverable. During the year ended December 31, 2001, the Company
incurred an impairment charge of $1,083 to write-down the land and
building at the Walterboro, SC production facility to its net
realizable value, which was based upon fair market value appraisals.
The carrying value of this land and building of $1,692 has been
classified as a component of assets held for sale in the accompanying
financial statements. During the year ended December 31, 2000, the
Company did not incur any impairment charges.

F-8

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

Depreciation is provided principally on the straight-line method over
the estimated useful lives of the depreciable assets for financial
reporting purposes. Accelerated depreciation methods are used for
income tax purposes.

(e) Revenue Recognition

The Company generally recognizes a sale when goods are shipped and
ownership is assumed by the customer. The Company has an inventory
management program for certain major ball and roller customers whereby
sales are recognized when products are used by the customer from
consigned stock, rather than at the time of shipment.

(f) Income Taxes

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.

(g) Net Income Per Common Share

Basic earnings per share reflect reported earnings divided by the
weighted average number of common shares outstanding. Diluted earnings
per share include the effect of dilutive stock options outstanding
during the year.

(h) Stock Incentive Plan

The Company applies the intrinsic value-based method of accounting
prescribed by Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations
including Financial Accounting Standards Board (FASB) Interpretation
No. 44, "Accounting for Certain Transactions involving Stock
Compensation (an interpretation of APB Opinion No. 25)" issued in March
2000, to account for its fixed plan stock options. Under this method,
compensation expense is recorded on the date of grant only if the
current market price of the underlying stock exceeds the exercise
price. The Company also applies the provision of APB Opinion No. 25 to
its variable stock options. Compensation expense is recognized for
these awards if the current market price of the underlying stock
exceeds $10.50. Statement of Financial Accounting Standards (SFAS) No.
123, "Accounting for Stock-Based Compensation," established accounting
and disclosure requirements using a fair value-based method of
accounting for stock-based employee compensation plans. As allowed by
SFAS No. 123, the Company has elected to continue to apply the
intrinsic value-based method of accounting described above, and has
adopted the disclosure requirements of SFAS No. 123.

F-9

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

(i) Principles of Consolidation

The Company's consolidated financial statements include the accounts of
NN, Inc. and subsidiaries in which the Company owns more than 50%
voting interest. Unconsolidated subsidiaries and investments where
ownership is between 20% and 50% are accounted for under the equity
method. All significant intercompany profits, transactions, and
balances have been eliminated in consolidation. The ownership interests
of other shareholders in companies that are more than 50% owned, but
less than 100% owned, are reflected as minority interests. Minority
interest represents the minority shareholders interest of Euroball and
NN Arte.

(j) Foreign Currency Translation

Assets and liabilities of the Company's foreign subsidiary are
translated at current exchange rates, while revenue and expenses are
translated at average rates prevailing during the year. Translation
adjustments are reported as a component of other comprehensive income.

(k) Goodwill

Goodwill, which represents the excess of purchase price over the fair
value of net assets acquired, is amortized on a straight-line basis
over the expected periods to be benefited, generally 20 years. The
Company assesses the recoverability of this intangible asset by
determining whether the amortization of the goodwill balance over its
remaining life can be recovered through undiscounted future operating
cash flows of the acquired operation. The amount of goodwill
impairment, if any, is measured based on projected discounted future
operating cash flows using a discount rate reflecting the Company's
average cost of funds.

(l) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

The Company accounts for long-lived assets in accordance with the
provisions of SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This
Statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future net cash
flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported at the
lower of the carrying amount or fair value less costs to sell.

(m) Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.

F-10

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

(n) Reclassifications

Certain 2000 and 1999 amounts have been reclassified to conform with
the 2001 presentation.

(o) Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting
for Derivative Instruments and Certain Hedging Activities." In June
2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activity, an Amendment of SFAS 133."
SFAS No. 133 and SFAS No. 138 require that all derivative instruments
be recorded on the balance sheet at their respective fair values. SFAS
No. 133 and SFAS No. 138 are effective for all fiscal quarters of all
fiscal years beginning after June 30, 2000, which for the Company was
effective January 1, 2001.

In July 2001, the FASB issued Statement of Financial Accounting
Standards No. 141, "Business Combinations" (Statement No. 141), and
Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets" (Statement No. 142). Statement No. 141
requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. Statement No. 141
also specifies criteria intangible assets acquired in a purchase method
business combination must meet to be recognized and reported apart from
goodwill. Statement No. 142 requires that goodwill and intangible
assets with indefinite useful lives no longer be amortized, but instead
tested for impairment. The effective date of Statement No. 142 is
January 1, 2002. As of the date of adoption, the Company expects to
have unamortized goodwill of approximately $39.8 million, which will be
subject to the provisions of Statement No. 142. Amortization expense
related to goodwill was approximately $1.8 million, $0.9 million and
$0.4 million for the years ended December 31, 2001, 2000 and 1999,
respectively. The Company is currently evaluating the impact of
adoption of Statement No. 142.

In July 2001, the FASB issued Statement of Financial Accounting
Standards No. 143, "Accounting For Asset Retirement Obligations." This
Statement requires capitalizing any retirement costs as part of the
total cost of the related long-lived asset and subsequently allocating
the total expense to future periods using a systematic and rational
method. Adoption of the Statement is required for fiscal years
beginning after June 15, 2002. The Company is currently evaluating the
impact of adoption of Statement No. 143.

In October 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, "Accounting For The Impairment or Disposal of
Long-lived Assets." This Statement supercedes Statement No. 121 but
retains many of its fundamental provisions. Additionally, this
Statement expands the scope of discontinued operations to include more
disposal transactions. The provisions of this Statement are effective
for financial statements issued for fiscal years beginning after
December 15, 2001. The Company is currently evaluating the impact of
Statement No. 144.

F-11

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

(p) Derivative Financial Instruments

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

In connection with a variable EURIBOR rate debt financing in July 2000
the Company's 54% owned subsidiary,Euroball entered into an interest
rate swap with a notional amount of Euro 12.5 million for the purpose
of fixing the interest rate on a portion of their debt financing. The
interest rate swap provides for the Company to receive variable Euribor
interest payments and pay 5.51% fixed interest. The interest rate swap
agreement expires in July 2006 and the notional amount amortizes in
relation to principal payments on the underlying debt over the life of
the swap.

The cumulative effect of a change in accounting principles for the
adoption of SFAS No. 133 effective January 1, 2001 resulted in a
transition adjustment net loss of $98 which is net of an income tax
benefit of $112 and the related minority interest impact of $84. The
interest rate swap does not qualify for hedge accounting under the
provisions of SFAS No. 133; therefore, the transition adjustment for
adoption of SFAS No. 133 and any subsequent periodic changes in fair
value of the interest rate swap are recorded in earnings.

As of December 31, 2001, the fair value of the swap is a before tax
loss of approximately $374 which is recorded in other non-current
liabilities. The change in fair value during the year ended December
31, 2001 was a loss of approximately $80 which has been included as a
component of other (income) expense.

(2) Acquisitions

On February 16, 2001, the Company completed the acquisition of all of the
outstanding stock of Delta, a Connecticut corporation for $22,500 in cash,
of which $500 was to be held in escrow for one year from the date of
closing. Delta provides high quality engineered bearing seals and other

F-12

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

precision-molded rubber products to original equipment manufacturers. The
Company plans to continue the operation of the Delta business, which
operates a manufacturing facility in Danielson, Connecticut. The excess of
the purchase price over the fair value of the net identifiable assets
acquired of $14,107 has been recorded as goodwill and is being amortized on
a straight-line basis over twenty years.

Effective July 31, 2000, the Company completed its Euroball transaction.
Completion of the transaction required the Company to start a majority
owned stand-alone company in Europe, Euroball, for the manufacture and sale
of precision steel balls used for ball bearings and other products. The
Company owns 54% of the shares of Euroball, AB SKF (SKF), a Swedish
Company, and FAG Kugelfischer Georg Schager AG (FAG), a German Company, own
23% each. Euroball subsequently acquired the steel ball manufacturing
facilities located in Pinerolo, Italy (previously owned by SKF), Eltmann,
Germany (previously owned by FAG) and Kilkenny, Ireland (previously owned
by the Company). Euroball paid approximately $57,788 for the net assets
acquired from SKF and FAG. The acquisitions of the Pinerolo, Italy and
Eltmann, Germany ball manufacturing facilities have been accounted for by
the purchase method of accounting and, accordingly, the results of
operations of Euroball have been included in the Company's consolidated
financial statements from July 31, 2000. The excess of the purchase price
over the fair value of the net identifiable assets acquired of $15,507 has
been recorded as goodwill and is being amortized on a straight-line basis
over twenty years.

Under the terms of a Shareholder Agreement between the Company, SKF and
FAG, at any time after December 31, 2002, SKF and FAG can require the
Company to purchase their shares of Euroball. The purchase price of the
shares is to be calculated using a purchase price formula specified in the
Shareholder Agreement.

The following unaudited pro forma summary presents the financial
information as if the Company's Euroball transaction and Delta acquisition
had occurred on January 1, 2001 and 2000. These proforma results have been
prepared for comparative purposes and do not purport to be indicative of
what would have occurred had the acquisitions been made on January 1, 2001
and 2000, nor is it indicative of future results.

(Unaudited) (Unaudited)
December 31, December 31,
2001 2000
------------ ------------

Net sales................. $182,700 $200,500
Net income................ 4,800 11,800
Basic earnings per share.. 0.31 0.77
Diluted earnings per share 0.31 0.76

Effective July 4, 1999, the Company acquired substantially all of the
assets and assumed certain liabilities of Earsley Capital Corporation, a
Nevada corporation and successor to and formerly known as Industrial
Molding Group, L.P. ("IMC"). IMC, located in Lubbock, Texas, operates as a
premier full-service designer and manufacturer of precision plastic
injection molded components. The Company paid consideration of
approximately $30,000, consisting of $27,500 in cash and

F-13

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

440 shares of its common stock, for the net assets acquired from IMC. The
Company has accounted for the IMC acquisition using the purchase method of
accounting and, accordingly, the results of operations of IMC have been
included in the Company's consolidated financial statements from July 4,
1999. The excess of the purchase price over the fair value of the net
identifiable assets acquired of $13,200 has been recorded as goodwill,
which is being amortized, on a straight-line basis over twenty years.

The following unaudited pro forma summary presents the financial
information as if the Company's acquisition of IMC had occurred on January
1, 1999. This unaudited pro forma summary does not include Euroball or
Delta. These proforma results have been prepared for comparative purposes
and do not purport to be indicative of what would have occurred had the
acquisition been made on January 1, 1999, nor is it indicative of future
results.

(Unaudited)
December 31,
1999
------------

Net sales.................. $101,562
Net income................. 7,558
Basic earnings per share... 0.50
Dilutive earnings per share 0.50

(3) Restructuring and Impairment Charges

In September 2001, the Company announced the closure of its Walterboro,
South Carolina ball manufacturing facility as a part of its ongoing
strategy to locate manufacturing capacity in closer proximity to its
customers. This facility is included in the Company's Domestic Ball and
Roller segment (see Note 10). The closure was substantially completed by
December 31, 2001.

Prior to December 31, 2001, production capacity and certain machinery and
equipment was transferred from the Walterboro facility to the Company's two
domestic ball facilities in Erwin, Tennessee and Mountain City, Tennessee.
The plant closing resulted in the termination of approximately 80 full time
hourly and salaried employees located at the Walterboro facility. The
Company has recorded restructuring costs of $750 during the year ended
December 31, 2001 for the severance payments. Additionally, prior to
December 31, 2001, the Company decided to sell the Walterboro land,
building and certain machinery. The Company incurred an impairment charge
of $1,083 during 2001 to write-down the land and building at the Walterboro
facility to its net realizable value of $1,697, which was based upon fair
market value appraisals. The amounts the Company will ultimately realize
upon disposition of these assets could differ materially from the amounts
assumed in arriving at the 2001 impairment loss. The remaining equipment
with a historical net book value of $2,656 is also held for sale. The
Company anticipates selling the land, building and machinery during 2002.
Approximately $290 of the severance payments were paid in 2001 and the
remaining is expected to be paid in 2002.

Accrued restructuring costs of $460 are included in other current
liabilities as of December 31, 2001. The Company has charged expenses for
moving machinery, equipment and inventory to

F-14

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

other production facilities and other costs to close the facility, which
will benefit future operations in the period they are incurred.

In addition to this restructuring charge, the Company's Euroball subsidiary
incurred restructuring charges of $479 for severance payments as a result
of the termination of 15 hourly employees and 3 salaried employees at its
Italy production facility. Approximately $426 of the severance payments
were paid during 2001 and remaining accrued restructuring costs of $53 are
included in other current liabilities as of December 31, 2001.

The following summarizes the 2001 restructurings:

Reserve
Non-Cash Paid in Balance
Charges Writedowns 2001 at 12/31/01
------- ---------- ------- -----------

Asset impairments................. $1,083 $1,083 $ -- $ --
Severance and other employee costs 1,229 -- 716 513
------ ------ ---- ----
Total............................. $2,312 $1,083 $716 $513
====== ====== ==== ====

Investments in affiliated companies at December 31, 2000 consist of 50% of
the member interest of NN General, LLC. NN General, LLC was formed in March
2000 between the Company and General Bearing Corporation. NN General, LLC
owns 60% of the Jiangsu General Ball and Roller, Company, Ltd., a Chinese
precision ball and roller manufacturer located in Rugao City, Jiangsu,
Province, China. The Company's investment in NN General, LLC includes $215
of member equity and a note receivable of $3,440 at December 31, 2000 which
are included in other non-current assets in the accompanying consolidated
balance sheet. The note receivable bears interest at variable rates (6.24%
at December 31, 2000) and is due December 31, 2020. Accrued interest income
on this note is $159 at December 31, 2000 and is included in other current
assets in the accompanying consolidated balance sheet.

Effective December 21, 2001, the Company sold its 50% ownership in NN
General, LLC to its partner, General Bearing Corporation for cash of $622
and notes of $3,300. The notes are due in annual installments of $200 with
the balance due on December 21, 2006. The notes bear interest at an average
of LIBOR (1.88% at December 31, 2001) plus 1.5%. In 2001, the Company
recorded a non-cash loss on the sale of its investment in this joint
venture of $144.

(5) Accounts Receivable

December 31,
---------------
2001 2000
------- -------

Trade................................ $26,613 $29,028
Other................................ 10 1,297
------- -------
26,623 30,325
Less--Allowance for doubtful accounts 1,791 776
------- -------
$24,832 $29,549
======= =======

F-15

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

Allowance for doubtful accounts is as follows:

Balance at
beginning Balance at
Description of year Additions Write-offs end of year
----------- ---------- --------- ---------- -----------

December 31, 1999
Allowance for doubtful accounts $586 $ 320 $ -- $ 906
==== ====== ==== ======
December 31, 2000
Allowance for doubtful accounts $906 $ -- $130 $ 776
==== ====== ==== ======
December 31, 2001
Allowance for doubtful accounts $776 $1,668 $653 $1,791
==== ====== ==== ======

On November 6, 2001, a customer of IMC filed for voluntary Chapter 7
bankruptcy. As of December 31, 2001, the Company had a trade accounts
receivable balance of approximately $829 with this customer. For the year
ended December 31, 2001, the Company recorded sales of approximately $1,900
to this customer. As of December 31, 2001, the Company has increased its
allowance for doubtful accounts by approximately $829 as a result of this
bankruptcy filing.

(6) Inventories

December 31,
----------------
2001 2000
------- -------

Raw materials......... $ 5,494 $ 4,431
Work in process....... 5,016 5,265
Finished goods........ 13,065 14,106
Less-inventory reserve (157) (60)
------- -------
$23,418 $23,742
======= =======

Inventory on consignment at December 31, 2001 and 2000 was approximately $
2,908 and $4,083, respectively.

(7) Property, Plant and Equipment

December 31,
Estimated -----------------
Useful Life 2001 2000
----------- -------- --------

Land.......................... $ 1,830 $ 2,202
Buildings and improvements.... 10-25 years 20,286 26,463
Machinery and equipment....... 3-10 years 103,363 92,810
Construction in process....... 1,577 6,138
-------- --------
127,056 127,613
Less--accumulated depreciation 44,286 35,920
-------- --------
$ 82,770 $ 91,693
======== ========

F-16

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

On September 11, 2001, the Company announced the closing of its Walterboro,
South Carolina ball manufacturing facility effective December 2001. As a
result of that closing land and building with a carrying value of $1,692
and certain machinery and equipment with a carrying value of $2,656 are
held for sale as of December 31, 2001.

(8) Debt

(a) Short Term

At December 31, 2000, the Company had outstanding $2,000 of unsecured
notes payable to banks bearing interest at 7.29%. These notes were
repaid during 2001.

(b) Long-Term

Long-term debt at December 31, 2001 and 2000 consists of the following:

2001 2000
------- -------

Borrowings under a revolving credit facility bearing interest at variable
rates (3.24%-4.75% at December 31, 2001) due July 25, 2003............. $ 9,805 $ --

Borrowings under a revolving credit facility bearing interest a variable
rates (7.29% at December 31, 2000) due July 25, 2003. Repaid in July
2001................................................................... -- 24,698

Term loan bearing interest at variable rates (3.24% at December 31,
2001) payable in quarterly installments of $1,750 beginning
September 19, 2001 through July 1, 2006................................ 31,500 --

Borrowings under a Euro revolving credit facility bearing interest at
variable rates (4.55% at December 31, 2001 and 6.63% at December
31, 2000) due July 15, 2006............................................ -- 942

Euro term loans bearing interest at variable rates (4.55% at
December 31, 2001 and 6.63% at December 31, 2000) payable in
quarterly installments of $1,781 beginning March 15, 2002 through
June 15, 2006.......................................................... 13,356 24,875
------- -------
Total long-term debt................................................. 54,661 50,515
Less current maturities.............................................. 7,000 --
------- -------
Long-term debt, excluding current installments....................... $47,661 $50,515
======= =======

On July 20, 2001, the Company entered into a syndicated loan agreement
with AmSouth Bank ("AmSouth") as the administrative agent for the
lenders, for a senior non-secured revolving credit facility of up to
$25,000, expiring on July 25, 2003 and a senior non-secured term loan
for $35,000 expiring on July 1, 2006. These facilities include certain
negative pledges. This credit facility replaces the $25,000 revolving
credit facility that was temporarily extended and restated in February
2001 to $50,000 and the additional $2,000 of availability extended in
March of 2001. Amounts outstanding under the revolving facility and
term loan facility bear interest at a floating rate equal to LIBOR
(1.88% at December 31, 2001) plus an applicable margin of 0.75% to
2.00% based upon calculated financial ratios.

F-17

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

The loan agreement contains restrictive covenants which specify, among
other things, restrictions on the incurrence of indebtedness, payment
of dividends, capital expenditures,
and the maintenance of certain financial ratios. The Company, as of
December 31, 2001, was in compliance with all such covenants.

In connection with the Euroball transaction (see Note 2) the Company
and Euroball, entered into a Facility Agreement with a bank to provide
up to Euro 36,000 in Term Loans and Euro 5,000 in revolving credit
loans. The Company borrowed Euro 30,500 ($28,755) under the term loan
facility and Euro 1,000 ($943) under the revolving credit facility.
Amounts outstanding under the Facility Agreement are secured by
inventory and accounts receivable and bear interest at EURIBOR (3.30%
at December 31, 2001) plus an applicable margin between 1.125% and
2.25% based upon financial ratios. The shareholders of Euroball have
provided guarantees for the Facility Agreement. The Facility Agreement
contains restrictive covenants, which specify, among other things,
restrictions on the incurrence of indebtedness and the maintenance of
certain financial ratios. Euroball was in compliance with all such
covenants at December 31, 2001.

The aggregate maturities of long-term debt for each of the five years
subsequent to December 31, 2001 are as follows:

2002. $ 7,000
2003. 23,893
2004. 13,268
2005. 7,000
2006. 3,500
-------
Total $54,661
=======

Interest paid during 2001, 2000 and 1999 was $3,596, $1,917 and $519,
respectively.

(9) Employee Benefit Plans

The Company has three defined contribution 401(k) profit sharing plans
covering substantially all employees of the Domestic Ball and Roller and
Plastics segments. The plan in place for the Domestic Ball and Roller
segment covers all employees who have one year of service, have attained
age twenty-one and have elected to participate in the plan. A participant
may elect to contribute from 1% to 20% of his or her compensation to the
Plan, subject to a maximum deferral set forth in the Internal Revenue Code.
The Company provides a matching contribution of the higher of $500 or 50%
of the first 4% of eligible compensation per participant. The employer
matching contribution is fully vested at all times. The contributions by
the Company for the Domestic Ball and Roller segment plan were $152, $106
and $120 in 2001, 2000 and 1999, respectively.

The plan in place for IMC covers all employees who have completed six
months of service and have elected to participate in the plan. A
participant may elect to contribute from 1% to 15% of his or her
compensation to the plan, subject to a maximum deferral set forth in the
Internal

F-18

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

Revenue Code. The Company matches 25% of the first 6% of each employee's
contribution to the plan and provides for a discretionary contribution at
the end of each plan year. The contributions by the Company for IMC plan
since acquisition in July 1999 were $58 in 2001, $70 in 2000 and $196 in
1999. Vesting occurs in equal increments over a period of five years.

The plan in place for Delta covers all employees who have one year of
service, have attained age twenty-one and have elected to participate in
the plan. A participant may elect to contribute from 1% to 20% of his or
her compensation to the Plan, subject to a maximum deferral set forth in
the Internal Revenue Code. The Company matches 50% of the first 6% of each
employee's contribution to the plan. The employee has 100% immediate
vesting on all contributions made to his or her account. The contributions
by the Company for the Delta plan since acquisition in February 2001 were
$67. Vesting occurs in equal increments over a period of five years.

The Company has a defined benefit pension plan covering its Eltmann,
Germany facility employees (a Euroball division). The benefits are based on
the expected years of service including the rate of compensation increase.
The plan is unfunded.
Following is a summary of the changes in the projected benefit obligation
for the defined benefit pension plan during 2001 and 2000:

2001 2000
--------- ------

Change in projected benefit obligation:
Benefit obligation at beginning of year........ $ 2,133 $1,886
Service cost................................... 77 33
Interest cost.................................. 116 62
Benefits paid.................................. (5) --
Effect of currency translation................. (196) --
Actuarial loss................................. 265 152
--------- ------
Benefit obligation at December 31.............. $ 2,390 $2,133
========= ======

2001 2000
--------- ------
Weighted-average assumptions as of December 31:
Discount rate.................................. 5.5% 6.0%
Rate of compensation increase.................. 1.5%-2.1% 2.0%

2001 2000
--------- ------
Components of net periodic benefit cost:
Service cost................................... $ 77 $ 33
Interest cost on projected benefit obligation.. 116 62
--------- ------
Net periodic pension cost...................... $ 193 $ 95
========= ======

F-19

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

Amounts recognized in the Consolidated Balance Sheets consist of:

2001 2000
------ ------

Accrued benefit liability....................... $2,390 $2,133
Accumulated other comprehensive loss, net of tax (53) --
------ ------
Net amount recognized........................... $2,337 $2,133
====== ======

(10) Stock Incentive Plan

Effective March 2, 1994, the Company adopted the NN, Inc. Stock Incentive
Plan under which 1,125 shares of the Company's Common Stock were reserved
for issuance to officers and key employees of the Company. During 1999 and
2000, the plan was amended to increase the number of shares available for
issuance pursuant to awards made under the plan from 1,125 to 1,625. Awards
or grants under the plan may be made in the form of incentive and
nonqualified stock options, stock appreciation rights and restricted stock.
The stock options and stock appreciation rights must be issued with an
exercise price not less than the fair market value of the Common Stock on
the date of grant. The awards or grants under the plan may have various
vesting and expiration periods as determined at the discretion of the
committee administering the plan.

A summary of the status of the Company's stock option plan as described
above as of December 31, 2001, 2000 and 1999, and changes during the years
ending on those dates is presented below:

2001 2000 1999
---------------- ---------------- ----------------
Weighted- Weighted- Weighted-
average average average
exercise exercise exercise
Shares price Shares price Shares price
------ --------- ------ --------- ------ ---------

Outstanding at beginning of year 1,091 $6.87 1,049 $ 8.53 548 $11.53
Granted......................... 396 8.09 555 7.63 539 5.93
Exercised....................... (70) 6.09 (2) 5.87 -- --
Forfeited....................... (44) 6.78 (511) 10.95 (38) 12.28
----- ----- -----
Outstanding at end of year...... 1,373 7.25 1,091 6.87 1,049 8.53
===== ===== =====
Options exercisable at year-end. 528 $6.59 290 $ 6.09 345 $11.53

The following table summarizes information about stock options outstanding
at December 31, 2001:

Options outstanding Options exercisable
------------------------------------ ---------------------
Weighted-
average Weighted- Number Weighted-
Number remaining average exercisable average
Range of exercise outstanding at contractual exercise at exercise
prices 12/31/2001 life price 12/31/2001 price
----------------- -------------- ----------- --------- ----------- ---------

$5.94 - $6.50 431 7.5 years $ 6.84 341 $ 5.97
$7.63 - $8.09 942 9.2 years $ 10.38 187 $ 7.71

F-20

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

On December 7, 1998, the Company granted a total of 20 options to the
members of its Board of Directors. These options carry an exercise price
equal to the market price on the date of issuance and vest equally over a
period of three years, beginning one year from date of grant. The maximum
term of these options is 10 years. On July 4, 1999, the Company granted an
additional 20 options to the members of its Board of Directors. These
options carry an exercise price equal to the market price on the date of
issuance and vest six months from the date of grant. The maximum term of
these options is 10 years. On October 10, 2000, the Company granted an
additional 15 options to the members of its Board of Directors. These
options carry an exercise price equal to the market price on the date of
issuance and vest 100% one year from date of grant. The maximum term of
these options is 10 years. On September 17, 2001, the Company granted an
additional 50 options to the members of the Board of Directors. These
options carry an exercise price equal to the market price on the date of
issuance and vest 100% one year from date of grant. The maximum term of
these options is 10 years.

On August 4, 1998 the Company's Board of Directors authorized the
repurchase of up to 740 shares of its Common Stock, equaling 5% of the
company's issued and outstanding shares as of August 4, 1998. The program
may be extended or discontinued at any time, and there is no assurance that
the Company will purchase any or all of the full amount authorized. The
Company has not repurchased any shares under this program through December
31, 2001.

All options granted in the period January 1, 1999 through December 31,
2001, except those granted to the Company's Board of Directors as described
above, vest ratably over three years, beginning one year from date of
grant. The exercise price of each option equals the market price of the
Company's stock on the date of grant, and an option's maximum term is 10
years. All options granted in the period January 1, 1995 through December
31, 1998, except those granted to the Company's Board of Directors as
described above, vest 20%-33% annually beginning one year from date of
grant. The exercise price of each option equals the market price of the
Company's stock on the date of grant, and an option's maximum term is 10
years. Certain options granted in July 1999 were deemed to be repriced
options under the applicable accounting requirements. These options, which
were fully vested as of the effective date of FASB Interpretation No. 44,
are treated under variable accounting. Accordingly, compensation expense
will be recognized, to the extent the market price of the Company's stock
exceeds $10.50. The Company recognized compensation expense of $108 during
2001 related to these options.

F-21

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123).
SFAS 123 encourages but does not require a fair value based method of
accounting for stock compensation plans. The Company has elected to
continue accounting for its stock compensation plan using the intrinsic
value based method under APB Opinion No. 25 and, accordingly, has not
recorded compensation expense for each of the three years ended December
31, 2001, except as discussed above. Had compensation cost for the
Company's stock compensation plan been determined based on the fair value
at the option grant dates, the Company's net income and earnings per share
would have been reduced to the proforma amounts indicated below:

Year ended December 31,
-----------------------
2001 2000 1999
------ ------ ------

Net income........................... As reported $4,662 $9,987 $7,759
Proforma 4,347 9,804 7,627
Earnings per share................... As reported $ 0.31 $ 0.66 $ 0.52
Proforma 0.28 0.64 0.51
Earnings per share--assuming dilution As reported $ 0.30 $ 0.64 $ 0.52
Proforma 0.28 0.63 0.51

The fair value of each option grant was estimated based on actual
information available through December 31, 2001, 2000 and 1999 using the
Black Scholes option-pricing model with the following assumptions:

Term Vesting period
Risk free interest rate 4.75%, 5.1% and 6.5% for 2001, 2000 and 1999, respectively
Dividend yield 2.8%, 3.6%, and 4.4% annually for 2001, 2000 and 1999, respectively
Volatility 40.7%, 39.5% and 39.5% for 2001, 2000 and 1999, respectively

(11) Segment Information

The Company adopted the provisions of SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information," effective with its
December 31, 1998 reporting and identified its reportable segments based
upon the geographic location of its business units. During 2001, the
Company's reportable segments are based on differences in product lines and
geographic locations and are divided among Domestic Ball and Roller,
Euroball and Plastics. The Domestic Ball and Roller segment is comprised of
two manufacturing facilities in the eastern United States. The Euroball
segment acquired in July 2000, is comprised of manufacturing facilities
located in Kilkenny, Ireland, Eltmann, Germany and Pinerolo, Italy. All of
the facilities in the Domestic Ball and Roller and Euroball segments are
engaged in the production of precision balls and rollers used primarily in
the bearing industry. The Plastics segment is compromised of five
facilities: two located in Lubbock, Texas, which represents the IMC
business acquired in July 1999; two facilities located in Danielson,
Connecticut, which represents the Delta business acquired in February 2001,
and one facility located in Guadalajara, Mexico, which represents the

F-22

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

NN Arte business. IMC and NN Arte manufacture plastic products for the
bearing, automotive, instrumentation, fiber optic and consumer hardware
markets. Delta manufactures engineered bearing seals used principally in
automotive, industrial, agricultural, mining and aerospace applications.

The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company evaluates
segment performance based on profit or loss from operations after income
taxes not including nonrecurring gains and losses. The Company accounts for
intersegment sales and transfers at current market prices; however, the
Company did not have any material intersegment transactions during 2001,
2000 or 1999.

December 31, 2001 December 31, 2000 December 31, 1999
------------------------- -------------------------- -----------------
Domestic Domestic Domestic
Ball and Ball and Ball and
Roller Euroball Plastics Roller Euroball Plastics Roller Plastics
-------- -------- -------- -------- -------- -------- -------- --------

Net sales.................. $52,692 $86,719 $40,740 $67,637 $33,988 $30,504 $67,736 $17,558
Interest expense........... 237 1,574 2,194 385 622 766 -- 523
Depreciation &
amortization.............. 4,439 5,426 3,475 4,796 2,123 2,246 4,932 1,199
Income tax expense......... 2,435 2,474 815 4,284 1,408 267 3,816 244
Segment profit (loss)...... 4,498 1,962 (1,798) 8,314 775 898 7,293 466
Segment assets............. 62,978 68,288 55,721 62,574 91,392 33,842 58,557 31,811
Expenditures for long-lived
assets.................... 1,117 3,537 1,660 9,319 3,737 4,854 1,723 671

Sales to external customers and long-lived assets utilized by the Company
were concentrated in the following geographical regions:

December 31, 2001 December 31, 2000 December 31, 1999
------------------- ------------------- ------------------
Long-lived Long-lived Long-lived
Sales assets Sales assets Sales assets
-------- ---------- -------- ---------- ------- ----------

United States........ $ 59,813 $38,900 $ 62,094 $44,137 $52,907 $36,842
Europe............... 88,649 42,799 46,697 46,216 21,064 6,610
Canada............... 8,278 -- 6,449 -- 5,918 --
Latin/S.America...... 8,157 1,071 6,100 1,340 2,903 --
Other export......... 15,254 -- 10,789 -- 2,502 --
-------- ------- -------- ------- ------- -------
All foreign countries 120,338 43,870 70,035 47,556 32,387 6,610
-------- ------- -------- ------- ------- -------
Total................ $180,151 $82,770 $132,129 $91,693 $85,294 $43,452
======== ======= ======== ======= ======= =======

Two customers comprised 49%, 49% and 46% of the Domestic Ball and Roller
segments sales during the years ended December 31, 2001, 2000, and 1999,
respectively (see Note 18). Two customers comprised 76% of the Euroball
segments sales during the year ended December 31, 2001. One customer
comprised 5% and 20% of IMC's sales for the years ended December 31, 2001
and 2000, respectively. Accounts receivable concentrations as of December
31, 2001 are generally reflective of sales concentrations during 2001.

F-23

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

(12) Income Taxes

Total income taxes (benefits) for the years ended December 31, 2001, 2000,
and 1999 are allocated as follows:

Year ended December 31,
---------------------
2001 2000 1999
------ ------ ------

Income from continuing operations:................. $4,094 $5,959 $4,060
Cumulative effect of change in accounting principle (112) -- --
Accumulated other comprehensive income............. (31) -- --
------ ------ ------
$3,951 $5,959 $4,060
====== ====== ======

Income tax expense attributable to income from continuing operations
consists of:

Year ended December 31,
---------------------
2001 2000 1999
------ ------ ------

Current:
U.S. Federal.................... $1,025 $3,496 $3,960
State........................... 146 452 469
Non-U.S......................... 2,490 826 --
------ ------ ------
$3,661 $4,774 $4,429
------ ------ ------
Deferred:
U.S. Federal.................... 557 496 (335)
State........................... 57 63 (34)
Non-U.S......................... (181) 626 --
------ ------ ------
Total deferred expense...... 433 1,185 (369)
------ ------ ------
$4,094 $5,959 $4,060
====== ====== ======

A reconciliation of taxes based on the U.S. federal statutory rate of 34%
for the years ended December 31, 2001, 2000 and 1999 is summarized as
follows:

Year ended December 31,
----------------------
2001 2000 1999
------ ------ ------

Income taxes at the federal statutory rate......... $3,606 $5,646 $4,006
State income taxes, net of federal benefit......... 134 340 289
Foreign sales corporation benefit, net of liability (95) (183) (256)
Non-US earnings taxed at different rates........... 395 337 (182)
Other, net......................................... 54 (181) 203
------ ------ ------
$4,094 $5,959 $4,060
====== ====== ======

F-24

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

The tax effects of the temporary differences are as follows:

Year ended
December 31,
-------------
2001 2000
------ ------

Deferred income tax liability
Tax in excess of book depreciation........... $5,692 $5,050
Duty drawback receivable..................... 37 69
Goodwill..................................... 493 210
Other deferred tax liabilities............... 112 123
------ ------
Gross deferred income tax liability...... 6,334 5,452
------ ------
Deferred income tax assets
Inventories.................................. 337 182
Allowance for bad debts...................... 632 279
Vacation accrual............................. 264 287
Health insurance accrual..................... 103 83
Other working capital accruals............... 358 230
Euroball net operating loss carryforward..... 133 --
------ ------
Gross deferred income tax assets......... 1,827 1,061
------ ------
Net deferred income tax liability............ $4,507 $4,391
====== ======

Deferred income tax expense differs from the change in the net deferred
income tax liability due to the following:

2001 2000
---- ------

Change in net deferred income tax liability.......................... $116 $1,780
Other comprehensive income adjustment................................ 31 --
Cumulative effect of a change in accounting principle................ 112 --
Acquisition of deferred tax asset (liability) recorded under purchase
accounting......................................................... 229 (595)
Effect of currency translation....................................... (55) --
---- ------
Deferred income tax expense...................................... $433 $1,185
==== ======

Although realization of deferred tax assets is not assured, management
believes that it is more likely than not that all of the deferred tax
assets will be realized. However, the amount of the deferred tax assets
considered realizable could be reduced based on changing conditions.

The Company has not recognized a deferred tax liability for the
undistributed earnings of its non-U.S. subsidiaries and non-U.S. corporate
joint ventures. The Company expects to reinvest these undistributed
earnings indefinitely and does not expect such earnings to become subject
to U.S. taxation in the foreseeable future. A deferred tax liability will
be recognized when the Company expects that it will recover these
undistributed earnings in a taxable manner, such as through the receipt of
dividends or sale of the investments. It is not practicable to determine
the U.S. income tax liability, if any, that would be payable if such
earnings were not reinvested indefinitely.

F-25

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

At December 31, 2001, the Company has net operating loss carryforwards for
foreign income tax purposes of approximately $1,500, which are available to
offset future foreign taxable income indefinitely.

Income tax payments were approximately $2,845, $5,207 and $3,123 in 2001,
2000, 1999, respectively.

(13) Reconciliation of Net Income Per Share

Year ended December 31,
-----------------------
2001 2000 1999
------- ------- -------

Net income......................... $ 4,662 $ 9,987 $ 7,759
Weighted average shares outstanding 15,259 15,247 15,021
Effective of dilutive stock options 281 284 17
------- ------- -------
Dilutive shares outstanding........ 15,540 15,531 15,038
Basic net income per share......... $ 0.31 $ 0.66 $ 0.52
======= ======= =======
Diluted net income per share....... $ 0.30 $ 0.64 $ 0.52
======= ======= =======

Excluded from the shares outstanding for the years ended December 31, 2001,
2000 and 1999 were 0, 10 and 525 antidilutive options, respectively, which
had exercise prices ranging from $9.75 to $11.50, during 2000 and $6.38 to
$15.50 during 1999.

The Company has declared a dividend of $ 0.32 per share in each of the
years ended
December 31, 2001, 2000 and 1999.

(14) Commitments and Contingencies

The Company has operating lease commitments for machinery, office
equipment, manufacturing and office space which expire on varying dates.
Rent expense for 2001, 2000 and 1999 was $1,650, $767 and $376,
respectively. The following is a schedule by year of future minimum lease
payments as of December 31, 2001 under operating leases that have initial
or remaining noncancelable lease terms in excess of one year.

Year ended December 31,
-----------------------

2002.............................. $ 1,473
2003.............................. 1,345
2004.............................. 1,311
2005.............................. 1,280
2006.............................. 1,204
Thereafter........................ 12,005
-------
Total minimum lease payments.. $18,618
=======

The Kilkenny operation of the Euroball segment has received certain grants
from the Ireland government. These grants are based upon the Kilkenny
facility hiring and retaining certain

F-26

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

employment levels. At December 31, 2001, actual employment levels are less
than those required by certain grant covenants. As of December 31, 2001,
the Company anticipates the grant agreement and employment level thresholds
will be adjusted.

The Euroball segment has entered into certain consignment arrangements with
Ascometals for the purchase of steel for ball production, whereby the
Euroball Kilkenny operation maintains steel on a consignment basis for a
period of up to three months.

Beginning in January 2003, FAG and SKF may each exercise their right under
The Shareholders Agreement to cause the Company to purchase their
respective interest in Euroball based on the Put Formula in the
Shareholders Agreement. The Company anticipates that if such purchase
becomes necessary, it may need to borrow additional funds. Because the
purchase price is based on a formula using Euroball's historical cash flow,
the exact amount of the put cannot be determined until the put right is
exercised.

(15) Quarterly Results of Operations (Unaudited)

The following summarizes the unaudited quarterly results of operations for
the years ended December 31, 2001 and 2000.

Year ended December 31, 2001
---------------------------------
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------

Net sales............................. $50,227 $47,350 $42,576 $39,998
Gross profit.......................... 12,043 12,030 9,687 8,800
Net income (loss)..................... 1,448 3,506 744 (1,036)
Basic net income (loss) per share..... 0.10 0.23 0.05 (0.07)
Dilutive net income (loss) per share.. 0.09 0.23 0.05 (0.07)
Weighted average shares outstanding:
Basic number of shares............ 15,247 15,253 15,286 15,302
Effect of dilutive stock options.. 149 279 298 377
------- ------- ------- -------
Diluted number of shares.............. 15,396 15,532 15,584 15,679
======= ======= ======= =======

Year ended December 31, 2000
---------------------------------
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------
Net sales............................. $28,002 $25,643 $37,075 $41,409
Gross profit.......................... 7,656 7,678 10,972 11,898
Net income............................ 2,110 2,242 2,443 3,192
Basic net income per share............ 0.14 0.15 0.16 0.21
Dilutive net income per share......... 0.14 0.15 0.16 0.21
Weighted average shares outstanding:
Basic number of shares............ 15,244 15,244 15,245 15,247
Effect of dilutive stock options.. 214 192 179 235
------- ------- ------- -------
Diluted number of shares.............. 15,458 15,436 15,424 15,482
======= ======= ======= =======

F-27

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

Fourth quarter results in 2001 include pre-tax charges of $1,405 ($913
after-tax) related to $1,086 of asset write downs on the Company's
Walterboro, SC production facility and $319 of NN Arte minority interest
losses absorbed by the Company. Without these nonrecurring charges, the
fourth quarter 2001 loss per share would have been ($.01) rather than
($.07).

(16) Fair Value of Financial Instruments

Management believes the fair value of financial instruments approximate
their carrying value due to the short maturity of these instruments or in
the case of the Company's notes receivable and debt, due to the variable
interest rates. The following table presents the carrying amounts and
estimated fair values of the Company's financial instruments at December
31, 2001 and 2000:

2001 2000
------------------- -------------------
Carrying Carrying
amount Fair value amount Fair value
-------- ---------- -------- ----------

Financial assets:
Cash and cash equivalents............ $ 3,024 $ 3,024 $ 8,273 $ 8,273
Accounts receivable, net............. 24,832 24,832 29,549 29,549
Other current assets................. 3,034 3,034 1,512 1,512
Other non-current assets............. 4,862 4,862 4,212 4,212
Financial liabilities:
Accounts payable and bank overdraft.. 16,970 16,970 17,337 17,337
Accrued expenses and other payables.. 13,716 13,716 14,839 14,839
Short-term loan.................. 7,000 7,000 2,000 2,000
Long-term debt................... 47,661 47,661 50,515 50,515
Interest rate swap liability............. 374 374 -- 280

(17) Involuntary Conversion

On March 12, 2000, a fire damaged a portion of the Company's manufacturing
plant in Erwin, Tennessee. The fire was contained to approximately 30% of
the productions area and did not result in serious injury to any employee.
Affected production was shifted to the Company's other facilities as
possible as well as the use of other certain suppliers to protect product
supply to customers. Insurance coverage for the loss provided for
reimbursement of the replacement value of property and equipment damaged in
the fire. As of December 31, 2001 the Company has settled the insurance
claim. For the years ended December 31, 2001 and 2000, the net gain on
involuntary conversion of $3,901 and $728, respectively, represents
insurance proceeds received in excess of costs incurred.

(18) Related Party Transactions

The minority shareholders of Euroball, SKF and FAG, are significant
customers of the Company. For the years ended December 31, 2001 and 2000,
combined sales to SKF and FAG amounted to $97,270 and $64,064,
respectively. At December 31, 2001 and 2000, accounts receivable from SKF
and FAG amounted to $11,360 and $4,983, respectively.

F-28

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share data)

In connection with the Euroball transaction described in note 2, SKF and
FAG provided administrative services to Euroball. Charges for these
services amounted to approximately $2,262 and $1,150 for the years ended
December 31, 2001 and 2000, respectively. At December 31, 2001 and 2000,
amounts payable to SKF and FAG amounted to $1,277 and $1,762, respectively.

Certain sales agreements are in effect with SKF and FAG, which provide for
minimum purchase quantities and specified, annual sales price adjustments
that may be modified up or down for changes in material costs. These
agreements expire during 2006.

The Company leases the Eltmann, Germany facility of the Euroball division,
from FAG. Annual minimum lease payments are Euro 944 ($885). The lease
expires in 2020.

F-29

NN, Inc.

Consolidated Statements of Income and Comprehensive Income (Loss)

(In thousands, except per share data)

(Unaudited)

Three Months Ended
March 31,
----------------
2002 2001
------- -------

Net sales........................................................................ $47,200 $50,227
Cost of products sold............................................................ 35,532 38,184
------- -------
Gross profit................................................................. 11,668 12,043
Selling, general and administrative.............................................. 4,498 4,014
Depreciation and amortization.................................................... 2,825 3,310
Restructuring and impairment costs............................................... 78 --
------- -------
Income from operations........................................................... 4,267 4,719
Interest expense................................................................. 601 1,182
Equity in earnings of unconsolidated affiliates.................................. -- (49)
Other income..................................................................... (355) (132)
------- -------
Income before provision for income taxes......................................... 4,021 3,718
Provision for income taxes....................................................... 1,505 1,636
Minority interest in consolidated subsidiaries................................... 668 536
------- -------
Income before cumulative effect of change in accounting principle............ 1,848 1,546
Cumulative effect of change in accounting principle, net of income tax benefit of
$112 and related minority interest impact of $84............................... -- 98
------- -------
Net income................................................................... 1,848 1,448

Other comprehensive income (loss):
Foreign currency translation................................................. (80) (3,386)
------- -------
Comprehensive income (loss).................................................. $ 1,768 $(1,938)
======= =======

Basic income per share:
Income before cumulative effect of change in accounting principle............ $ 0.12 $ 0.10
Cumulative effect of change in accounting principle.......................... -- --
------- -------
Net income................................................................... $ 0.12 $ 0.10
======= =======
Weighted average shares outstanding.......................................... 15,341 15,247
======= =======
Diluted income per share:
Income before cumulative effect of change in accounting principle............ $ 0.12 $ 0.10
------- -------
Cumulative effect of change in accounting principle.......................... -- (0.01)
------- -------
Net income................................................................... $ 0.12 $ 0.09
======= =======
Weighted average shares outstanding.............................................. 15,735 15,396
======= =======

See accompanying notes to consolidated financial statements.

F-30

NN, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

March 31, December 31,
2002 2001
----------- ------------
(Unaudited)

Assets
Current assets:
Cash and cash equivalents........................... $ 2,204 $ 3,024
Accounts receivable, net............................ 30,808 24,832
Inventories, net.................................... 21,720 23,418
Other current assets................................ 4,844 4,343
-------- --------
Total current assets............................ 59,576 55,617
Property, plant and equipment, net...................... 80,742 82,770
Assets held for sale.................................... 3,929 4,348
Goodwill, net........................................... 39,666 39,805
Other assets............................................ 5,507 5,595
-------- --------
Total assets.................................... $189,420 $188,135
======== ========

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable.................................... $ 14,446 $ 14,552
Bank overdraft...................................... 646 1,141
Accrued salaries, wages and benefits................ 3,826 3,813
Income taxes payable................................ 3,799 2,377
Payable to affiliates............................... 935 1,277
Short-term portion of long-term notes............... 7,000 7,000
Other current liabilities........................... 8,232 7,576
-------- --------
Total current liabilities....................... 38,884 37,736
Minority interest in consolidated subsidiaries.......... 31,186 30,932
Non-current deferred tax liability...................... 6,482 6,499
Long-term debt.......................................... 47,047 47,661
Accrued pension......................................... 2,292 2,390
Other................................................... 801 878
-------- --------
Total liabilities............................... 126,692 126,096

Total stockholders' equity...................... 62,728 62,039
-------- --------

Total liabilities and stockholders' equity...... $189,420 $188,135
======== ========

See accompanying notes to consolidated financial statements.

F-31

NN, Inc.

Consolidated Statements of Changes in Stockholders' Equity

(In thousands)

(Unaudited)

Common Stock Accumulated
--------------- Additional Other
Number of Par paid in Retained Comprehensive
Thousands of Dollars Shares value capital Earnings Loss Total
-------------------- --------- ----- ---------- -------- ------------- -------

Balance, December 31, 2000.... 15,247 $153 $30,414 $36,364 $(1,685) $65,246
Net income................ -- -- -- 1,448 -- 1,448
Dividends paid............ -- -- -- (1,220) -- (1,220)
Other comprehensive loss.. -- -- -- -- (3,386) (3,386)
------ ---- ------- ------- ------- -------
Balance, March 31, 2001....... 15,247 $153 $30,414 $36,592 $(5,071) $62,088
====== ==== ======= ======= ======= =======
Balance, December 31, 2001.... 15,317 $154 $30,841 $36,139 $(5,095) $62,039
Shares issued............. 24 -- 148 -- -- 148
Net income................ -- -- -- 1,848 -- 1,848
Dividends paid............ -- -- -- (1,227) -- (1,227)
Other comprehensive loss.. -- -- -- -- (80) (80)
------ ---- ------- ------- ------- -------
Balance, March 31, 2002....... 15,341 $154 $30,989 $36,760 $(5,175) $62,728
====== ==== ======= ======= ======= =======

See accompanying notes to consolidated financial statements.

F-32

NN, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three Months Ended
March 31,
-----------------
Thousands of Dollars 2002 2001
-------------------- ------- --------

Cash flows from operating activities:
Net income...................................................... $ 1,848 $ 1,448
Adjustments to reconcile net income:
Depreciation and amortization................................. 2,825 3,310
Cumulative effect of change in accounting principle........... -- 98
Equity in earnings of unconsolidated affiliate................ -- (49)
Interest income on receivable from unconsolidated affiliates.. -- (52)
Minority interest in consolidated subsidiaries................ 668 536
Restructuring costs and impairment costs...................... 78 --
Changes in operating assets and liabilities:
Accounts receivable......................................... (5,996) (6,363)
Inventories................................................. 1,578 702
Other current assets........................................ (558) (127)
Other assets................................................ 2 1,049
Accounts payable............................................ (1,371) (2,251)
Income taxes payable........................................ 1,421 1,675
Other liabilities........................................... 571 3,501
------- --------
Net cash provided by operating activities................. 1,066 3,477
------- --------
Cash flows from investing activities:
Acquisition of Delta Rubber Company, net of cash acquired....... -- (23,472)
Acquisition of property, plant, and equipment................... (849) (1,978)
------- --------
Net cash used by investing activities..................... (849) (25,450)
------- --------
Cash flows from financing activities:
Net proceeds under revolving line of credit..................... -- 24,642
Proceeds from long-term debt.................................... 1,710 --
Bank overdrafts................................................. 495 3,081
Repayment of long-term debt..................................... (2,132) (4,731)
Repayment of short-term debt.................................... -- (2,000)
Proceeds from issuance of stock................................. 148 --
Cash Dividends.................................................. (1,227) (1,220)
------- --------
Net cash provided (used) by financing activities.......... (1,006) 19,772
------- --------
Effect of exchange rate changes................................. (31) 1,415
Net Change in Cash and Cash Equivalents......................... (820) (786)
Cash and Cash Equivalents at Beginning of Period................ 3,024 8,273
------- --------
Cash and Cash Equivalents at End of Period...................... $ 2,204 $ 7,487
======= ========

See accompanying notes to consolidated financial statements.

F-33

NN, Inc.
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2002 and 2001
(In thousands, except per share data)

Note 1. Interim Financial Statements

The accompanying consolidated financial statements of NN, Inc. (the "Company")
have not been audited by independent accountants, except that the balance sheet
at December 31, 2001 is derived from the Company's audited financial
statements. In the opinion of the Company's management, the financial
statements reflect all adjustments necessary to present fairly the results of
operations for the three month periods ended March 31, 2002 and 2001, the
Company's financial position at March 31, 2002 and December 31, 2001, and the
cash flows for the three month periods ended March 31, 2002 and 2001. These
adjustments are of a normal recurring nature and are, in the opinion of
management, necessary for fair presentation of the financial position and
operating results for the interim periods.

Certain information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted from the interim financial statements presented
in this Quarterly Report on Form 10-Q.

The results for the first quarter of 2002 are not necessarily indicative of
future results.

Certain 2001 amounts have been reclassified to conform with the 2002
presentation.

Note 2. Derivate Financial Instruments

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

In connection with a variable Euribor rate debt financing in July 2000 the
Company's 54% owned subsidiary, Euroball entered into an interest rate swap
with a notional amount of Euro 12.5 million for the purpose of fixing the
interest rate on a portion of its debt financing. The interest rate swap
provides for the Company to receive variable Euribor interest payments and pay
5.51% fixed interest. The interest rate swap agreement expires in July 2006 and
the notional amount amortizes in relation to initially established principal
payments on the underlying debt over the life of the swap.

As of March 31, 2002, the fair value of the swap is a loss of approximately
$312, which is recorded in other non-current liabilities. The change in fair
value during the three month period ended March 31, 2002 and 2001 was a gain of
approximately $56 and a loss of approximately $48, respectively, which have
been included as a component of other income.

Note 3. Inventories

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

F-34

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Three Months Ended March 31, 2002 and 2001
(In thousands, except per share data)

Inventories are comprised of the following:

March 31,
2002 Dec. 31,
(Unaudited) 2001
----------- --------

Raw materials.......... $ 5,083 $ 5,494
Work in process........ 4,453 5,016
Finished goods......... 12,373 13,065
Less inventory reserves (189) (157)
------- -------
$21,720 $23,418
======= =======

Note 4. Net Income Per Share

Three Months Ended
March 31,
-----------------------
2002 2001
----------- -----------

Net income...................... $ 1,848 $ 1,448
Adjustments to net income....... -- --
----------- -----------
Net income.................. $ 1,848 $ 1,448
=========== ===========
Weighted average basic shares... 15,340,806 15,246,909
Effect of dilutive stock options 393,904 149,543
=========== ===========
Weighted average dilutive shares 15,734,710 15,396,452
=========== ===========
Basic net income per share...... $ 0.12 $ 0.10
=========== ===========
Diluted net income per share.... $ 0.12 $ 0.09
=========== ===========

Excluded from the shares outstanding for each of the three month periods ended
March 31, 2002 and 2001 were 0 and 10,750 antidilutive options, respectively,
which had exercise prices ranging from $9.75 to $11.50 as of March 31, 2001.

Note 5. Segment Information

During 2002 and 2001, the Company's reportable segments are based on
differences in product lines and geographic locations and are divided among
Domestic Ball and Roller, Euroball and Plastics. The Domestic Ball and Roller
segment is comprised of two manufacturing facilities in the eastern United
States. The Euroball segment was acquired in July 2000 and is comprised of
manufacturing facilities located in Kilkenny, Ireland, Eltmann, Germany and
Pinerolo, Italy. All of the facilities in the Domestic Ball and Roller and
Euroball segment are engaged in the production of precision balls and rollers
used primarily in the bearing industry. The Plastics segment is comprised of
the IMC business, located in Lubbock, Texas, which was acquired in July 1999,
NN Arte formed in August of 2000, located in Guadalajara, Mexico and Delta,
located in Danielson, Connecticut, which was acquired in February 2001. IMC and
NN Arte are engaged in the production of plastic injection molded products for
the bearing, automotive, instrumentation, fiber optic and consumer hardware
markets. Delta is engaged principally in the production of engineered bearing
seals used principally in automotive, industrial, agricultural, mining and
aerospace applications.

F-35

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Three Months Ended March 31, 2002 and 2001
(In thousands, except per share data)

The accounting policies of each segment are the same as those described in the
summary of significant accounting policies in the December 31, 2001 Form 10-K/A
including those policies as discussed in Note 8. The Company evaluates segment
performance based on profit or loss from operations before income taxes and
minority interest not including nonrecurring gains and losses. The Company
accounts for inter-segment sales and transfers at current market prices;
however, the Company did not have any material inter-segment transactions
during the three month periods ended March 31, 2002 and 2001.

Three Months Ended March 31,
----------------------------------------------------
2002 2001
-------------------------- -------------------------
Domestic Domestic
Ball & Ball &
Roller Euroball Plastics Roller Euroball Plastics
-------- -------- -------- -------- -------- --------

Revenues from external customers $13,203 $21,725 $12,272 $15,799 $25,337 $ 9,091
Segment pretax profit (loss).... 998 2,351 672 1,546 2,658 (486)
Segment assets.................. 65,982 66,412 57,026 62,468 86,955 59,904

Note 6. Acquisitions and Joint Ventures

On February 16, 2001, the Company completed the acquisition of all of the
outstanding stock of Delta, a Connecticut corporation for $22.5 million in
cash. Delta manufactures and sells high quality engineered bearing seals to
original equipment manufacturers and operates a manufacturing facility in
Danielson, Connecticut. The Company has accounted for this acquisition using
the purchase method of accounting.

Note 7. Restructuring Charges

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

Prior to December 31, 2001, production capacity and certain machinery and
equipment were transferred from the Walterboro facility to the Company's two
domestic ball facilities in Erwin, Tennessee and Mountain City, Tennessee. The
Company has recorded restructuring costs of $62 for additional severance
payments during the quarter ended March 31, 2002. Additionally, prior to
December 31, 2001, the Company decided to sell the Walterboro land, building
and certain machinery and incurred an impairment charge of approximately $1.1
million during 2001 to write down the land and building to its net realizable
value of approximately $1.7 million, which was based upon fair market
appraisals less costs to sell. The amounts the Company will ultimately realize
upon disposition of these assets could differ materially from the amounts
assumed in arriving at the 2001 impairment loss. The remaining equipment
recorded at a historical net book value of $2.2 million is also held for sale.
The Company anticipates selling the land, building and machinery during 2002.

Accrued restructuring costs of $114 are included in other current liabilities
as of March 31, 2002. The Company has charged expenses for moving machinery,
equipment and inventory to other

F-36

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Three Months Ended March 31, 2002 and 2001
(In thousands, except per share data)

production facilities and other costs to close the facility which will benefit
future operations in the period they are incurred.

The Company's Euroball subsidiary incurred restructuring charges of $16 for the
quarter ended March 31, 2002 for additional severance payments as a result of
the termination of 15 hourly employees and 3 salaried employees at its Italy
production facility. Approximately $69 of the severance payments were paid
during the quarter ended March 31, 2002 and there are no remaining accrued
restructuring costs included in other current liabilities as of March 31, 2002
related to Euroball.

The following summarizes the 2002 activity related to the restructurings:

Accrual Accrual
Balance at Paid in Balance at
12/31/01 Charges 2002 3/31/02
---------- ------- ------- ----------

Severance and other employee costs $513 $78 $477 $114
---- --- ---- ----
Total............................. $513 $78 $477 $114
==== === ==== ====

Note 8. New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 141, "Business Combinations"
(Statement No. 141), and Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" (Statement No. 142). Statement No. 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. Statement No. 141 also specifies
criteria that intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill.
Statement No. 142 requires that goodwill and intangible assets with indefinite
useful lives no longer be amortized, but rather, periodically tested for
impairment. The effective date of Statement No. 142 is January 1, 2002. As of
the date of adoption, the Company had unamortized goodwill of approximately
$39.8 million, which is subject to the provisions of Statement No. 142.

As a result of adopting these standards in the first quarter of 2002, the
Company no longer amortizes goodwill. The Company estimates that amortization
expense for goodwill would have been approximately $2.1 million (or $1.2
million net of tax and minority interest) for the year ended December 31, 2002.

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

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

F-37

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Three Months Ended March 31, 2002 and 2001
(In thousands, except per share data)

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

The Company is currently evaluating the impact of adoption of Statement No. 142
related to the transitional goodwill impairment review required by the new
standards during the first six months after adoption.

The table below describes the impact of the amortization of goodwill for the
three months ended March 31, 2002 and 2001:

For the Quarter Ended
March 31,
---------------------
2002 2001
------ ------

Reported net income........................ $1,848 $1,448
Add back: Goodwill amortization, net of tax -- 220
------ ------
Pro-forma net income....................... $1,848 $1,668
====== ======
Basic earnings per share:
Reported net income.................... $ 0.12 $ 0.10
Goodwill amortization.................. -- 0.01
------ ------
Pro-forma net income................... $ 0.12 $ 0.11
====== ======
Diluted earnings per share:
Reported net income.................... $ 0.12 $ 0.09
Goodwill amortization.................. -- 0.01
------ ------
Pro-forma net income................... $ 0.12 $ 0.11
====== ======

In June 2001, the FASB issued Statement of Financial Accounting Standards No.
143, "Accounting For Asset Retirement Obligations." This Statement requires
capitalizing any retirement costs as part of the total cost of the related
long-lived asset and subsequently allocating the total expense to future
periods using a systematic and rational method. Adoption of this Statement is
required for fiscal years beginning after June 15, 2002. The Company is
currently evaluating the impact of adoption of Statement No. 143.

In August 2001, the FASB issued Statement of Financial Accounting Standards No.
144, "Accounting For The Impairment or Disposal of Long-lived Assets." This
Statement supercedes Statement No. 121 but retains many of its fundamental
provisions. Additionally, this Statement expands the scope of discontinued
operations to include more disposal transactions. The provisions of this
Statement are effective for financial statements issued for fiscal years
beginning after December 15, 2001. The

F-38

NN, Inc.
Notes to Consolidated Financial Statements (Continued)
Three Months Ended March 31, 2002 and 2001
(In thousands, except per share data)

Company has adopted Statement No. 144 effective January 1, 2002. Management
believes that as of March 31, 2002 no asset impairment exists under the
provisions of Statement No. 144.

Note 9. Long-Term Debt

On July 20, 2001, the Company entered into a syndicated loan agreement with
AmSouth Bank ("AmSouth"), as the administrative agent for the lenders, for a
senior non-secured revolving credit facility of up to $25 million, expiring on
July 25, 2003 and a senior non-secured term loan for $35 million expiring on
July 1, 2006. This credit facility replaces the $25 million revolving credit
facility that was temporarily extended and restated in February of 2001 to $50
million and the additional $2 million of availability extended in March of
2001. Amounts outstanding under the revolving facility and the term loan
facility bear interest at a floating rate equal to LIBOR (1.88% at March 31,
2002) plus an applicable margin of 0.75% to 2.00% based upon calculated
financial ratios. The loan agreement contains customary financial and
non-financial covenants. The Company was in compliance with all such covenants
as of March 31, 2002.

In connection with the Euroball transaction the Company and Euroball, entered
into a Facility Agreement with a bank to provide up to Euro 36 million in Term
Loans and Euro 5 million in revolving credit loans. The Company borrowed Euro
30.5 million ($28,755) under the term loan facility and Euro 1 million ($943)
under the revolving credit facility. Amounts outstanding under the Facility
Agreement are secured by inventory and accounts receivable and bear interest at
EURIBOR (3.36% at March 31, 2002) plus an applicable margin between 1.125% and
2.25% based upon financial ratios. The shareholders of Euroball have provided
guarantees for the Facility Agreement. The Facility Agreement contains
restrictive covenants, which specify, among other things, restrictions on the
incurrence of indebtedness and the maintenance of certain financial ratios.
Euroball was in compliance with all such covenants as of March 31, 2002.

F-39

[Photograph of the Company's products]

[LOGO] NN Inc

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses payable by us in
connection with the sale of Common Stock being registered. All amounts other
than the registration fee are estimates.

SEC registration fee.............. $ 7,221
NASD filing fee................... 8,349
Legal fees and expenses........... 150,000
Accounting fees and expenses...... 50,000
Nasdaq National Market listing fee 22,500
Transfer agent fees and expenses.. 5,000
Printing and engraving expenses... 60,000
Miscellaneous fees and expenses... 6,930
--------
Total......................... $310,000
========

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company has entered into indemnification agreements with certain
officers and directors of the Company. Under these agreements, the Company
agrees to hold harmless and indemnify each indemnitee generally to the full
extent permitted by Section 145 of the Delaware General Corporation Law (the
"DGCL") and against any and all liabilities, expenses, judgments, fines,
penalties and costs in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative to which the indemnitee is made a party by reason of the fact
that the indemnitee has, is or at the time becomes a director or officer of the
Company or any other entity at the request of the Company.

Section 145 permits a corporation to indemnify certain persons, including
officers and directors, who are (or are threatened to be made) parties to any
threatened, pending or completed legal action (whether civil, criminal,
threatened or investigative) for reason of their being officers or directors.
The indemnity may include expenses, attorneys' fees, judgments, fines and
reasonably incurred costs of settlement, provided the officer and director
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interest and, in the case of criminal
proceedings, he had no reasonable cause to believe that his conduct was
illegal. The corporation may indemnify officers and directors in derivative
actions (in which suit is brought by a shareholder on behalf of the
corporation) under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is judged liable
for negligence or misconduct in the performance of his duty to the corporation.
If the officer or director is successful on the merits or otherwise in defense
of any action referred to above, the corporation must indemnify him against the
expenses and attorneys' fees he actually and reasonably incurred.

The Company has obtained liability insurance coverage for its officers and
directors with respect to actions arising out of the performance of such
officer's or director's duty in his or her capacity as such.

II-1

ITEM 16. EXHIBITS

1.1 Form of Underwriting Agreement.
3.1 Restated Certificate of Incorporation of the Company.*
3.2 Restated By-Laws of the Company.*
4.1 The specimen certificate representing the Company's Common Stock, par value $0.01 per
share.*
4.2 Article IV, Article V (Sections 3 through 6), Article VI (Section 2) and Article VII (Sections
1 and 3) of the Restated Certificate of Incorporation of the Company (included in Exhibit 3.1).*
4.3 Article II (Sections 7 and 12), Article III (Sections 2 and 15) and Article VI of the
Restated By-Laws of the Company (included in Exhibit 3.2).*
5.1 Opinion of Blackwell Sanders Peper Martin LLP, counsel to the Company.*
10.1 NN Ball & Roller, Inc. Stock Incentive Plan and Form of Incentive Stock Option Agreement
pursuant to the Stock Incentive Plan.**
10.2 Amendment No. 1 to the Stock Incentive Plan increasing the number of shares of Common
Stock available for Awards by 500,000 shares to a total of 1,625,000 (incorporated by
reference to Exhibit 4.6 of the Company's Registration Statement on Form S-8 filed on
November 30, 2000).**
10.3 Amendment No. 2 to the Stock Incentive Plan increasing the number of shares of Common
Stock available for Awards by 825,000 shares to a total of 2,450,000 shares and renaming
the Stock Incentive Plan the NN, Inc. Stock Incentive Plan (incorporated by reference to
Exhibit 4.7 of the Company's Registration Statement on Form S-8 filed on September 18,
2001).**
10.4 Form of Non-Competition and Confidentiality Agreement for Executive Officers of the
Company.
10.5 Stockholders Agreement dated February 22, 1994, among certain stockholders of the
Company.
10.6 Form of Indemnification Agreement for Officers and Directors of the Company.
10.7 Credit Agreement dated as of July 20, 2001 among NN, Inc., as the Borrower, the Lenders
identified therein, Bank One, Kentucky, NA, as Co-Agent, and AmSouth Bank, as
Administrative Agent.
10.8 First Amendment to Credit Agreement, dated October 4, 2001.
10.9 Second Amendment to Credit Agreement, dated July 12, 2002.
10.10 Form of Stock Option Agreement, dated December 7, 1998, between the Company and the
non-employee directors of the Company (incorporated by reference to Exhibit 10.15 of the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998).**
10.11 Elective Deferred Compensation Plan, dated February 26, 1999 (incorporated by reference to
Exhibit 10.15 of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998). **
10.12 Employment Agreement, dated August 1, 1997, between the Company and Roderick R. Baty
(incorporated by reference to Exhibit 10.14 of the Company's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 1997).**

II-2

10.13 Amendment No. 1 dated January 21, 2002, to Employment Agreement between the
Company and Roderick R. Baty (incorporated by reference to Exhibit 10.18 of the
Company's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2001).**
10.14 Change of Control and Noncompetition Agreement, dated January 21, 2002, between the
Company and Roderick R. Baty (incorporated by reference to Exhibit 10.19 of the
Company's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2001).**
10.15 Employment Agreement, dated May 7, 1998, between the Company and Frank T. Gentry
(incorporated by reference to Exhibit 10.14 of the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998).**

10.16 Amendment No. 1 dated January 21, 2002, to Employment Agreement between the
Company and Frank T. Gentry (incorporated by reference to Exhibit 10.16 of the Company's
Annual Report on Form 10-K/A for the fiscal year ended December 31, 2001).**
10.17 Change of Control and Noncompetition Agreement, dated January 21, 2002, between the
Company and Frank T. Gentry (incorporated by reference to Exhibit 10.17 of the Company's
Annual Report on Form 10-K/A for the fiscal year ended December 31, 2001).**
10.18 Employment Agreement dated January 21, 2002, between the Company and Robert R. Sams
(incorporated by reference to Exhibit 10.20 of the Company's Annual Report on Form 10-K/
A for the fiscal year ended December 31, 2001).**
10.19 Change of Control and Noncompetition Agreement, dated January 21, 2002, between the
Company and Robert R. Sams (incorporated by reference to Exhibit 10.21 of the Company's
Annual Report on Form 10-K/A for the fiscal year ended December 31, 2001).**
10.20 Employment Agreement dated January 21, 2002, between the Company and David L.
Dyckman (incorporated by reference to Exhibit 10.24 of the Company's Annual Report on
Form 10-K/A for the fiscal year ended December 31, 2001).**
10.21 Change of Control and Noncompetition Agreement, dated January 21, 2002, between the
Company and David L. Dyckman (incorporated by reference to Exhibit 10.25 of the
Company's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2001).**
10.22 Employment Agreement dated January 21, 2002, between the Company and William C.
Kelly, Jr. (incorporated by reference to Exhibit 10.22 of the Company's Annual Report on
Form 10-K/A for the fiscal year ended December 31, 2001).**
10.23 Change of Control and Noncompetition Agreement, dated January 21, 2002, between the
Company and William C. Kelly, Jr. (incorporated by reference to Exhibit 10.23 of the
Company's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2001).**
10.24 NN Euroball, ApS Shareholder Agreement dated April 6, 2000 among NN, Inc., AB SKF
and FAG Kugelfishcher Georg Schafer AG (incorporated by reference to Exhibit 10.26 of
the Company's Annual Report on Form 10-K/A for the fiscal year ended December 31,
2001).
21.1 List of Subsidiaries of the Company.
23.1 Consent of Blackwell Sanders Peper Martin LLP (included in Exhibit 5.1).*
23.2 Consent of KPMG LLP, Independent Auditors.
23.3 Consent of PricewaterhouseCoopers LLP, Independent Auditors.
24 Powers of Attorney (included in the signature page to the Registration Statement).*

--------
* Previously filed.
**Represents a management contract or compensatory plan or arrangement.

II-3

ITEM 17. UNDERTAKINGS

(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.

(b) The undersigned Company hereby undertakes that:

(i) For purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(ii) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(iii) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Johnson City, State of Tennessee, on July 15, 2002.

NN, Inc.

By: /s/ RODERICK R. BATY
-----------------------------
Roderick R. Baty
Chairman, Chief Executive
Officer and President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:

Signature Title Date
--------- ----- ----

/S/ RODERICK R. BATY Chairman, Chief Executive July 15, 2002
----------------------------- Officer, President and
Roderick R. Baty Director (Principal Executive
Officer)

/S/ DAVID L. DYCKMAN Vice President-Business July 15, 2002
----------------------------- Development and Chief
David L. Dyckman Financial Officer (Principal
Financial Officer)

/S/ WILLIAM C. KELLY, JR. Treasurer, Secretary and July 15, 2002
----------------------------- Chief Accounting Officer
William C. Kelly, Jr. (Principal Accounting Officer)

RODERICK R. BATY* A majority of the July 15, 2002
MICHAEL D. HUFF* Board of Directors July 15, 2002
G. RONALD MORRIS* July 15, 2002
STEVEN T. WARSHAW* July 15, 2002
JAMES L. EARSLEY* July 15, 2002

/S/ DAVID L. DYCKMAN
*By: ------------------------
David L. Dyckman
As Attorney-in-fact for
the above-named officers
and directors pursuant to
powers of attorney
duly executed by such
persons

II-5

Index of Exhibits

Exhibit
Number Document
------- --------

1.1 Form of Underwriting Agreement.

3.1 Restated Certificate of Incorporation of the Company.*

3.2 Restated By-Laws of the Company.*

4.1 The specimen certificate representing the Company's Common Stock, par value $0.01 per
share.*

4.2 Article IV, Article V (Sections 3 through 6), Article VI (Section 2) and Article VII (Sections 1
and 3) of the Restated Certificate of Incorporation of the Company (included in Exhibit 3.1).*

4.3 Article II (Sections 7 and 12), Article III (Sections 2 and 15) and Article VI of the Restated
By-Laws of the Company (included in Exhibit 3.2).*

5.1 Opinion of Blackwell Sanders Peper Martin LLP, counsel to the Company.*

10.1 NN Ball & Roller, Inc. Stock Incentive Plan and Form of Incentive Stock Option Agreement
pursuant to the Stock Incentive Plan.**

10.2 Amendment No. 1 to the Stock Incentive Plan increasing the number of shares of Common
Stock available for Awards by 500,000 shares to a total of 1,625,000 (incorporated by
reference to Exhibit 4.6 of the Company's Registration Statement on Form S-8 filed on
November 30, 2000).**

10.3 Amendment No. 2 to the Stock Incentive Plan increasing the number of shares of Common
Stock available for Awards by 825,000 shares to a total of 2,450,000 shares and renaming the
Stock Incentive Plan the NN, Inc. Stock Incentive Plan (incorporated by reference to Exhibit
4.7 of the Company's Registration Statement on Form S-8 filed on September 18, 2001).**

10.4 Form of Non-Competition and Confidentiality Agreement for Executive Officers of the
Company.

10.5 Stockholders Agreement dated February 22, 1994, among certain stockholders of the
Company.

10.6 Form of Indemnification Agreement for Officers and Directors of the Company.

10.7 Credit Agreement dated as of July 20, 2001 among NN, Inc., as the Borrower, the Lenders
identified therein, Bank One, Kentucky, NA, as Co-Agent, and AmSouth Bank, as
Administrative Agent.

10.8 First Amendment to Credit Agreement, dated October 4, 2001.

10.9 Second Amendment to Credit Agreement, dated July 12, 2002.

10.10 Form of Stock Option Agreement, dated December 7, 1998, between the Company and the
non-employee directors of the Company (incorporated by reference to Exhibit 10.15 of the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998).**

10.11 Elective Deferred Compensation Plan, dated February 26, 1999 (incorporated by reference to
Exhibit 10.15 of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998).**

Exhibit
Number Document
------- --------

10.12 Employment Agreement, dated August 1, 1997, between the Company and Roderick R. Baty
(incorporated by reference to Exhibit 10.14 of the Company's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1997).**

10.14 Change of Control and Noncompetition Agreement, dated January 21, 2002, between the
Company and Roderick R. Baty (incorporated by reference to Exhibit 10.19 of the Company's
Annual Report on Form 10-K/A for the fiscal year ended December 31, 2001).**

10.15 Employment Agreement, dated May 7, 1998, between the Company and Frank T. Gentry
(incorporated by reference to Exhibit 10.14 of the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998).**

10.17 Change of Control and Noncompetition Agreement, dated January 21, 2002, between the
Company and Frank T. Gentry (incorporated by reference to Exhibit 10.17 of the Company's
Annual Report on Form 10-K/A for the fiscal year ended December 31, 2001).**

10.18 Employment Agreement dated January 21, 2002, between the Company and Robert R. Sams
(incorporated by reference to Exhibit 10.20 of the Company's Annual Report on Form 10-K/A
for the fiscal year ended December 31, 2001).**

10.19 Change of Control and Noncompetition Agreement, dated January 21, 2002, between the
Company and Robert R. Sams (incorporated by reference to Exhibit 10.21 of the Company's
Annual Report on Form 10-K/A for the fiscal year ended December 31, 2001).**

10.20 Employment Agreement dated January 21, 2002, between the Company and David L.
Dyckman (incorporated by reference to Exhibit 10.24 of the Company's Annual Report on
Form 10-K/A for the fiscal year ended December 31, 2001).**

10.21 Change of Control and Noncompetition Agreement, dated January 21, 2002, between the
Company and David L. Dyckman (incorporated by reference to Exhibit 10.25 of the
Company's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2001).**

10.22 Employment Agreement dated January 21, 2002, between the Company and William C. Kelly,
Jr. (incorporated by reference to Exhibit 10.22 of the Company's Annual Report on Form
10-K/A for the fiscal year ended December 31, 2001).**

10.23 Change of Control and Noncompetition Agreement, dated January 21, 2002, between the
Company and William C. Kelly, Jr. (incorporated by reference to Exhibit 10.23 of the
Company's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2001).**

10.24 NN Euroball, ApS Shareholder Agreement dated April 6, 2000 among NN, Inc., AB SKF and
FAG Kugelfishcher Georg Schafer AG (incorporated by reference to Exhibit 10.26 of the
Company's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2001).

21.1 List of Subsidiaries of the Company.

Exhibit
Number Document
------- --------

23.1 Consent of Blackwell Sanders Peper Martin LLP (included in Exhibit 5.1).*

23.2 Consent of KPMG LLP, Independent Auditors.

23.3 Consent of PricewaterhouseCoopers LLP, Independent Auditors.

24 Powers of Attorney (included in the signature page to the Registration Statement).*

--------
* Previously filed.
**Represents a management contract or compensatory plan or arrangement.