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Aug. 1, 2006 — NS Group, Inc. announced net income of $32.0 million on record net sales of $192.3 million for the second quarter, and net income of $66.5 million on net sales of $382.8 million for the six months ended June 30, 2006.

Second Quarter Results—The $32.0 million net income ($1.41 per diluted share) compares to net income of $34.5 million ($1.53 per diluted share) in the first quarter of 2006, and net income of $37.2 million ($1.65 per diluted share) in the second quarter of 2005. Net sales, a record $192.3 million, reflect a one percent increase over the $190.5 million of sales in the first quarter of 2006.

Operating income was $49.6 million, which was the second highest result ever following the record first quarter 2006 operating income of $53.9 million. Operating margin was 25.8% compared to an operating margin of 28.3% in the first quarter of 2006. The decline was primarily caused by a change in product mix and higher costs as a result of scheduled maintenance outages.

The company's effective tax rate for the quarter was 38.0% versus 7.6% in the second quarter of 2005, when the company benefited from the utilization of tax net operating loss carryforwards.

Six Month Results—Net income was $66.5 million ($2.94 per diluted share), which compares to net income of $56.6 million ($2.51 per diluted share) in the prior-year period. Net sales were $382.8 million, which compare to net sales of $306.8 million for the six months ended June 30, 2005. Operating income was $103.5 million, compared to operating income of $62.6 million for the comparable prior-year period.

Management Comments—President and CEO, Rene J. Robichaud, stated, "The oil and gas market was robust in the second quarter as evidenced by the continued growth in the U.S. drill rig count. The quarterly average drill rig count increased 22% in the second quarter of 2006 relative to the same period a year ago and 7% relative to the first quarter of 2006. As a result we achieved record seamless shipments for the second consecutive quarter."

Robichaud went on to say, "We are very excited about growing the higher value added segments of our business. The recent addition of Ultra Premium Oilfield Services combined with the announced expansion of our capacity for manufacturing seamless tubular products and heat treating provides us with the foundation for profitable growth and industry-leading customer service. We now have the people and the assets to compete successfully in the rapidly changing North American drilling environment where challenging unconventional resource plays have become a substantial portion of total drilling activity."

NS Group, Inc. is a leading producer of tubular products serving the energy industry and certain industrial markets. The company manufactures and markets seamless and welded tubular steel products used in the drilling, exploration and transmission of oil and natural gas. NS Group also manufactures premium connections for oil and gas drilling and production.

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