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<div align="left" style="font-family: 'Times New Roman',Times,serif">   <div align="left"> </div> <div align="center" style="font-size: 10pt; margin-top: 0pt"><b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 1. Interim Financial Statements</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying condensed consolidated financial statements of NN, Inc. have not been audited, except that the balance sheet at December 31, 2010 was derived from the Company’s audited consolidated financial statements. In the opinion of the Company’s management, the financial statements reflect all adjustments necessary to fairly state the results of operations for the three and six month periods ended June 30, 2011 and 2010, the Company’s financial position at June 30, 2011 and December 31, 2010, and the cash flows for the six month periods ended June 30, 2011 and 2010. These adjustments are of a normal recurring nature and are, in the opinion of management, necessary for fair statement of the financial position and operating results for the interim periods. As used in this Quarterly Report on Form 10-Q, the terms “NN”, “the Company”, “we”, “our”, or “us” mean NN, Inc. and its subsidiaries. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Certain information and footnote disclosures normally included in the consolidated 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. These unaudited, condensed and consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our most recent annual report on Form 10-K for the year ended December 31, 2010 which we filed with the Securities and Exchange Commission on March 15, 2011. The results for the three and six month period ended June 30, 2011 are not necessarily indicative of results for the year ending December 31, 2011 or any other future periods. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Due to the impacts of the global economic recession and the resulting reduction in revenue and operating losses, our wholly owned German subsidiary, Kugelfertigung Eltmann GbmH (“Eltmann” or “Eltmann Plant”), sustained a significant weakening of its financial condition and as a result became insolvent at which point it was required to file for bankruptcy under German bankruptcy law. The filing was made in the bankruptcy court in Germany on January 20, 2011. As of this date, NN lost the ability to control or manage Eltmann as a result of the bankruptcy court trustee taking over effective control and day to day management of this subsidiary. As a result of loss of control of this subsidiary, NN deconsolidated the assets and liabilities of Eltmann from our Consolidated Financial Statements effective January 20, 2011. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">We were informed that in early April 2011, the bankruptcy trustee sold the majority of the production assets of Eltmann to a non-affiliated manufacturing company. It is our understanding that the remaining assets and liabilities of Eltmann will be liquidated sometime in the future by the bankruptcy court. NN does not expect any further significant impact on our consolidated financial statements as a result of the liquidation of this subsidiary. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the effects on the June 30, 2011 Condensed Consolidated Balance Sheet of the deconsolidation of Eltmann effective January 20, 2011: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="88%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cash </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(979</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Accounts receivable </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(3,388</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Inventory </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(2,407</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Other assets </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(193</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Property, plant and equipment </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,343</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Reduction of total assets </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(8,310</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Accounts payable </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,947</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Accrued salaries </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,500</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Accrued pension </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(5,623</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Accumulated other comprehensive income </div></td> <td> </td> <td> </td> <td align="right">551</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Reduction of total liabilities and stockholders’ equity </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(8,519</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Gain from deconsolidation of bankrupt subsidiary </div></td> <td> </td> <td align="left">$</td> <td align="right">209</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 2. Restructuring Charges and Other</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the first quarter of 2010, we announced the closure of the Tempe Plant. The closure impacted approximately 130 employees. Economic conditions at that time coupled with the long-term manufacturing strategy for our Whirlaway business necessitated a consolidation of our manufacturing resources into existing facilities in Ohio. During the three and six month periods ended June 30, 2010, we accrued $604 and $1,137, respectively, of severance costs related to the closure. The severance costs were recognized pro-rata over the period from the announcement date until the employees’ termination date as continued employment was a requirement to receive severance payments. Additionally, during the three and six month periods ended June 30, 2010, we incurred $63 of site closure and other associated costs. In the first quarter of 2010, we incurred $1,000 of accelerated depreciation related to certain fixed assets that ceased to be used due to the Tempe Plant closure. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 3. Long Term Notes Receivable</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Certain property, plant and equipment of the Tempe Plant was sold on August 31, 2010, the day the Tempe Plant ceased operations, to a newly formed company not affiliated with NN. Property, plant and equipment with a net book value of $2,230 were sold in exchange for a promissory note with a fair value of $1,562, as of August 31, 2010, (described below as the Tempe Fixed Asset Note). </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Tempe Fixed Asset Note had an original face value of $2,500, a 60 month term, a 7% interest rate, interest only payments for 24 months, principal and interest payments totaling $40 per month for the next 36 months followed by a balloon payment of $1,525. The note is secured by a first lien on approximately $1,000 of the assets and a second lien on the remaining assets. As of June 30, 2011, the note had an estimated fair value and carrying value of $1,688 determined using a discounted cash flow method applying market interest rates for similar types of seller financed, partially secured promissory notes (Level 3 under the U.S. GAAP fair value hierarchy). This note is reported within other current assets for the current portion and other non-current assets for the long-term portion within the Condensed Consolidated Balance Sheets. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 4. Inventories</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Inventories are comprised of the following (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>June 30,</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>December 31,</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>2011</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>2010</b></td> </tr>   <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="7" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Raw materials </div></td> <td> </td> <td align="right">$</td> <td align="right">13,422</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">12,882</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Work in process </div></td> <td> </td> <td> </td> <td align="right">9,664</td> <td> </td> <td> </td> <td> </td> <td align="right">8,837</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Finished goods </div></td> <td> </td> <td> </td> <td align="right">21,061</td> <td> </td> <td> </td> <td> </td> <td align="right">21,467</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Less inventory reserves </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1,493</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1,304</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="7" nowrap="nowrap" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="right">$</td> <td align="right">42,654</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">41,882</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="7" align="left" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Inventories on consignment at customer locations as of June 30, 2011 and December 31, 2010 totaled $3,870 and $3,401, respectively. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the first quarter of 2011, $2,407 of inventory at Eltmann was deconsolidated from the financial statements of NN. (See Note 1 of the Notes to Condensed Consolidated Financial Statements). </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The inventory valuations above were developed using normalized production capacities for each of our manufacturing locations. Any costs from abnormal excess capacity or under-utilization of fixed production overheads are expensed in the period incurred and are not included as a component of inventory valuation. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 5. Net Income Per Share</b> </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Three months ended</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Six months ended</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000">(In Thousands of Dollars, Except Per Share Data)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>2011</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>2010</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>2011</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>2010</b></td> </tr>   <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="15" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net income </div></td> <td> </td> <td align="right">$</td> <td align="right">5,827</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">5,123</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">11,334</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">5,348</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="15" align="left" style="border-top: 3px double #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Weighted average basic shares outstanding </div></td> <td> </td> <td> </td> <td align="right">16,864</td> <td> </td> <td> </td> <td> </td> <td align="right">16,522</td> <td> </td> <td> </td> <td> </td> <td align="right">16,733</td> <td> </td> <td> </td> <td> </td> <td align="right">16,388</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Effect of dilutive stock options </div></td> <td> </td> <td> </td> <td align="right">255</td> <td> </td> <td> </td> <td> </td> <td align="right">111</td> <td> </td> <td> </td> <td> </td> <td align="right">241</td> <td> </td> <td> </td> <td> </td> <td align="right">104</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="15" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Weighted average dilutive shares outstanding </div></td> <td> </td> <td> </td> <td align="right">17,119</td> <td> </td> <td> </td> <td> </td> <td align="right">16,633</td> <td> </td> <td> </td> <td> </td> <td align="right">16,974</td> <td> </td> <td> </td> <td> </td> <td align="right">16,492</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="15" align="left" style="border-top: 3px double #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Basic net income per share </div></td> <td> </td> <td align="right">$</td> <td align="right">0.35</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">0.31</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">0.68</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">0.33</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="15" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Diluted net income per share </div></td> <td> </td> <td align="right">$</td> <td align="right">0.34</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">0.31</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">0.67</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">0.32</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="15" align="left" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">There were 201 anti-dilutive options with an exercise price of $14.13 excluded from the dilutive shares outstanding for the three and six month periods ended June 30, 2011. Excluded from the dilutive shares outstanding for the three and six month periods ended June 30, 2010 were 1,132 anti-dilutive options which had exercise prices ranging from $4.42 to $12.62. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 6. Segment Information</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The segment information and the accounting policies of each segment are the same as those described in the notes to the consolidated financial statements entitled “Segment Information” and “Summary of Significant Accounting Policies and Practices,” respectively, included in our annual report on Form 10-K for the fiscal year ended December 31, 2010. We evaluate segment performance based on segment net income or loss after income taxes. We account for inter-segment sales and transfers at current market prices. We did not have any significant inter-segment transactions during the three and six month periods ended June 30, 2011 and 2010. </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="40%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Precision</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Plastic and</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Metal Bearing</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Metal</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Rubber</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Components</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Components</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Components</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Corporate and</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(In Thousands of Dollars)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Segment</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Segment</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Segment</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Consolidations</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td> </tr>   <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td colspan="9" align="left"><b>Three Months ended June 30, 2011</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Revenues from external customers </div></td> <td> </td> <td align="right">$</td> <td align="right">84,827</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">19,534</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">11,561</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">115,922</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Segment net income (loss) </div></td> <td> </td> <td align="right">$</td> <td align="right">8,898</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(1,130</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">918</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(2,859</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">5,827</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td colspan="9" align="left"><b>Six Months ended June 30, 2011</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Revenues from external customers </div></td> <td> </td> <td align="right">$</td> <td align="right">168,609</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">35,936</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">22,684</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">227,229</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Segment net income (loss) </div></td> <td> </td> <td align="right">$</td> <td align="right">18,729</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(3,338</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">1,736</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(5,793</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">11,334</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total assets </div></td> <td> </td> <td align="right">$</td> <td align="right">208,313</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">44,703</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">21,559</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">4,155</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">278,730</td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="40%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Precision</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Plastic and</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Metal Bearing</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Metal</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Rubber</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Components</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Components</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Components</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Corporate and</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(In Thousands of Dollars)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Segment</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Segment</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Segment</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Consolidations</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td> </tr>   <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td colspan="9" align="left"><b>Three Months ended June 30, 2010</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Revenues from external customers </div></td> <td> </td> <td align="right">$</td> <td align="right">66,866</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">16,017</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">9,810</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">92,693</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Segment net income (loss) </div></td> <td> </td> <td align="right">$</td> <td align="right">8,256</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(592</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">750</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(3,291</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">5,123</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td colspan="9" align="left"><b>Six Months ended June 30, 2010</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Revenues from external customers </div></td> <td> </td> <td align="right">$</td> <td align="right">128,889</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">29,611</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">19,533</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">178,033</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Segment net income (loss) </div></td> <td> </td> <td align="right">$</td> <td align="right">13,290</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(2,499</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">1,450</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(6,893</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">5,348</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total assets </div></td> <td> </td> <td align="right">$</td> <td align="right">179,365</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">33,441</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">18,772</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">4,036</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">235,614</td> <td> </td> </tr>  </table> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 7. Pensions</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Effective January 20, 2011, the defined benefit pension plan covering the employees at our Eltmann Plant is under control of the bankruptcy trustee and has been or will be taken over by the German government’s pension security fund. The plan is no longer a responsibility of NN, resulting in a reduction of Accrued pension liabilities of $5,623 on January 20, 2011. We have no remaining pension obligations. (See Note 1 of the Notes to Condensed Consolidated Financial Statements). </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Severance Indemnity</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with Italian law, the Company has an unfunded severance plan covering our Pinerolo Plant employees under which all employees at that location are entitled to receive severance indemnities upon termination of their employment. The table below summarizes the changes to the severance indemnity for the three and six month periods ended June 30, 2011 and 2010: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Three months ended</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Six months ended</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(In Thousands of Dollars)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>2011</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>2010</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>2011</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>2010</b></td> </tr>   <tr style="font-size: 1px"> <td colspan="17" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Beginning balance </div></td> <td> </td> <td align="right">$</td> <td align="right">7,658</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">7,488</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">7,115</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">8,015</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Amounts accrued </div></td> <td> </td> <td> </td> <td align="right">311</td> <td> </td> <td> </td> <td> </td> <td align="right">278</td> <td> </td> <td> </td> <td> </td> <td align="right">651</td> <td> </td> <td> </td> <td> </td> <td align="right">575</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Payments to employees </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(120</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(235</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(134</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(330</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Payments to government managed plan </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(168</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(173</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(403</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(387</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Currency impacts </div></td> <td> </td> <td> </td> <td align="right">133</td> <td> </td> <td> </td> <td> </td> <td align="right">635</td> <td> </td> <td> </td> <td> </td> <td align="right">585</td> <td> </td> <td> </td> <td> </td> <td align="right">120</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="15" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Ending balance </div></td> <td> </td> <td align="right">$</td> <td align="right">7,814</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">7,993</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">7,814</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">7,993</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="15" align="left" style="border-top: 3px double #000000"> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Service and Early Retirement Provisions</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">We have two plans that cover our Veenendaal Plant employees. One plan provides an award for employees who achieve 25 or 40 years of service and the other plan is an award for employees upon retirement. These plans are both unfunded and the benefits are based on years of service and rate of compensation at the time the award is paid. The table below summarizes the combined changes in the two plans during the three and six month periods ended June 30, 2011 and 2010. </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Three months ended</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Six months ended</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(In Thousands of Dollars)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>2011</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>2010</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>2011</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>2010</b></td> </tr>   <tr style="font-size: 1px"> <td colspan="17" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Beginning balance </div></td> <td> </td> <td align="right">$</td> <td align="right">835</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">768</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">749</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">805</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Service cost </div></td> <td> </td> <td> </td> <td align="right">6</td> <td> </td> <td> </td> <td> </td> <td align="right">14</td> <td> </td> <td> </td> <td> </td> <td align="right">26</td> <td> </td> <td> </td> <td> </td> <td align="right">33</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Interest cost </div></td> <td> </td> <td> </td> <td align="right">17</td> <td> </td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> <td> </td> <td> </td> <td align="right">38</td> <td> </td> <td> </td> <td> </td> <td align="right">40</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Benefits paid </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(33</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(36</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(39</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Currency impacts </div></td> <td> </td> <td> </td> <td align="right">15</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(67</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">63</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(120</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="15" nowrap="nowrap" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Ending balance </div></td> <td> </td> <td align="right">$</td> <td align="right">840</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">719</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">840</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">719</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="15" align="left" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 8. New Accounting Pronouncements</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In June 2011, the FASB issued amended accounting guidance related to presentation of comprehensive income. The standards update is intended to help financial statement users better understand the causes of an entity’s change in financial position and results of operation. It is effective for reporting periods beginning after December 15, 2011. The amendments eliminate the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The guidance also requires that reclassification adjustments for items that are reclassified from other comprehensive income to net income be presented on the face of the financial statement where the components of net income and other comprehensive income are presented. We plan on adopting this guidance for reporting periods beginning after December 15, 2011 and are currently assessing the impact on financial statement presentation of adopting this guidance. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 9. Long-Term Debt and Short-Term Debt</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Long-term debt and short-term debt at June 30, 2011 and December 31, 2010 consisted of the following: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>June 30,</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">December 31,</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>2011</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b> 2010</b></td> </tr>   <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="7" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Borrowings under our $100,000 revolving credit facility bearing interest at a floating rate equal to LIBOR (0.26% at June 30, 2011) plus an applicable margin of 3.25%, expiring December 21, 2014. </div></td> <td> </td> <td align="right">$</td> <td align="right">69,641</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">50,500</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Borrowings under our $40,000 aggregate principal amount of senior notes bearing interest at a fixed rate of 6.70% maturing on April 26, 2014. Annual principal payments of $5,714 began on April 26, 2008 and extend through the date of maturity. </div></td> <td> </td> <td> </td> <td align="right">17,143</td> <td> </td> <td> </td> <td> </td> <td align="right">22,857</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="7" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Total debt </div></td> <td> </td> <td> </td> <td align="right">86,784</td> <td> </td> <td> </td> <td> </td> <td align="right">73,357</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Less current maturities of long-term debt </div></td> <td> </td> <td> </td> <td align="right">6,655</td> <td> </td> <td> </td> <td> </td> <td align="right">5,714</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="7" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Long-term debt, excluding current maturities of long-term debt </div></td> <td> </td> <td align="right">$</td> <td align="right">80,129</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">67,643</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="7" align="left" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On December 21, 2010, we entered into an amended and restated revolving credit facility expiring December 21, 2014 with Key Bank as administrative agent with an initial size of $75 million. The amended agreement was entered into to adjust our financial and non-financial covenants to more normalized measures and to provide greater ability to fund our capital investment plans. The interest rate was amended to LIBOR plus a margin of 1.5% to 3.5% (depending on the level of the ratio of debt to EBITDA) from LIBOR plus a margin of 4.75%. The facility may be expanded upon our request with approval of the lenders by up to $60 million, under the same terms and conditions. On March 9, 2011, we exercised an option to increase the size of the facility from $75 million to $100 million to allow additional flexibility and to fund potential growth projects. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The loan agreement contains customary restrictions on, among other things, additional indebtedness, liens on our assets, sales or transfers of assets, investments, restricted payments (including payment of dividends and stock repurchases), issuance of equity securities, and merger, acquisition and other fundamental changes in our business including a “material adverse change” clause, which if triggered would accelerate the maturity of the debt. The facility has a $10 million swing line feature to meet short term cash flow needs. Any borrowings under this swing line are considered short term. Costs associated with entering into the revolving credit facility were capitalized and will be amortized into interest expense over the life of the facility. As of June 30, 2011, $1,983 of net capitalized loan origination costs related to the revolving credit facility were recorded on the balance sheet within other non-current assets. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On December 21, 2010, our senior note agreement with Prudential Capital was also amended. The amended agreement was entered into to adjust our financial and non-financial covenants to more normalized measures and to provide greater ability to fund our capital investment plans. There were no changes to the terms or availability of credit but the interest rate was reduced from 8.50% to 6.70%. The agreement contains customary restrictions on, among other things, additional indebtedness, liens on our assets, sales or transfers of assets, investments, restricted payments (including payment of dividends and stock repurchases), issuance of equity securities, and mergers, acquisitions and other fundamental changes in our business including a “material adverse change” clause, which if triggered would accelerate the maturity of the debt. Interest is paid semi-annually and the note matures on April 26, 2014. Annual principal payments of approximately $5,714 began on April 26, 2008 and extend through the date of maturity. We incurred costs as a result of issuing these notes which have been recorded as a component of other non-current assets and are being amortized over the term of the notes. The unamortized balance at June 30, 2011 was $350. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The specific covenants to which we are subject and the actual results achieved for the six month period ended June 30, 2011 are stated below. </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="26%"> </td> <td width="5%"> </td> <td width="57%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Actual Level</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Financial Covenants</b></td> <td> </td> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>Required Covenant Level</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Achieved</b></td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">Interest coverage ratio </div></td> <td> </td> <td align="left" valign="top">Not to be less than 3.00 to 1.00 as of the last day of any fiscal quarter </td> <td> </td> <td nowrap="nowrap" colspan="3" align="center" valign="top">4.90 to 1.00 </td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">Fixed charge coverage </div></td> <td> </td> <td align="left" valign="top">Not to be less 1.10 to 1.00 as of the last day of any fiscal quarter </td> <td> </td> <td nowrap="nowrap" colspan="3" align="center" valign="top">1.13 to 1.00 </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">Leverage ratio </div></td> <td> </td> <td align="left" valign="top">Not to exceed 2.75 to 1.00 for the most recently completed four fiscal quarters </td> <td> </td> <td nowrap="nowrap" colspan="3" align="center" valign="top">2.13 to 1.00 </td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">Capital expenditures </div></td> <td> </td> <td align="left" valign="top">Not to exceed 150% of Consolidated Depreciation charges for the immediate previous fiscal year </td> <td> </td> <td nowrap="nowrap" align="right" valign="top"> </td> <td align="right" valign="top">36</td> <td nowrap="nowrap" valign="top">%</td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">While the actual fixed charge coverage ratio approximates the required ratio at June 30, 2011, we do not project any failures of our financial covenants within the next 12 months due to projected earnings before interest, taxes, depreciation, and amortization. The main drivers of the fixed charge coverage ratio are rolling four quarters earnings before interest, taxes, depreciation, and amortization and rolling four quarters capital expenditures. The reasons the actual ratio approximated the required ratio at June 30, 2011, were lower Q3 2010 earnings before interest, taxes, depreciation, and amortization and a higher level of capital expenditure in the second quarter of 2011 versus the first quarter of 2011. The lower Q3 2010 earnings before interest, taxes, depreciation, and amortization was due to lower income from operations related to normal seasonality and from almost $2.2 million of cash and non-cash restructuring charges incurred in that quarter. If necessary to maintain financial covenant compliance, we can control subsequent quarterly capital expenditure levels. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 10. Goodwill, net</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The changes in the carrying amount of goodwill for the six month period ended June 30, 2011 are as follows: </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><u><b>Goodwill, net</b></u> </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="88%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Metal Bearing</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Components</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000">(In Thousands of Dollars)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Segment</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance as of January 1, 2011 </div></td> <td> </td> <td align="left">$</td> <td align="right">8,396</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Currency translation impacts </div></td> <td> </td> <td> </td> <td align="right">921</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance as of June 30, 2011 </div></td> <td> </td> <td align="left">$</td> <td align="right">9,317</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The goodwill balance is tested for impairment on an annual basis during the fourth quarter and between annual tests if a triggering event occurs. During the three and six month periods ended June 30, 2011, the financial results of the reporting unit with a goodwill balance exceeded the forecasted results used in testing for impairment at December 31, 2010. As of June 30, 2011, there are no further indications of impairment at this reporting unit. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 11. Intangible Assets</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Precision Metal Components Segment has an intangible asset not subject to amortization of $900 related to the value of the trade names of Whirlaway. There are no indicators of impairment for this indefinite lived intangible asset as of June 30, 2011. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 12. Shared-Based Compensation</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In the three and six month periods ended June 30, 2011 and 2010, approximately $116 and $116 in 2011 and $34 and $1,200 in 2010, respectively, of compensation expense was recognized in selling, general and administrative expense for all share-based awards. There were 75 share awards and 201 option awards granted to non-executive directors, officers and certain other key employees during the three and six month periods ended June 30, 2011. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the three month period ended March 31, 2010, we granted 249 shares and 26 share options to non-executive directors, officers and certain other key employees. The 249 shares of our common stock were issued on March 17, 2010 and were fully vested at the date of grant. We incurred $1,101 of non-cash compensation expense, which was the entire fair value of the grant, at that date. The fair value of the shares issued was determined by using the grant date closing price of our common stock. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">We incurred $66 and $99 of stock option expense in the six month periods ended June 30, 2011 and 2010, respectively. The fair value of the options cannot be determined by market value, as our options are not traded in an open market. Accordingly, a financial pricing model is utilized to determine fair value. The Company utilizes the Black Scholes model which relies on certain assumptions to estimate an option’s fair value. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table provides a reconciliation of option activity for the six month period ended June 30, 2011: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Weighted-</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Weighted-</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Average</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Average</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Remaining</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Aggregate</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Exercise</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Contractual</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Intrinsic</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><b>Options</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Shares (000)</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Price</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Term</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Value ($000)</b></td> </tr>   <tr style="font-size: 1px"> <td colspan="17" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Outstanding at January 1, 2011 </div></td> <td> </td> <td> </td> <td align="right">1,205</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">9.23</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Granted </div></td> <td> </td> <td> </td> <td align="right">201</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">14.13</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Exercised </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(244</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">9.45</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Forfeited or expired </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">1.30</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td style="border-top: 1px solid #000000"> </td> <td align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Outstanding at June 30, 2011 </div></td> <td> </td> <td> </td> <td align="right">1,159</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">10.05</td> <td> </td> <td> </td> <td> </td> <td align="right">6.1</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">5,687</td> <td nowrap="nowrap"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="15" nowrap="nowrap" align="left" style="border-top: 3px double #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Exercisable at June 30, 2011 </div></td> <td> </td> <td> </td> <td align="right">897</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">9.62</td> <td> </td> <td> </td> <td> </td> <td align="right">7.4</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">4,765</td> <td nowrap="nowrap"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="15" nowrap="nowrap" align="left" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96%"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td> <td> </td> <td>The intrinsic value is the amount by which the market price of our stock was greater than the exercise price of any individual option grant at June 30, 2011.</td> </tr> </table> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 13. Provision for Income Taxes</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2011, we continued to place a valuation allowance on all of the deferred tax assets of our U.S. locations, based on the negative financial performance of our U.S. operations during the global economic recession of 2008 and 2009. If U.S. operations return to a level of profitability sufficient to utilize a portion of these deferred tax assets, these assets will be used to offset future U.S. based taxable income. If we determine the probability of realizing all the tax benefits is more likely than not, the entire valuation allowance will be released and deferred tax benefits will be recognized. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">For the six month periods ended June 30, 2011 and 2010, the difference between the U.S. federal statutory tax rate of 34% and our effective tax rates of 24% and 32%, respectively, was primarily due to non-U.S. based earnings taxed at lower rates. The statutory and effective income tax rates in many of the foreign countries in which we operate are lower than the U.S. federal statutory rate. Additionally, during the first quarter of 2011, the effective tax rate was reduced by recognizing deferred tax benefits totaling $631 related to the Eltmann deconsolidation. These benefits related to losses for write-offs of receivables owed by Eltmann to certain NN subsidiaries that will be deductible once Eltmann is finally liquidated in 2012 or 2013. The table below summarizes the impacts on the effective tax rate for the six month periods ended June 30, 2011 and 2010. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Six Months ended</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Six Months ended</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000">(In Thousands of Dollars)</td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>June 30, 2011</b></td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>June 30, 2010</b></td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Income tax provision at the federal statutory rate of 34% </div></td> <td> </td> <td align="right">$</td> <td align="right">5,043</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">2,658</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">(Decrease) increase in U.S. valuation allowance </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(181</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">1,012</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Non-U.S. earnings taxed at lower rates </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1,522</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1,125</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. State income taxes </div></td> <td> </td> <td> </td> <td align="right">123</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Other differences </div></td> <td> </td> <td> </td> <td align="right">36</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(76</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="7" nowrap="nowrap" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Provision for income taxes </div></td> <td> </td> <td align="right">$</td> <td align="right">3,499</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">2,469</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="7" align="left" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the three and six month periods ended June 30, 2011, we have begun to recognize tax expense at our Kunshan (China) Plant and our Kysucke (Slovakia) Plant as we have fully utilized the previous net operating losses at these foreign jurisdictions. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">We do not foresee any significant changes to our unrecognized tax benefits within the next twelve months. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 14. Commitments and Contingencies</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">As described more fully in our Form 10-K for 2010, we continue to monitor the remediation efforts at a former waste recycling vendor used by our former Walterboro, South Carolina facility. The costs associated with the remediation, which has been tentatively approved by the EPA, are estimated to be approximately $10,000. Our allocated share is approximately $143 which has been fully accrued as of June 30, 2011. While there can be no assurances, we believe that the $143 is the maximum amount for which we will be liable under the tentatively accepted remediation plan. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">All other legal matters are of an ordinary and routine nature and are incidental to our operations. Management believes that such proceedings should not, individually or in the aggregate, have a material adverse effect on our business or financial condition or on the results of operations. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 15. Property Plant and Equipment</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the first quarter of 2011, $1,343 of property, plant and equipment at Eltmann was deconsolidated from the financial statements of NN. (See Note 1 of the Notes to the Condensed Consolidated Financial Statements). </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the first quarter of 2010, we incurred $1,000 of accelerated depreciation to adjust certain assets that ceased to be used as of part of the Tempe Plant closure to the new estimated salvage values. (See Note 2 of the Notes to Consolidated Financial Statements). </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 16. Fair Value of Financial Instruments</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The fair values of the Company’s fixed rate long-term borrowings are calculated by using a discounted cash flow analysis factoring in current market borrowing rates for similar types of borrowing arrangements under our credit profile. The current market borrowing rates are Level 2 inputs under the U.S. GAAP fair value hierarchy. The carrying amounts and fair values of the Company’s long-term debt are in the table below: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000"><b>June 30, 2011</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000"><b>December 31, 2010</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Carrying</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Fair</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Carrying</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Fair</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000">(In Thousands of Dollars)</td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Amount</b></td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Value</b></td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Amount</b></td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Value</b></td> </tr>   <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Variable rate long-term debt </div></td> <td> </td> <td align="right">$</td> <td align="right">69,641</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">69,641</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">50,500</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">50,500</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Fixed rate long-term debt </div></td> <td> </td> <td align="right">$</td> <td align="right">17,143</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">16,860</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">22,857</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">22,195</td> <td> </td> </tr>  </table> </div> </div>

NN INC 2407000 1947000 3388000 6379000 1343000