Good morning ladies and gentlemen. Thank you for standing by. Welcome to the NN Inc. third quarter results conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator instructions) This conference is being recorded today, Tuesday, November 4th, 2008. I would now like to turn the conference over to Scott Eckstein. Please go ahead sir.

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Rock Baty Thank you Scott. Good morning everyone. With me this morning, I have got James Dorton, our CFO and VP of Business Development; Will Kelly, our Chief Administrative Officer; and Tom Burwell, our Corporate Controller.:

Jim Dorton Thanks Rock. Good morning, everyone. NN was on track for an excellent quarter until the effects of the global economic prices hit in September. July and August were pretty well with sales remaining above our business plan, but in September, we began to see orders fall off. We still ended the quarter in pretty good shape with sales up 5.9% over last year’s third quarter, most of that due to currency, and net income from operations was up 80% versus last year, that is excluding the restructuring charges that we booked in 2007.:

Looking at the year-to-date performance, we remained on a record pace. EPS from operations year-to-date was up 64% versus last year at a record level of $0.82 per share compared with $0.50 per share last year. Sales also were a record at $349 million for the nine months, up 11% over the previous year.: Excluding currency effects, sales were up $11.4 million or about 4% despite the weakness in the US auto sector. Obviously, the story for 2008 thus far is good operational execution, positive currency momentum, good industrial demand, and a relatively stable auto sector in the first three quarters.: Unfortunately, a major part of the 2008 full-year story is Q4 and the global economic crisis. As we put in the headline of the press release, we are seeing demand fall at least 20% in Q4. Customers are afraid to order, and are clearing out their supply lines. Even though we are taking out all of the marginal costs that we can, a demand drop like this in the short run is going to have an extremely negative impact on our performance, and Rock will talk more out the outlook in a minute.:

NN is impacted in multiple ways by the dollar-euro exchange rate. In general, we benefit from a strong euro. During the quarter, the euro weakened against the dollar from its all time high of around $1.60 to $1.41 at September 30th. This tended to reduce potential earnings from Europe, and it also brought down asset and liability levels in the balance sheet.:

Certainly in 2009, we expect to squeeze working capital down as low as possible. Capital spending totaled $4.8 million for the third quarter, in line with our business plan. Year-to-date, we have spent $13.8 million on capital against the plan of about $18 million, and we should be on or below plan for the full year. We did not repurchase any stock during the quarter, but we did buy about $1 million worth of shares early in October. Under the current uncertain environment, we do not anticipate purchasing any more shares in the near term, but we will pick up the program again when business conditions improve. In this uncertain economic environment, I want to spend a minute with you on our financial condition and liquidity position. First, we are financed by a five-year credit agreement expiring in 2011 headed by KeyBanc and in the bank group there are also Wells Fargo, Regents Bank, and BB&T. We believe that our bank group is solid and that none of the banks in the group is in danger of failing although some of the banks could be candidates for consolidation. In any case, we believe that our credit agreement will survive intact for the immediate future. We are fortunate in that we set up the agreement at a time when borrowing spreads were at historic lows, so we now have a committed $135 million credit agreement against which we have $73 million drawn as of today. We are paying LIBOR – currently paying LIBOR plus 93 basis points with an all-in cost below 5%, and this is at a time when market rates are much, much higher. Plus, we have a fixed rate note with Prudential for $34 million due in 2014 at a rate of 4.98%, so our cost of funds…

Jim, thank you. I am going to close today's call with comments regarding our results for the three quarters briefly and then commend specifically on the current global economic condition and how they are impacting our fourth quarter and our full year forecast and guidance. I will begin with comments regarding our overall results for the first three quarters in 2008. Jim just covered those quite well and so the specific details through the third quarter, I will comment on just briefly if I could. Our revenue and earnings results through nine months reflected overall strength in the European economy in general as well as good industrial demand in the North American economy. Our current global footprint with our significant presence in Europe continued to offset the reductions that we experienced, as Jim mentioned, with the North American automotive downturn during the first nine months of the year. In the absence of the current global economic downturn, we experienced solid earnings momentum at NN during the first nine months of 2008 particularly, as Jim mentioned, in the three operations, which were problems in 2007 namely Whirlaway, China, and Slovakia. The improvement in these three operations coupled with continuing strong performance from our US and European Bearing Components businesses allowed us to perform in a manner, which resulted in the record earnings, as Jim mentioned, for the first nine months ending September 30, 2008, even in a challenging US automotive environment. Our year-to-date EPS from operations of $0.82 a share was up significantly 64% from the same period of 2007. All in all, really good results during the first three quarters of the year. The irony of course for 2008 is the stark contract between business conditions and results for the vast majority of the year and the sudden changes that…

Thank you sir. And ladies and gentlemen, we will now begin the question and answer session. (Operator instructions). Our first question comes of the line of Holden Lewis with BB&T Capital Markets. Holden Lewis – BB&T Capital Markets: Thank you, good morning.

Good morning Holden. Holden Lewis – BB&T Capital Markets: Couple of things, I guess the first is, can you tell us what is the impact, I guess, during the quarter? How did the three businesses, Slovakia, China, and Whirlaway, do? And then, going forward, I mean do these things slip back into losses in light of sort of the trend that we are seeing now in Q4?

As Jim Mentioned, Whirlaway had a rough quarter in the third quarter based upon the acceleration of the continuing reduction in North American automotive, and actually in China in the month of September, also had a rough month of September, but they were very good in July and August, and Slovakia performed admirably through the first three quarters in general. Having said that though Holden, you know, we talked in the press release and just my comment now regarding North America and Europe specifically, but I think it is – the other message here is that Asia and specifically what is going on in the Asian markets while you do not have negative GDP growth, we are seeing reductions in orders for our Chinese facility in the Asian marketplace and significant reductions that are double digit in nature, and so to answer your question would they go back to the levels of earnings or losses that we were incurring in 2007, no; but will they continue on a track of the improvement that we have seen in the first three quarters, probably not either. So, it is some part in between and, you know, we do not specifically disclose the earnings by individual operations that you are asking about, but to size it for you, it is a lot better than 2007, but not as good as what we were tracking in the first three quarters of 2008. Holden Lewis – BB&T Capital Markets: Right, I think that the three – without looking at each of the individual units, I think the three business units had sort of achieved marginal profitability in the first half, right?

Yes, I think it is fair to say marginal profitability in the first nine months. Holden Lewis – BB&T Capital Markets: Okay, and so, yes, it seems pretty clear that those are going to slip back into sort of a loss mode?

Yes, that is fair to say, but again sizing it versus the 2007 loss, not where we were by any stretch of the imagination in 2007. Holden Lewis – BB&T Capital Markets: Okay, can you refresh us, what was the collective loss in 2007?

As I mentioned, we really do not, other than our segment reporting, we have never publicly said what the individual pieces were there, Holden. Holden Lewis – BB&T Capital Markets: Okay, and so in China, I guess you said you said you're seeing reductions in orders for the Asian facility now, I missed in your dialog, but did you mention a single customer had downs, what was the comment there?

There was a single customer inventory adjustment issue in the month of September in Asia, our largest customer there for our Chinese facility, but that is a reflection of what is going on globally as well. I mean the automotive business in Asia in certain segments of the automotive business in Asia is down pretty significantly as well. Holden Lewis – BB&T Capital Markets: Okay, fair enough, thank you for that. And then, in terms of your covenants, obviously with – presumably you are going to be going to a marginally positive EBITDA and if this continues on going forward and Europe looks like it is in its infancy, you know, it is probably not a stretch to think that maybe you could run into sort of a debt-to EBIDTA issue or what have you with regards to your covenants? How do you perceive that risk right now and should you breach any of those covenants, what are sort of the anticipated consequences?

Yes, it is a good question and Jim spoke to it just briefly because of our concern there. Having said that, based on the five actions that I just mentioned, including paring capital way back and dealing with the discretionary spending issues, and so far, we can – given the EBITDA, we will be lowered over the next 12 months or so. We have the ability to managing working capital. We have the ability to pay down a pretty significant amount of debt over the next six to nine months irrespective of – almost irrespective of what happens with EBIDTA. I do not want to say – it is obvious that if it really got bad that it would impact it, but in looking at what we physically feel like we can pay down in debt over the next six to nine months and the spread that that would create beyond the $30 million spread that currently exists today, factoring in the reductions in earnings and EBITDA – the associated reductions in EBITDA and we think the rest are pretty minimal and we are going to do everything we can to ensure that that does not happen, because if it does, you know, if were to bump off against the covenants, the obvious remedy there would potentially be that we would go to market rates on our current facility, and we are not going to let that happen, so – but you are right that there is a risk out there long term depending on the depth in how long this happens and how long it takes for the economy to respond, there is a risk there that we recognize, but if you just think about from a pure $30 million exists today based on EBITDA today, we also have to factor in the serious debt reduction goal that we are going to put in place for the next six to nine months as well. Holden Lewis – BB&T Capital Markets: Okay, and as you look forward into 2009, I know, you are not going to be giving specific numbers, but is there anything about Q4 that is kind of overheated? In other words, I mean, did you caught such that costs are more dramatic where charges might be in there, what have you so that we do not necessarily take a slightly better than break-even performance and run it forward into 2009?

I think, just the only thing that might be super heated is the reaction of the entire supply base to the slowdown in Europe. I mean, not in the US, I mean that is pretty much – that has played itself out in the US, but within Europe, the suddenness of the change and the magnitude of the change and our customers’ response to their customers of course, they are so dramatically that it does not necessarily line up with what you hear about the sales rate reductions in Europe on the automotive side. It is more, it is great, and the severity is greater. That is not true in the US. I mean, look at the numbers that we reported yesterday, but I think there might be some glimmer of hope relative to that – relative to what we might see in the first and second quarters coming off the fourth, but that is the only thing. There is nothing. Jim, there is nothing else there Tom in there that?

I would agree. I mean, you saw also Volkswagen come out and reaffirm their guidance for the rest of the year. It seems to be kind of in the face of some of this stuff. So that is why I mentioned the confidence as I think a key factor if we begin to build some industrial confidence out there, so that people will fill the supply chain back to normal levels, then that could have a positive influence, but how do you call that? Holden Lewis – BB&T Capital Markets: Okay, and what about the general industrial in terms of global trends going forward? I mean, have you begun to see that weaken as well?

A little bit in the fourth quarter and a little bit in the month of September, but percentage wise, not nearly – I mean we are talking less than 5% there. And while having said that, we have certain areas of the end markets from customers that are wanting us that it could get in double digit reductions over the next six to nine months, but we have not seen a great deal of that yet and they appear to be holding up half way decently, honestly. Holden Lewis – BB&T Capital Markets: So, the real question in terms of sort of break-even fourth quarter, you would not necessarily carry break-even into the four quarters of 2009 only because you there is inventory destocking that runs its course, but other than that, fourth quarter is kind of a fair representation of the deleverage associated with the volume.

Yes, you have some seasonality and the third and fourth versus the first and second also and who knows that the seasonality plays out from 2008 to 2009, but as you know, our first and second are much stronger from a pure seasonal perspective than third and fourth. Holden Lewis – BB&T Capital Markets: Okay, thank you.

You bet.

Thank you. Our next question comes from the line of Mark Parr with Keybanc Capital Markets, please go ahead. Jason Brocious – KeyBanc Capital Markets: Hi guys. This is actually Jason Brocious in for Mark, how are you?

Hi Jason, how are you? Jason Brocious – KeyBanc Capital Markets: Doing okay. I was just wondering if you could share, some of the – maybe your steel price outlook for 2009?

It is a very mixed bag on the base of where the supply comes from and the region of the world. We are actually seeing on the basis of the commodity prices coming down in Europe and global scrap prices coming down in Europe. We are seeing price reductions from our sources within Europe, but we import steel for our US operations in Bearing Components principally from Japan, and we are seeing dramatic increases from the steel producers in Japan well effective January 1st. Jason Brocious – KeyBanc Capital Markets: Okay.

And by the way, our pricing is only three months now, and then of course currency enters into it as well with respect to currency movements on the dollar/yen there. So, it is very unstable globally, but it is certainly the Japanese situation we have seen a dramatic increase effective January 1st. Jason Brocious – KeyBanc Capital Markets: Okay, and when might we expect to see some kind of 2009 guidance come from you guys?

We do not guide historically until our February earnings release for the full 2008 results, and we have historically provided guidance for the year moving forward at that time. Jason Brocious – KeyBanc Capital Markets: Okay, and could you just talk about the – any new contracts or the magnitude of new contracts in 2009 versus 2008?

Are you talking about customer contracts? Jason Brocious – KeyBanc Capital Markets: Yes, the new programs that you might have in place.

Well, we have – I think we have mentioned on several calls that we have several pending new programs in our new platform at Whirlaway. Unfortunately, the benefits of most of those new programs do not hit until late 2009 and 2010, and that is the biggest growth relative to new programs that we see company wide for the next 12 to 18 months. The rest of the business is somewhat driven by what is going on in the economic front we just mentioned. Jason Brocious – KeyBanc Capital Markets: Okay, that is all I have for you guys, thanks a lot.

Thank you.

Thank you. (Operator instructions). And our next question comes from the line of Robert Kosowsky with Ofi Institutional. Please go ahead. Robert Kosowsky – Ofi Institutional

Robert Kosowsky – Ofi Institutional: How are you doing?

Good, how are you? Robert Kosowsky – Ofi Institutional: Good, I was wondering if you could quantify the debt reduction targets that you guys have? I know, you said earlier this year you wanted to pay down debt below $100 million, but I was just kind of wondering, given the wave of what has been happening and what cash entering opportunities you guys might have, is there is a debt target you are willing to share with us?

For 2008 or 2009? Robert Kosowsky – Ofi Institutional: Just, I guess through into 2009?

Yes, well, I cannot comment on 2009. We are putting our business plan together as we speak and rolling up the cash flow implications for 2009 looks like in total, you know what the policy on capital will mean and all those issues, so we do not really have a comment on 2009 other than to say what I said to Holden, and that is it will be a very aggressive debt reduction program for 2009 on the basis of what we heard, but in terms of between now and year end, you know, I do not think that we will see much more than about $5 million total debt reduction. Robert Kosowsky – Ofi Institutional: Okay, so $5 million in the next quarter, but then more substantially in, I guess, first half of the next year?

Yes, that is fair. Robert Kosowsky – Ofi Institutional: Okay, and do have any comments about some of the cost cutting you are thinking about doing? Does this include kind of like significant provision of the manufacturing footprint or kind of what you guys kind of are eyeballing, do you have any kind of quantification for that too?

No. No specific comments beyond what I said, so relative to the fact that – on an ongoing basis, and you have seen some of those from us in our comments relative to other quarterly calls and releases that we are continually looking at our current structure, our current manufacturing footprint, and not only on the basis of what happened during the short term, but long-term, what is the best structure in the footprint, and so that is an ongoing review, but we are not ready to talk about any specifics on what that might mean in terms of a review. Robert Kosowsky – Ofi Institutional: Okay, and that is probably a continuation of Slovakia, and I guess potentially picking up some volumes?

Yes, I mean we have made – I think that everybody understands that we have made significant investments in both Slovakia and China into those facilities. We will continue to invest there and more volume long term will be produced in those facilities moving forward. Robert Kosowsky – Ofi Institutional: Okay, and could you also just give us an idea of some of the magnitude of the new business that you are looking at securing with Whirlaway for 2009 and kind of this past month of just kind of new product development and kind of put on hold because of such a bad environment for your customers?

Yes, actually the new product development and new program development in Whirlaway in the new platform, our new position metal platform, is the activity level is very, very high. We are having many things [ph] put on hold as a result of the economic conditions. In terms of quantifying the magnitude of some of the programs that I previously mentioned are not in a position to do that as of yet, what I expect here is something probably in the first quarter – in February when we release. Robert Kosowsky – Ofi Institutional: Okay, would you expect them to be meaningful for the segment?

They are very meaningful for the segment, yes. Robert Kosowsky – Ofi Institutional: All right, thank you very much, good luck.

Thank you.

Thank you. And management, I am showing there are no further questions. I will turn it back to you for closing comments.

Again, thank you for joining today’s call. That is all the comments that we have.

Thank you. Ladies and gentlemen that will conclude today’s teleconference. If you would like to listen to a replay of today’s conference, please dial-in 203-590-3000 or 1-800-145-2236 and enter the access code of 11122000 followed by the “#” sign. We thank you again for your participation today, and at this time you may disconnect. Have a nice day.