Shiloh Industries (SHLO)

Results of Operations

Three Months Ended April 30, 2009 Compared to Three Months Ended April 30, 2008

REVENUES. Sales for the second quarter of fiscal 2009 were $62,239, a decrease of $68,409 from last year’s second quarter sales of $130,648, or 52.4%. Sales decreased during the second quarter of fiscal 2009 as a result of reduced production volumes experienced by the North American automotive and heavy truck industries for which the Company supplies parts and, most significantly, by the traditional domestic manufacturers, which include some of the Company’s largest customers. According to industry statistics, traditional domestic manufacturer production for the second quarter of fiscal 2009 declined by 45.8% and total North American car and light truck production for the second quarter of fiscal 2009 decreased by 45.2%, in each case compared with production for the second quarter of fiscal 2008.

GROSS PROFIT. Gross profit for the second quarter of fiscal 2009 was a loss of $1,142 compared to gross profit of $12,248 in the second quarter of fiscal 2008, a decrease of $13,390. Gross profit as a percentage of sales was a negative 1.8% in the second quarter of fiscal 2009 compared to 9.4% for the same period a year ago. Gross profit in the second quarter of fiscal 2009 compared to the second quarter of fiscal 2008 was adversely affected by the lower volume of sales in the quarter and the absence of the related gross profit of approximately $17,700. Gross profit was also adversely affected by increased material costs and lower revenue realized from the sale of engineered scrap during the second quarter of fiscal 2009 compared to the second quarter of fiscal 2008. The effect of increased material cost was approximately $9,200. These reductions of gross profit were offset by reduced manufacturing expenses that favorably affected gross profit by approximately $13,400. Manufacturing expenses declined as a result of the actions that the Company initiated in response to the reduction in production volumes of the Company’s customers. These actions resulted in reduced personnel and personnel related expenses of approximately $8,200 and reduced expenditures for repairs, supplies and utilities of approximately $3,450. Depreciation and taxes declined by $1,750.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses were $4,857 in the second quarter of fiscal 2009, a decrease of $1,760 from $6,617 in the same period of the prior year. As a percentage of sales, these expenses were 7.8% of sales in the second quarter of fiscal 2009 and 5.1% of sales in the second quarter of fiscal 2008. The decrease in selling, general, and administrative expenses reflect lower personnel and personnel-related expenses of approximately $580, and lower spending in controllable expense areas of approximately $1,180, also in response to the current automotive market conditions.

ASSET IMPAIRMENT AND RESTRUCTURING CHARGES. In March 2009, the Company presented to the Board of Directors its plan to close the operations of its Liverpool Manufacturing Division due to declining levels of sales. The Company therefore is committed to its plan to relocate certain machinery and equipment to another of the Company’s plants to service business that will continue and to close operations at Liverpool by August 2009. As a result, the Company recorded an impairment charge of $1,644 to reduce long-lived assets that will not be transferred to their estimated fair value. The Company also recorded a restructuring charge of $906 based on negotiated settlement for approximately 100 employees for severance, health insurance, and curtailment of the retirement plan of Liverpool Manufacturing employees.

In fiscal 2006, management presented to the Board of Directors an assessment of its current business at its Cleveland Stamping facility and committed to a plan to cease operation of the Cleveland facility as of October 31, 2007, as a result of declining volumes. The Company recorded an impairment charge to reduce long-lived assets to their estimated fair value and recorded an estimated restructuring charge related to approximately 200 employees for severance, health insurance and curtailment of the retirement plan for employees of the Cleveland plant. An impairment recovery of $30 was recorded during the second quarter of fiscal 2008 for cash received upon the sale of assets that were previously impaired. An impairment recovery of $11 was also recorded in the second quarter of fiscal 2009 for cash received upon the sale of assets that were previously impaired.

During the second quarter of fiscal 2008, the Company recorded an asset impairment charge of $927 related to equipment that was dedicated to a customer program that concluded production.

         OTHER. Interest expense for the second quarter of fiscal 2009 was $568, compared to interest expense of $971 during the second quarter of fiscal 2008. Interest expense decreased from the prior year second quarter as a result of a decrease in the interest rate and a lower level of average borrowed funds in the second quarter of fiscal 2009 compared to the prior year. Borrowed funds averaged $58,488 during the second quarter of fiscal 2009 and the weighted average interest rate was 3.07%. In the second quarter of fiscal 2008, borrowed funds averaged $76,752 while the weighted average interest rate was 4.52%.

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Other income, net was $35 for the second quarter of fiscal 2009 compared to other expense, net of $(21) for the second quarter of fiscal 2008. Other income in fiscal 2009 is the result of currency transaction gains realized by the Company’s Mexican subsidiary.

The provision for income taxes in the second quarter of fiscal 2009 was a benefit of $2,826 on loss before taxes of $9,058 for an effective tax rate of 31.2%. The provision for income taxes in the second quarter of fiscal 2008 was $1,738 on income before taxes of $3,746 for an effective tax rate of 46.4%. The estimated effective tax rate for fiscal 2009 has declined in the second quarter of fiscal 2009 compared to the second quarter of fiscal 2008 as a result of losses that cannot be benefited from the Company’s Mexican subsidiary.

NET INCOME. The net loss for the second quarter of fiscal 2009 was $6,232, or $0.38 per share, diluted. Net income for the second quarter of fiscal 2008 was $2,008, or $0.12 per share, diluted.

Six Months Ended April 30, 2009 Compared to Six Months Ended April 30, 2008

REVENUES. Sales for the first six months of fiscal 2009 were $125,261, a decrease of $140,281, or 52.8%, from last year’s first six month sales of $265,542. For the first half of fiscal 2009, North American automotive and light truck production decreased by 43.2% compared to the first half of fiscal 2008, while production of traditional domestic manufacturers declined 45.2% compared to the first half of fiscal 2008.

GROSS PROFIT. Gross profit for the first six months of fiscal 2009 was a loss of $5,397 compared to gross profit of $23,003 in the first half of fiscal 2008, a decrease of $28,400. Gross profit as a percentage of sales was a negative 4.3% in the first half of fiscal 2009 compared to 8.7% in the same period a year ago. For the first six months of fiscal 2009 gross profit was reduced as a result of lower sales volume compared to the prior year first six-month period. The effect of reduced sales on gross profit was approximately $37,000. Gross profit was also adversely affected by increased material costs and lower revenue realized from the sale of engineered scrap during the first half of fiscal 2009 compared to the first half of fiscal 2008. The effect of increased material cost was approximately $17,500. These reductions of gross profit were offset by reduced manufacturing expenses that favorably affected gross profit by approximately $26,100. Manufacturing expenses declined as a result of the actions that the Company initiated in response to the reduction in production volumes of the Company’s customers. These actions resulted in reduced personnel and personnel related expenses of approximately $16,700 and reduced expenditures for repairs, supplies and utilities of approximately $7,000. Depreciation and taxes declined by $2,400.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses were $9,843 or 7.9% of sales in the first six months of fiscal 2009 compared to $13,538, or 5.1% of sales in the same period of the prior year. The decrease in selling, general, and administrative expenses reflect lower personnel and personnel-related expenses of approximately $2,000, and lower spending in controllable expense areas of approximately $1,700, also in response to the current automotive market conditions.

ASSET IMPAIRMENT AND RESTUCTURING CHARGES. In March 2009, the Company presented to the Board of Directors its plan to close the operations of its Liverpool Manufacturing Division due to declining levels of sales. The Company therefore is committed to its plan to relocate certain machinery and equipment to another of the Company’s plants to service business that will continue and to close operations at Liverpool by August 2009. As a result, the Company recorded an impairment charge of $1,644 to reduce long-lived assets that will not be transferred to their estimated fair value. The Company also recorded a restructuring charge of $906 based on a negotiated settlement for approximately 100 employees for severance, health insurance, and curtailment of the retirement plan of the Liverpool Manufacturing employees.

In fiscal 2006, management presented to the Board of Directors an assessment of its current business at its Cleveland Stamping facility and committed to a plan to cease operation of the Cleveland facility as of October 31, 2007, as a result of declining volumes. The Company recorded an impairment charge to reduce long-lived assets to their estimated fair value and recorded an estimated restructuring charge related to approximately 200 employees for severance, health insurance and curtailment of the retirement plan for employees of the Cleveland plant. Impairment recoveries of $30 and $930 were also recorded during the first six-month periods of fiscal 2008 and 2009, respectively, for cash received upon the sale of assets that were previously impaired.

During the first six-month period of fiscal 2008, the Company recorded an asset impairment charge of $927 related to equipment that was dedicated to a customer program that concluded production.

OTHER. For the first six months of fiscal 2009, interest expense was $1,387, a decrease of $878 from interest expense of $2,265 in the first six months of fiscal 2008. The decrease in interest expense compared to the prior year six-month period resulted from a lower level of average borrowed funds and a decrease in the interest rate. Borrowed funds averaged $62,643 during the first six months of fiscal 2009 and the weighted average interest rate was 3.55%. For the first six months of fiscal 2008, borrowed funds averaged $76,492 while the weighted average interest rate was 5.41%.

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Other income, net was $247 for the first six months of fiscal 2009 compared to other expense, net of $(6) for the first six months of fiscal 2008. Other income in fiscal 2009 is the result of currency transaction gains realized by the Company’s Mexican subsidiary.

In the first six months of fiscal 2009 the provision for income taxes was a benefit of $5,608 on loss before taxes of $17,975 for an effective tax rate of 31.2%. The provision for income taxes in the first half of fiscal 2008 was $2,720 on income before taxes of $6,311 for an effective tax rate of 43.1%. The estimated effective tax rate for the first six months of fiscal 2009 has declined compared to the first six months of fiscal 2008 as a result of losses that cannot be benefited from the Company’s Mexican subsidiary.

NET INCOME. The net loss for the first six months of fiscal 2009 was $12,367, or $.76 per share, diluted. Net income for the first six months of fiscal 2008 was $3,591, or $.22 per share, diluted.

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Results of Operations

Three Months Ended January 31, 2009 Compared to Three Months Ended January 31, 2008

REVENUES. Sales for the first quarter of fiscal 2009 were $63,022, a decrease of $71,872 from last year’s first quarter sales of $134,894, or 53%. During the first quarter of fiscal 2009, sales declined as a result of reduced production volumes of the North American car and light truck manufacturers, especially the traditional domestic manufacturers, the Company’s major customers. According to industry statistics, North American car and light truck production in the first quarter of fiscal 2009 declined 41.1% from production levels of the first quarter of fiscal 2008. For traditional domestic manufacturers, the production decrease in the first quarter of fiscal 2009 was 44.6% compared to the prior year first quarter period. Sales also declined due to reduced demand of the heavy truck industry.

GROSS MARGIN. Gross margin for the first quarter of fiscal 2009 was a loss of $4,255 compared to gross profit of $10,755 in the first quarter of fiscal 2008, a decrease of $15,010. Gross profit as a percentage of sales was a negative 6.8% in the first quarter of fiscal 2009 compared to 8.0% for the same period a year ago. Gross profit in the first quarter of fiscal 2009 was adversely affected by the reduced volume of sales in the first quarter of fiscal 2009. The effect of reduced sales volume on first quarter 2009 gross profit was approximately $19,300. Gross profit was also adversely affected by increased material costs and lower revenue realized from the sale of engineered scrap during the first quarter of fiscal 2009 compared to the first quarter of fiscal 2008. The effect of increased material cost was approximately $8,300. The factors that reduced gross profit were offset by reduced manufacturing expenses that favorably affected gross profit by approximately $12,600. Manufacturing expenses declined as a result of the actions that the Company initiated in response to the reduction in production volumes of the Company’s customers. These actions resulted in reduced personnel and personnel related expenses of approximately $8,500 and reduced expenditures for repairs, supplies and utilities of approximately $2,900. Depreciation and taxes declined by $800.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses of $4,986 in the first quarter of fiscal 2009 were $1,935 less than selling, general and administrative expenses of $6,921 in the same period of the prior year. As a percentage of sales, these expenses were 7.9% of sales in first quarter of fiscal 2009 and 5.1% in the first quarter of fiscal 2008. The decrease in selling, general and administrative expenses reflect lower personnel and personnel related expenses of approximately $1,600, and lower spending in controllable expense areas.

ASSET IMPAIRMENT AND RESTRUCTURING CHARGES.

In fiscal 2006, management presented to the Board of Directors an assessment of its current business at its Cleveland Stamping facility and committed to a plan to cease operation of the Cleveland facility as of October 31, 2007, as a result of declining volumes. The Company recorded an impairment charge to reduce long-lived assets to their estimated fair value and recorded an estimated restructuring charge related to approximately 200 employees for severance, health insurance and curtailment of the retirement plan for employees of the Cleveland plant. An impairment recovery of $919 was recorded during the first quarter of fiscal 2009 for cash received upon the sale of assets that were previously impaired.

OTHER. Interest expense for the first quarter of fiscal 2009 was $818, compared to interest expense of $1,294 during the first quarter of fiscal 2007. Interest expense decreased from the prior year first quarter as a result of a lower level of average borrowed funds and a lower weighted average interest rate in the first quarter of fiscal 2009 compared to the prior year. Borrowed funds averaged $67,093 during the first quarter of fiscal 2009 and the weighted average interest rate was 3.93%. In the first quarter of fiscal 2008, borrowed funds averaged $72,922 while the weighted average interest rate was 6.43%.

Other income, net was $212 for the first quarter of fiscal 2009 compared to $16 in the first quarter of fiscal 2008. Other income in fiscal 2009 is the result of currency transaction gains realized by the Company’s Mexican subsidiary.

The provision for income taxes in the first quarter of fiscal 2009 was a benefit of $2,782 on loss before taxes of $8,916 for an effective tax rate of 31.2%. The provision for income taxes in the first quarter of fiscal 2008 was $982 on income before taxes of $2,565 for an effective tax rate of 38.3%. The estimated effective tax rate for fiscal 2009 has declined in the first quarter of fiscal 2009 compared to the first quarter of fiscal 2008 as a result of losses that cannot be benefited from the Company’s Mexican subsidiary.

NET INCOME. The net loss for the first quarter of fiscal 2009 was $6,134, or $0.38 per share, diluted. Net income for the first quarter of fiscal 2008 was $1,583, or $0.10 per share, diluted.

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Results of Operations

Results of Operations

Three Months Ended July 31, 2008 Compared to Three Months Ended July 31, 2007

REVENUES. Sales for the third quarter of fiscal 2008 were $124,229, a decrease of $8,759 from last year’s third quarter sales of $132,988, or 6.6%. Sales decreased during the third quarter of fiscal 2008 as a result of reduced production volumes experienced by the North American automotive and heavy truck industries for which the Company supplies parts and, most significantly, by the traditional domestic manufacturers, which include some of the Company’s largest customers. Furthermore, sales in May 2008 were significantly reduced as a result of a strike at a customer’s supplier, which resulted in the closure of several of that customer’s plants. According to industry statistics, traditional domestic manufacturer production for the third quarter of fiscal 2008 declined by 22.1% and total North American car and light truck production for the third quarter of fiscal 2008 decreased by 15.5%, in each case compared with production for the third quarter of fiscal 2007.

GROSS PROFIT. Gross profit for the third quarter of fiscal 2008 was $12,780 compared to gross profit of $12,467 in the third quarter of fiscal 2007, an increase of $313. Gross profit as a percentage of sales was 10.3% in the third quarter of fiscal 2008 compared to 9.4% for the same period a year ago. Gross profit in the third quarter of fiscal 2008 compared to the third quarter of fiscal 2007 was adversely affected by the lower volume of sales in the quarter and the absence of the related gross profit of approximately $5,700. Gross profit in the third quarter of fiscal 2008 was favorably affected by the material content of products sold of approximately $400. Gross profit was also favorably affected by reduced manufacturing expenses. Manufacturing expenses for the third quarter of fiscal 2008 declined from the previous year by $5,600. Personnel and personnel related expenses decreased by approximately $4,700, manufacturing supplies, expenses and repair materials decreased by approximately $1,000. The reduction in manufacturing expenses resulted from the Company’s action to control variable expenses in response to reduced sales volumes caused by work stoppages at customer plants in the second and third quarters of fiscal 2008. Manufacturing expenses also declined due to the announced closure of the Cleveland Stamping facility.

During the third quarter of fiscal 2008, the Company recorded an expense to cost of sales of approximately $952 pre-tax, or $0.03 per share, representing the correction of certain accounting errors caused by unsupported adjustments made by a former group controller of the Company during the period beginning in July 2005 through April 2008. The Company discovered the errors following a routine internal audit conducted at one of its plants. These adjustments included errors in inventory reserves in the first quarter of fiscal 2008 for approximately $330 and the capitalization of costs in fiscal years 2005 and 2006 associated with a capital asset project and the related depreciation of those fixed assets from the date of installation to the current quarter for approximately $622. The Company, assisted by outside legal counsel and an independent forensic accounting firm, conducted a thorough review of the financial reporting process at the division, including, among other things, reviews of journal entries and financial statement accounts that were or could have been impacted by the errors. After considering the results of these reviews, the facts and circumstances related to the nature of the errors, and based on Management’s assessment of materiality under SAB 99, the Company has concluded that the effect of the correction on reported results of operations for each quarter of the fiscal years involved was not significant to the results of operations as previously reported, and not significant to the current year’s results. As a result, the Company’s results of operations for the third quarter and nine-month period of fiscal 2008 reflect the cumulative correction of the errors through the second quarter of fiscal 2008.

The Company’s review of its financial reporting process identified a material weakness in the Company’s internal control over financial reporting consisting of ineffective control over manual journal entries made by plant controllers. Management reported the material weakness to the Company’s Audit Committee and remediated the material weakness by instituting an additional procedure. The procedure requires the reporting to several corporate personnel of all manually prepared accounting journal entries prepared by the controllers of the Company’s manufacturing plants.

The Audit Committee of the Board of Directors has reviewed management’s analysis of the quantitative and qualitative factors of the effect of the correction of these errors and has concluded that management’s assessment was thorough and complete and that management’s accounting for the correction of the errors was proper.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses were $6,888, or 5.5% of sales, in the third quarter of fiscal 2008, a decrease of $997 from $7,885, or 5.9% of sales, in the same period of the prior year. Selling, general and administrative expenses were primarily reduced as a result of lower personnel and personnel related expenses of $800 that were attributable to work force adjustments.

OTHER. During the third quarter of fiscal 2008, the Company recorded a recovery of $19 of previously impaired Cleveland Stamping facility assets that were sold.

Interest expense for the third quarter of fiscal 2008 was $952, compared to interest expense of $2,038 during the third quarter of fiscal 2007. Interest expense decreased from the prior year third quarter as a result of a decrease in the interest rate and a lower level of average borrowed funds in the third quarter of fiscal 2008 compared to the prior year. Borrowed funds averaged $75,189 during the third quarter of fiscal 2008 and the weighted average interest rate was 4.06%. In the third quarter of fiscal 2007, borrowed funds averaged $97,729 while the weighted average interest rate was 7.26%.

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The provision for income taxes in the third quarter of fiscal 2008 was $2,021 on income before taxes of $4,959 for an effective tax rate of 40.8%. The provision for income taxes in the third quarter of fiscal 2007 was $863 on income before taxes of $2,540 for an effective tax rate of 34.0%. The effective tax rate in the third quarter of fiscal 2008 declined from the Company’s estimate of the effective tax rate for all of fiscal 2008. The effective tax rate in the third quarter of fiscal 2007 includes the recognition of research and development tax credits related to prior years that were claimed by the Company by amending the tax returns for these years.

NET INCOME. Net income for the third quarter of fiscal 2008 was $2,938, or $.18 per share, diluted. Net income for the third quarter of fiscal 2007 was $1,677, or $.10 per share, diluted.

Nine Months Ended July 31, 2008 Compared to Nine Months Ended July 31, 2007

REVENUES. Sales for the first nine months of fiscal 2008 were $389,771, a decrease of $46,759, or 10.7%, from last year’s first nine month sales of $436,530. For the first nine months of fiscal 2008, North American automotive and light truck production decreased by 9.6% compared to the first nine months of fiscal 2007, while production of traditional domestic manufacturers declined 15.1% compared to the first nine months of fiscal 2007. Sales of several of the Company’s plants were significantly reduced during the second and third quarters of fiscal 2008 as a result of a strike at a customer’s supplier, which resulted in the closure of several of the customer’s plants.

GROSS PROFIT. Gross profit for the first nine months of fiscal 2008 was $35,784 compared to gross profit of $39,631 in the first nine months of fiscal 2007, a decrease of $3,847. Gross profit as a percentage of sales was 9.2% in the first nine months of fiscal 2008 compared to 9.1% in the same period a year ago.

For the first nine months of fiscal 2008 gross profit was reduced as a result of lower sales volume compared to the prior year nine-month period. The effect of reduced sales on gross profit was approximately $18,500. Gross profit was also reduced by an increase in the material content of sales during the first nine months of fiscal 2008 compared to the first nine months of fiscal 2007 in the approximate amount of $900. The negative effect on gross profit of reduced sales volume and increased material content were offset partially by lower manufacturing expenses. Manufacturing expenses for the first nine months of fiscal 2008 declined from the same period of the previous year by $15,500. Personnel and personnel related expenses decreased by approximately $13,400, reflecting the reduction of personnel related to the announced closure of the Company’s Cleveland Stamping facility and the reduction of personnel in response to work stoppages at several customer plants. In addition, manufacturing supplies, expenses, repair materials and utilities decreased by approximately $3,400 and depreciation expense increased by approximately $1,100.

During the third quarter of fiscal 2008, the Company recorded an expense to cost of sales of approximately $952 pre-tax, or $0.03 per share, representing the correction of certain accounting errors caused by unsupported adjustments made by a former group controller of the Company during the period beginning in July 2005 through April 2008. The Company discovered the errors following a routine internal audit conducted at one of its plants. These adjustments included errors in inventory reserves in the first quarter of fiscal 2008 for approximately $330 and the capitalization of costs in fiscal years 2005 and 2006 associated with a capital asset project and the related depreciation of those fixed assets from the date of installation to the current quarter for approximately $622. The Company, assisted by outside legal counsel and an independent forensic accounting firm, conducted a thorough review of the financial reporting process at the division, including, among other things, reviews of journal entries and financial statement accounts that were or could have been impacted by the errors. After considering the results of these reviews, the facts and circumstances related to the nature of the errors, and based on Management’s assessment of materiality under SAB 99, the Company has concluded that the effect of the correction on reported results of operations for each quarter of the fiscal years involved was not significant to the results of operations as previously reported, and not significant to the current year’s results. As a result, the Company’s results of operations for the third quarter and nine-month period of fiscal 2008 reflect the cumulative correction of the errors through the second quarter of fiscal 2008.

The Company’s review of its financial reporting process identified a material weakness in the Company’s internal control over financial reporting consisting of ineffective control over manual journal entries made by plant controllers. Management reported the material weakness to the Company’s Audit Committee and remediated the material weakness by instituting an additional procedure. The procedure requires the reporting to several corporate personnel of all manually prepared accounting journal entries prepared by the controllers of the Company’s manufacturing plants.

The Audit Committee of the Board of Directors has reviewed management’s analysis of the quantitative and qualitative factors of the effect of the correction of these errors and has concluded that management’s assessment was thorough and complete and that management’s accounting for the correction of the errors was proper.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses were $20,426 or 5.2% of sales in the first nine months of fiscal 2008 compared to $24,808, or 5.7% in the same period of the prior year. The decrease in selling, general and administrative expenses of $4,382 resulted from the provision of a reserve of $2,070 for litigation decided against the Company in fiscal 2007. In the previous year second quarter, the Company provided a reserve of $2,070 for this matter based upon management’s estimate of the probable outcome of the legal decisions possible in this case. Offsetting this legal reserve, the Company recorded a credit of $799, representing the difference between liabilities that the Company had accrued as payable to Valley City Steel LLC and the payment of $261 that the Company paid to the bankruptcy estate of Valley City Steel LLC as a result of the jury’s verdict. Selling, general and administrative expenses were further reduced by lower professional fees of approximately $500 and lower personnel and personnel related expenses of $2,500 that are attributable to the Company’s workforce adjustments and a reduction of incentive compensation accruals in response to the automotive industry work stoppages at certain customer and other supplier manufacturing plants.

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OTHER. During the second quarter of fiscal 2008, the Company recorded an asset impairment charge of $927 related to equipment that was dedicated to a customer program that has concluded production. Offsetting this charge was a recovery of $49 of previously impaired Cleveland Stamping facility assets that were sold.

For the first nine months of fiscal 2008, interest expense was $3,217, a decrease of $2,569 from interest expense of $5,786 in the first nine months of fiscal 2007. The decrease in interest expense compared to the prior year nine-month period resulted from a lower level of average borrowed funds and a decrease in the interest rate. Borrowed funds averaged $74,056 during the first nine months of fiscal 2008 and the weighted average interest rate was 4.95%. For the first nine months of fiscal 2007, borrowed funds averaged $101,574 while the weighted average interest rate was 7.00%.

Other income was $321 in the first nine months of fiscal 2007. The majority of the other income in the prior year was the result of the Company’s liquidation of the assets of its rabbi trust that had been established to fund the Company’s obligation in connection with its employment agreement and the related supplemental executive retirement plan with the Company’s President and CEO.

In the first nine months of fiscal 2008 the provision for income taxes was $4,741 on income before taxes of $11,270 for an effective tax rate of 42.1%. The provision for income taxes in the first nine months of fiscal 2007 was $4,098 on income before taxes of $9,308 for an effective tax rate of 44.0%. The effective tax rate for fiscal 2007 included the losses of the Company’s Mexican subsidiary for which no tax benefit could be recorded, and the effect of executive compensation beyond the amount deductible for tax purposes. In fiscal 2008, the effect of losses of the Company’s Mexican subsidiary are reduced and the condition that limited the deduction of executive compensation no longer exists.

NET INCOME. Net income for the first nine months of fiscal 2008 was $6,529, or $.40 per share, diluted. Net income for the first nine months of fiscal 2007 was $5,210, or $.32 per share, diluted.

Results of Operations

Three Months Ended April 30, 2008 Compared to Three Months Ended April 30, 2007

REVENUES. Sales for the second quarter of fiscal 2008 were $130,648, a decrease of $25,269 from last year’s second quarter sales of $155,917, or 16.2%. Sales decreased during the second quarter of fiscal 2008 as a result of reduced production volumes experienced by the North American automotive and heavy truck industries for which the Company supplies parts and, most significantly, by the traditional domestic manufacturers, which include some of the Company’s largest customers. Furthermore, sales were significantly reduced during the second quarter of fiscal 2008 as a result of a strike at a customer’s supplier, which resulted in the closure of several of that customer’s plants. According to industry statistics, traditional domestic manufacturer production for the second quarter of fiscal 2008 declined by 16.6% and total North American car and light truck production for the second quarter of fiscal 2008 decreased by 10.2%, in each case compared with production for the second quarter of fiscal 2007.

GROSS PROFIT. Gross profit for the second quarter of fiscal 2008 was $12,248 compared to gross profit of $15,576 in the second quarter of fiscal 2007, a decrease of $3,328. Gross profit as a percentage of sales was 9.4% in the second quarter of fiscal 2008 compared to 10.0% for the same period a year ago. Gross profit in the second quarter of fiscal 2008 compared to the second quarter of fiscal 2007 was adversely affected by the lower volume of sales in the quarter and the absence of the related gross profit of approximately $8,200. Gross profit in the second quarter of fiscal 2008 was also adversely affected by increased material content of products sold of approximately $300. These reductions of gross profit were offset by reduced manufacturing expenses. Manufacturing expenses for the second quarter of fiscal 2008 declined from the previous year by $5,200. Personnel and personnel related expenses decreased by approximately $3,800, manufacturing supplies, expenses and repair materials decreased by approximately $1,750 and depreciation expense increased by approximately $300. The reduction in manufacturing expenses resulted from the Company’s action to control variable expenses in response to reduced sales volumes caused by work stoppages at customer plants in the second quarter of fiscal 2008. Manufacturing expenses also declined due to the announced closure of the Cleveland Stamping facility.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses were $6,617, or 5.1% of sales, in the second quarter of fiscal 2008, a decrease of $2,691 from $9,308, or 6.0% of sales, in the same period of the prior year. During the second quarter of fiscal 2007, the Company provided a reserve of $2,070 for the Valley City Steel Litigation based upon management’s estimate of the probable outcome of the legal decisions possible in this case. Offsetting this legal reserve, the Company recorded a credit of $799, representing the difference between liabilities that the Company had accrued as payable to Valley City Steel LLC and the payment of $261 that the Company paid to the bankruptcy estate of Valley City Steel LLC as a result of the jury’s verdict. Selling, general and administrative expenses were further reduced as a result of lower personnel and personnel related expenses of $1,500 that were attributable to work force adjustments and a reduction of incentive compensation accruals.

OTHER. During the second quarter of fiscal 2008, the Company recorded an asset impairment charge of $927 related to equipment that was dedicated to a customer program that has concluded production. Offsetting this charge was a recovery of $30 of previously impaired Cleveland Stamping facility assets that were sold.

Interest expense for the second quarter of fiscal 2008 was $971, compared to interest expense of $2,043 during the second quarter of fiscal 2007. Interest expense decreased from the prior year second quarter as a result of a decrease in the interest rate and a lower level of average borrowed funds in the second quarter of fiscal 2008 compared to the prior year. Borrowed funds averaged $76,752 during the second quarter of fiscal 2008 and the weighted average interest rate was 4.52%. In the second quarter of fiscal 2007, borrowed funds averaged $117,552 while the weighted average interest rate was 6.94%.

Other (expense) income, net was $(21) for the second quarter of fiscal 2008 compared to $71 for the second quarter of fiscal 2007. During the second quarter of fiscal 2007, the Company liquidated the remainder of the assets of its rabbi trust that had been established to fund the Company’s obligation in connection with its employment agreement and the related supplemental executive retirement plan with the Company’s President and CEO. The gain upon final liquidation was $30 in the second quarter of fiscal 2007. The balance of other income net was a gain due to foreign currency transactions in Mexico recorded by the Company’s Mexican subsidiary.

The provision for income taxes in the second quarter of fiscal 2008 was $1,738 on income before taxes of $3,746 for an effective tax rate of 46.4%. The provision for income taxes in the second quarter of fiscal 2007 was $2,162 on income before taxes of $4,213 for an effective tax rate of 51.3%. The effective tax rate in the second quarter of fiscal 2008 declined from the Company’s estimate of the effective tax rate for all of fiscal 2007. The decrease in the effective tax rate was the result of a reduction in losses of the Company’s Mexican subsidiary for which a tax benefit cannot be provided and the absence of the effect of executive compensation beyond the amount deductible for tax purposes that existed in fiscal 2007.

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NET INCOME. Net income for the second quarter of fiscal 2008 was $2,008, or $0.12 per share, diluted. Net income for the second quarter of fiscal 2007 was $2,051, or $0.12 per share, diluted.

Six Months Ended April 30, 2008 Compared to Six Months Ended April 30, 2007

REVENUES. Sales for the first six months of fiscal 2008 were $265,542, a decrease of $38,000, or 12.5%, from last year’s first six month sales of $303,542. For the first half of fiscal 2008, North American automotive and light truck production decreased by 6.5% compared to the first half of fiscal 2007, while production of traditional domestic manufacturers declined 11.6% compared to the first half of fiscal 2007. Sales of several of the Company’s plants were significantly reduced during the second quarter of fiscal 2008 as a result of a strike at a customer’s supplier, which resulted in the closure of several of the customer’s plants.

GROSS PROFIT. Gross profit for the first six months of fiscal 2008 was $23,003 compared to gross profit of $27,164 in the first half of fiscal 2007, a decrease of $4,161. Gross profit as a percentage of sales was 8.7% in the first half of fiscal 2008 compared to 8.9% in the same period a year ago.

For the first six months of fiscal 2008 gross profit was reduced as a result of lower sales volume compared to the prior year first six-month period. The effect of reduced sales on gross profit was approximately $12,800. Gross profit was also reduced by an increase in the material content of sales during the first half of fiscal 2008 compared to the first half of fiscal 2007 in the approximate amount of $1,350. The negative effect on gross profit of reduced sales volume and increased material content were offset partially by lower manufacturing expenses. Manufacturing expenses for the first six months of fiscal 2008 declined from the same period of the previous year by $10,000. Personnel and personnel related expenses decreased by approximately $7,700, reflecting the reduction of personnel related to the announced closure of the Company’s Cleveland Stamping facility and the reduction of personnel in response to work stoppages at several customer plants. In addition, manufacturing supplies, expenses, repair materials and utilities decreased by approximately $3,200 and depreciation expense increased by approximately $900.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses were $13,538 or 5.1% of sales in the first six months of fiscal 2008 compared to $16,923, or 5.6% in the same period of the prior year. The decrease in selling, general and administrative expenses of $3,385 resulted from the provision of a reserve of $2,070 for litigation decided against the Company in fiscal 2007. In the previous year second quarter, the Company provided a reserve of $2,070 for this matter based upon management’s estimate of the probable outcome of the legal decisions possible in this case. Offsetting this legal reserve, the Company recorded a credit of $799, representing the difference between liabilities that the Company had accrued as payable to Valley City Steel LLC and the payment of $261 that the Company paid to the bankruptcy estate of Valley City Steel LLC as a result of the jury’s verdict. Selling, general and administrative expenses were further reduced by lower professional fees of approximately $400 and lower personnel and personnel related expenses of $1,750 that are attributable to the Company’s workforce adjustments and a reduction of incentive compensation accruals in response to the automotive industry work stoppages at certain customer and other supplier manufacturing plants.

OTHER. During the second quarter of fiscal 2008, the Company recorded an asset impairment charge of $927 related to equipment that was dedicated to a customer program that has concluded production. Offsetting this charge was a recovery of $30 of previously impaired Cleveland Stamping facility assets that were sold.

For the first six months of fiscal 2008, interest expense was $2,265, a decrease of $1,484 from interest expense of $3,749 in the first six months of fiscal 2007. The decrease in interest expense compared to the prior year six-month period resulted from a lower level of average borrowed funds and a decrease in the interest rate. Borrowed funds averaged $76,492 during the first six months of fiscal 2008 and the weighted average interest rate was 5.41%. For the first six months of fiscal 2006, borrowed funds averaged $106,663 while the weighted average interest rate was 6.88%.

Other income was $345 in the first half of fiscal 2007. The majority of the other income is the result of the Company’s liquidation of the assets of its rabbi trust that had been established to fund the Company’s obligation in connection with its employment agreement and the related supplemental executive retirement plan with the Company’s President and CEO.

In the first six months of fiscal 2008 the provision for income taxes was $2,720 on income before taxes of $6,311 for an effective tax rate of 43.1%. The provision for income taxes in the first half of fiscal 2007 was $3,235 on income before taxes of $6,768 for an effective tax rate of 47.8%. The effective tax rate for fiscal 2007 included the losses of the Company’s Mexican subsidiary for which no tax benefit could be recorded, and the effect of executive compensation beyond the amount deductible for tax purposes. In fiscal 2008, the effect of losses of the Company’s Mexican subsidiary are reduced and the condition that limited the deduction of executive compensation no longer exists.

NET INCOME. Net income for the first six months of fiscal 2008 was $3,591, or $.22 per share, diluted. Net income for the first six months of fiscal 2007 was $3,533, or $.21 per share, diluted.

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Results of Operations

Three Months Ended January 31, 2008 Compared to Three Months Ended January 31, 2007

REVENUES. Sales for the first quarter of fiscal 2008 were $134,894, a decrease of $12,731 from last year’s first quarter sales of $147,625, or 8.6%. During the first quarter of fiscal 2008, sales declined as a result of reduced production volumes of the North American car and light truck manufacturers, especially the traditional domestic manufacturers, the Company’s major customers. According to industry statistics, North American car and light truck production in the first quarter of fiscal 2008 declined 2.4% from production levels of the first quarter of fiscal 2007. For traditional domestic manufacturers, the production decrease in the first quarter of fiscal 2008 was 5.7% compared to the prior year first quarter period. Sales also declined due to the absence of all sales for the Company’s Cleveland Stamping facility that is now closed and due to reduced demand of the heavy truck industry.

GROSS PROFIT. Gross profit for the first quarter of fiscal 2008 was $10,755 compared to gross profit of $11,588 in the first quarter of fiscal 2007, a decrease of $833. Gross profit as a percentage of sales was 7.9% in the first quarter of fiscal 2008 compared to 7.8% for the same period a year ago. Gross profit in the first quarter of fiscal 2008 was adversely affected by the reduced volume of sales in the first quarter of fiscal 2008. The effect of reduced sales volume on first quarter 2008 gross profit was approximately $4,500. Gross profit was also adversely affected by increased material costs during the first quarter of fiscal 2008 compared to the first quarter of fiscal 2007. The effect of increased material cost was approximately $1,100. The factors that reduced gross profit were offset by reduced manufacturing expenses that favorably affected gross profit by approximately $4,600. Manufacturing expenses declined as a result of reduced personnel and personnel related expenses of approximately $3,800 and reduced expenditures for repairs, supplies and utilities of approximately $900. The closure of the Company’s Cleveland Stamping facility contributed to the reduction of manufacturing expenses. A year ago, the Cleveland plant was operating as it completed its final operations leading to its complete closure in October 2007.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses of $6,921 in the first quarter of fiscal 2008 were $694 less than selling, general and administrative expenses of $7,615 in the same period of the prior year. As a percentage of sales, these expenses were 5.1% of sales in first quarter of fiscal 2008 and 5.2% in the first quarter of fiscal 2007. The decrease in selling, general and administrative expenses reflect lower personnel and personnel related expenses of approximately $300, lower professional fees of approximately $300 and a lower provision for doubtful accounts.

OTHER. Interest expense for the first quarter of fiscal 2008 was $1,294, compared to interest expense of $1,706 during the first quarter of fiscal 2007. Interest expense decreased from the prior year first quarter as a result of a lower level of average borrowed funds and a lower weighted average interest rate in the first quarter of fiscal 2008 compared to the prior year. Borrowed funds averaged $72,922 during the first quarter of fiscal 2008 and the weighted average interest rate was 6.43%. In the first quarter of fiscal 2007, borrowed funds averaged $105,418 while the weighted average interest rate was 6.82%.

Other income, net was $16 for the first quarter of fiscal 2008 compared to $275 in the first quarter of fiscal 2007. During the prior year first quarter, the Company liquidated most of the assets of its rabbi trust that had been established to fund the Company’s obligation in connection with its employment agreement and the related supplemental executive retirement plan with the Company’s President and CEO. The obligation was paid on January 31, 2007 and the liquidation of the assets of the rabbi trust realized a gain of $208.

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The provision for income taxes in the first quarter of fiscal 2008 was $982 on income before taxes of $2,565 for an effective tax rate of 38.3%. The provision for income taxes in the first quarter of fiscal 2007 was $1,073 on income before taxes of $2,555 for an effective tax rate of 42.0%. The estimated effective tax rate for fiscal 2008 has declined in the first quarter of fiscal 2008 compared to the first quarter of fiscal 2007 as a result of the absence of executive compensation beyond the amount deductible for tax purposes and less of an impact of losses that cannot be benefited from the Company’s Mexican subsidiary.

NET INCOME. Net income for the first quarter of fiscal 2008 was $1,583, or $0.10 per share, diluted. Net income for the first quarter of fiscal 2007 was $1,482, or $0.09 per share, diluted.

Three Months Ended January 31, 2007 Compared to Three Months Ended January 31, 2006

REVENUES. Sales for the first quarter of fiscal 2007 were $147,625, an increase of $1,880 from fiscal 2006 first quarter sales of $145,745, or 1.3%. During the first quarter of fiscal 2007, sales improved as a result of new parts that the Company supplies for several new vehicle programs that began production during the latter part of the fourth quarter of fiscal 2006 and during the first quarter of fiscal 2007.

GROSS PROFIT. Gross profit for the first quarter of fiscal 2007 was $11,588 compared to gross profit of $16,434 in the first quarter of fiscal 2006, a decrease of $4,846. Gross profit as a percentage of sales was 7.8% in the first quarter of fiscal 2007 compared to 11.3% for the same period a year ago. Gross profit in the first quarter of fiscal 2007 decreased compared to the first quarter of the previous year as a result of an increase in the material content of products sold during the first quarter of fiscal 2007. The effect of increased material content reduced gross profit by approximately $5,300. Gross profit in the first quarter of fiscal 2007 was also adversely affected by increased material costs including the effect of lower market prices for engineered scrap material during the first quarter of fiscal 2007 compared to the first quarter of fiscal 2006. The effect of lower market prices of engineered scrap reduced gross profit by approximately $1,700. Gross profit in the first quarter of fiscal 2007 compared to the prior year was favorably affected by the gross profit realized on increased sales of approximately $1,300. Lastly, gross profit was favorably affected by reduced manufacturing expenses. Manufacturing expenses declined by approximately $900 due to lower personnel and personnel related expenses of approximately $500 and lower depreciation of approximately $400.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses of $7,615 in the first quarter of fiscal 2007 were even with selling, general and administrative expenses of $7,619 in the same period of the prior year. As a percentage of sales, these expenses were 5.2% of sales in each first quarter period of fiscal 2007 and 2006.

OTHER. Interest expense for the first quarter of fiscal 2007 was $1,706, compared to interest expense of $1,488 during the first quarter of fiscal 2006. Interest expense increased from the prior year first quarter as a result of an increase in the interest rate and higher level of average borrowed funds in the first quarter of fiscal 2007 compared to the prior year. Borrowed funds averaged $105,418 during the first quarter of fiscal 2007 and the weighted average interest rate was 6.82%. In the first quarter of fiscal 2006, borrowed funds averaged $99,574 while the weighted average interest rate was 5.97%.

Other income, net was $275 for the first quarter of fiscal 2007. During the quarter, the Company liquidated most of the assets of its rabbi trust that had been established to fund the Company’s obligation in connection with its employment agreement and the related supplemental executive retirement plan with the Company’s President and CEO. The obligation was paid on January 31, 2007 and the liquidation of the assets of the rabbi trust realized a gain of $208.

The provision for income taxes in the first quarter of fiscal 2007 was $1,073 on income before taxes of $2,555 for an effective tax rate of 42.0%. The provision for income taxes in the first quarter of fiscal 2006 was $2,804 on income before taxes of $7,379 for an effective tax rate of 38.0%. The effective tax rate in the first quarter of fiscal 2007 reflects the gradual elimination of the tax on income in the state of Ohio and the estimated benefit of the domestic production activities deduction provided by the American Jobs Creation Act of 2004. Offsetting these favorable items was the loss of the Company’s Mexican subsidiary for which a tax benefit cannot be provided and the effect of executive compensation beyond the amount deductible for tax purposes.

NET INCOME. Net income for the first quarter of fiscal 2007 was $1,482, or $0.09 per share, diluted. Net income for the first quarter of fiscal 2006 was $4,575, or $0.28 per share, diluted.

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Results of Operations

Three Months Ended July 31, 2007 Compared to Three Months Ended July 31, 2006

REVENUES. Sales for the third quarter of fiscal 2007 were $132,988, a decrease of $11,596, or 8.0% from last year’s third quarter sales of $144,584. The sales decrease was led by the loss of sales at the Company’s Cleveland Stamping facility where the conclusion of two major automotive programs and the conclusion of other business has led to the closure of this facility. Sales also decreased as a result of the decline in heavy truck production that had previously experienced strong demand before the effect of new industry emission standards on January 1, 2007 and as a result of lower demand in lawn and garden products. The reductions in sales for Cleveland Stamping, heavy truck, and lawn and garden were offset by additional sales for new automotive programs. According to industry statistics, traditional domestic automotive manufacturer production for the third quarter of fiscal 2007 declined by 3.1% while total North American car and light truck production for the third quarter of fiscal 2007 increased by 1.1%, in each case compared with production for the third quarter of fiscal 2006.

GROSS PROFIT. Gross profit for the third quarter of fiscal 2007 was $12,467 compared to gross profit of $12,227 in the third quarter of fiscal 2006, an increase of $240. Gross profit as a percentage of sales was 9.4% in the third quarter of fiscal 2007 compared to 8.5% for the same period a year ago. Gross profit in the third quarter of fiscal 2007 compared to the third quarter of fiscal 2006 was adversely affected by the lower volume of sales in the quarter and the absence of the related gross profit of approximately $2,800. Gross profit was also adversely affected by lower engineered scrap recovery during the third quarter of fiscal 2007 compared to the third quarter of fiscal 2006. The revenue from the sale of engineered scrap has declined since the prior year third quarter period as a result of reduced tonnage related to the decrease of sales of product and lower prices for engineered scrap. The effect of reduced engineered scrap revenue on material cost during the third quarter of fiscal 2007 was approximately $2,900. In the third quarter of fiscal 2007, gross profit was favorably affected by the change in material content in sales and reduced manufacturing expenses compared to the third quarter of fiscal 2006. The material content in the fiscal 2007 third quarter sales declined, improving profitability by $1,550. Manufacturing expenses declined in the current third quarter period compared to the prior year by $4,400. Personnel and personnel related expenses decreased by approximately $2,100, repair expenses and manufacturing supplies decreased by approximately $1,300, property taxes declined by approximately $500 and utilities and depreciation expense each decreased by approximately $200. The personnel and personnel related expense reductions include the effect of freezing the Company’s cash balance pension plan for non-bargaining employees and the reduction of personnel related to the announced closure of the Company’s Cleveland Stamping facility.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses of $7,885 in the third quarter of fiscal 2007 decreased by $1,048 compared to $8,933 in the same period of the prior year. As a percentage of sales, these expenses were 5.9% in the third quarter of fiscal 2007, compared to 6.2% of sales in the third quarter of fiscal 2006. Selling, general and administrative expenses were reduced as a result of decreased professional service fees in fiscal 2007 compared to fiscal 2006 when the Company was first required to comply with the certification requirements under Section 404 of the Sarbanes-Oxley Act. Also, depreciation expense in the third quarter of fiscal 2007 declined from the third quarter of fiscal 2006. The effect of these items was approximately $1,050.

OTHER. Interest expense for the third quarter of fiscal 2007 was $2,038, compared to interest expense of $1,540 during the third quarter of fiscal 2006. Interest expense increased from the prior year third quarter as a result of an increase in the interest rate and higher level of average borrowed funds in the third quarter of fiscal 2007 compared to the prior year. Borrowed funds averaged $97,729 during the third quarter of fiscal 2007 and the weighted average interest rate was 7.26%. In the third quarter of fiscal 2006, borrowed funds averaged $92,970 while the weighted average interest rate was 6.79%.

Other expense, net was $24 for the third quarter of fiscal 2007 compared to other income, net of $331 for the third quarter of fiscal 2006. During the third quarter of fiscal 2006, the income resulted from the sale of securities that the Company acquired while recovering a bad debt.

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The provision for income taxes in the third quarter of fiscal 2007 was $863 on income before taxes of $2,540 for an effective tax rate of 34.0%. The effective tax rate in the third quarter of fiscal 2007 reflects the provision for federal and local taxes at normal rate and the absence of tax benefit to the Company for the losses of the Company’s Mexican subsidiary offset by recognition of research and development tax credits related to prior years that are being claimed by amending the tax returns for those years.

The provision for income taxes in the third quarter of fiscal 2006 was $893 on income before taxes of $2,102 for an effective tax rate of 42.5%. The effective tax rate during the third quarter of fiscal 2006 reflected the gradual elimination of the tax on income in the state of Ohio and the estimated benefit of the domestic production activities deduction provided by the American Jobs Creation Act of 2004. Offsetting these favorable items was losses of the Company’s Mexican subsidiary for which a tax benefit cannot be provided.

NET INCOME. Net income for the third quarter of fiscal 2007 was $1,677, or $0.10 per share, diluted. Net income for the third quarter of fiscal 2006 was $1,209, or $0.07 per share, diluted.

Nine Months Ended July 31, 2007 Compared to Nine Months Ended July 31, 2006

REVENUES. Sales for the first nine months of fiscal 2007 were $436,530, a decrease of $25,953, or 5.6%, from last year’s first nine-month sales of $462,483. The decrease in sales was attributed to the loss of business at the Company’s Cleveland Stamping facility that is being closed and to the decline in heavy truck production following the effect of new engine emission standards that went into effect on January 1, 2007. These sales declines were offset by new automotive product sales. For the first nine-month period of fiscal 2007, North American automotive and light truck production decreased by 3.4% and the production of traditional domestic manufacturers declined 7.3%, all according to published industry statistics and in comparison to the nine-month period of fiscal 2006.

GROSS PROFIT. Gross profit for the first nine months of fiscal 2007 was $39,631 compared to gross profit of $48,070 in the first nine months of fiscal 2006, a decrease of $8,439, or 17.6%. Gross profit as a percentage of sales was 9.1% in the first nine months of fiscal 2007 compared to 10.4% in the same period a year ago. Gross profit in the first nine months of fiscal 2007 declined on the lower volume of sales during this period the effect of which was a reduction of gross profit of approximately $7,100. Gross profit was also reduced by the increased content of material in the products produced and sold during the first nine months of fiscal 2007 compared to the prior year. The effect of greater material content on gross profit was a decrease of $6,100. Lastly, gross profit decreased due to a lower recovery of engineered scrap during the first nine months of fiscal 2007 compared to the prior year nine-month period of approximately $4,800. These factors were offset by reduced manufacturing expenses of approximately $9,500 in the first nine months of fiscal 2007 compared to the first nine months of fiscal 2006. Personnel and personnel related expenses decreased by approximately $5,550, manufacturing supplies, expenses and repair materials decreased by approximately $2,000 and depreciation, taxes and utilities decreased by approximately $1,800. The decreases in manufacturing expenses for the first nine months of fiscal 2007 were the result of cost reduction efforts in response to reduced production volumes, including the closure of the Company’s Cleveland Stamping facility and the effect of freezing the Company’s cash balance pension plan for non-bargaining employees.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses were $24,808 in the first nine months of fiscal 2007, a decline of $203 compared to $25,011 in the same period of the prior year. As a percentage of sales, these expenses were 5.7% in the first nine months of fiscal 2007 compared to 5.4% of sales in the first nine months of fiscal 2006. Selling, general and administrative expenses in the first nine months of 2007 included the provision of a reserve of $2,000 for litigation decided against the Company. During the second quarter of fiscal 2007, the Company provided a reserve of $2,000 for the Valley City Steel litigation based upon management’s estimate of the probable outcome of the legal decisions possible in this case. Offsetting this legal reserve, the Company recorded a credit of $799, representing the difference between liabilities that the Company had accrued as payable to Valley City Steel, LLC and the payment of $261 that the Company paid to the bankruptcy estate of Valley City Steel, LLC as a result of the jury’s verdict. Selling, general and administrative expenses were further effected by lower depreciation expense of approximately $900 and lower professional fees of approximately $600.

OTHER. For the first nine months of fiscal 2007, interest expense was $5,786, an increase of $1,251 from interest expense of $4,535 in the first nine months of fiscal 2006. The increase in interest expense compared to the prior year nine-month period resulted from a higher level of average borrowed funds and an increase in the interest rate. Borrowed funds averaged $101,574 during the first nine months of fiscal 2007 and the weighted average interest rate was 7.00%. For the first nine months of fiscal 2006, borrowed funds averaged $96,272 while the weighted average interest rate was 6.28%.

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Other income was $321 for the first nine months of fiscal 2007, compared to $379 in the first nine months of fiscal 2006. The majority of the other income in fiscal 2007 is the result of the Company’s liquidation of the assets of its rabbi trust that had been established to fund the Company’s obligation in connection with its employment agreement and the related supplemental executive retirement plan with the Company’s President and CEO. In fiscal 2006, other income resulted from the sale of securities acquired while recovering a bad debt.

In the first nine months of fiscal 2007 the provision for income taxes was $4,098 on income before taxes of $9,308 for an effective tax rate of 44.0%. The effective tax rate for fiscal 2007 reflects the inability to provide tax benefit on the losses of the Company’s Mexican subsidiary, offset by the recognition of research and development tax credits related to prior year that are being realized by amending the tax returns of these years.

The provision for income taxes in the first nine months of fiscal 2006 was $5,804 on income before taxes of $18,941 for an effective tax rate of 30.6%. The effective tax rate in fiscal 2006 reflected the recognition of $1,488 of tax credits in the State of Ohio whose utilization was resolved as the result of court proceedings and the profitability of the Company.

NET INCOME. Net income for the first nine months of fiscal 2007 was $5,210, or $0.32 per share, diluted. Net income for the first nine months of fiscal 2006 was $13,137, or $0.80 per share, diluted.

Results of Operations

Three Months Ended April 30, 2007 Compared to Three Months Ended April 30, 2006

REVENUES. Sales for the second quarter of fiscal 2007 were $155,917, a decrease of $16,237 from last year’s second quarter sales of $172,154, or 9.4%. Sales decreased during the second quarter of fiscal 2007 as a result of reduced production volumes experienced by the North American automotive and heavy truck industries for which the Company supplies parts and, most significantly, by the traditional domestic manufacturers, which includes some of the Company’s largest customers. Sales were also reduced by the conclusion of two programs for the automotive customers at the Company’s Cleveland Stamping facility that is currently being shut down. According to industry statistics, traditional domestic manufacturer production for the second quarter of fiscal 2007 declined by 7.7% and total North American car and light truck production for the second quarter of fiscal 2007 decreased by 4.1%, in each case compared with production for the second quarter of fiscal 2006.

GROSS PROFIT. Gross profit for the second quarter of fiscal 2007 was $15,576 compared to gross profit of $19,408 in the second quarter of fiscal 2006, a decrease of $3,832. Gross profit as a percentage of sales was 10.0% in the second quarter of fiscal 2007 compared to 11.3% for the same period a year ago. Gross profit in the second quarter of fiscal 2007 compared to the second quarter of fiscal 2006 was adversely affected by the lower volume of sales in the quarter and the absence of the related gross profit of approximately $5,300. Gross profit in the second quarter of fiscal 2007 was also adversely affected by increased material content of products sold of approximately $2,750. These reductions of gross profit were offset by reduced manufacturing expenses. Manufacturing expenses for the second quarter of fiscal 2007 declined from the previous year by $4,124. Personnel and personnel related expenses decreased by approximately $3,000, manufacturing supplies, expenses and repair materials decreased by approximately $800 and depreciation expense decreased by approximately $425. These reductions were offset by increased utility expenses during the second quarter. The personnel and personnel related expense reductions include the effect of freezing the Company’s cash balance pension plan for non-bargaining employees and the reduction of personnel related to the announced closure of the Company’s Cleveland Stamping facility.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses of $9,308 in the second quarter of fiscal 2007 increased by $849 compared to $8,459 in the same period of the prior year. During the second quarter of fiscal 2007, the Company provided a reserve of $2,000 for the Valley City Steel Litigation based upon management’s estimate of the probable outcome of the legal decisions possible in this case. Offsetting this legal reserve, the Company recorded a credit of $799, representing the difference between liabilities that the Company had accrued as payable to Valley City Steel, LLC and the payment of $261 that the Company paid to the bankruptcy estate of Valley City Steel, LLC as a result of the jury’s verdict. Selling, general and administrative expenses were further reduced as a result of lower depreciation expense of approximately $223 and lower personnel related expenses of $178 that are attributable to the Company’s freezing of its cash balance pension plan for non-bargaining employees.

OTHER. Interest expense for the second quarter of fiscal 2007 was $2,043, compared to interest expense of $1,506 during the second quarter of fiscal 2006. Interest expense increased from the prior year second quarter as a result of an increase in the interest rate and higher level of average borrowed funds in the second quarter of fiscal 2007 compared to the prior year. Borrowed funds averaged $117,552 during the second quarter of fiscal 2007 and the weighted average interest rate was 6.94%. In the second quarter of fiscal 2006, borrowed funds averaged $97,396 while the weighted average interest rate was 6.23%.

Other income, net was $71 for the second quarter of fiscal 2007 compared to $6 for the second quarter of fiscal 2006. During the second quarter of fiscal 2007, the Company liquidated the remainder of the assets of its rabbi trust that had been established to fund the Company’s obligation in connection with its employment agreement and the related supplemental executive retirement plan with the Company’s President and CEO. The gain upon final liquidation was $30 in the second quarter of fiscal 2007. The balance of other income net was a gain due to foreign currency transactions in Mexico recorded by the Company’s Mexican subsidiary.

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The provision for income taxes in the second quarter of fiscal 2007 was $2,162 on income before taxes of $4,213 for an effective tax rate of 51.3%. The provision for income taxes in the second quarter of fiscal 2006 was $2,107 on income before taxes of $9,460 for an effective tax rate of 22.3%. The effective tax rate in the second quarter of fiscal 2007 reflects an increase in the Company’s estimate of the effective tax rate for all of fiscal 2007. The rising effective tax rate is the result of continued losses of the Company’s Mexican subsidiary for which a tax benefit cannot be provided, and the effect of executive compensation beyond the amount deductible for tax purposes.

In addition, the effective tax rate during the second quarter of fiscal 2006 was low reflecting several factors, including the gradual elimination of the tax on income in the state of Ohio, the estimated benefit of the domestic production activities deduction provided by the American Jobs Creation Act of 2004 and the ability of the Company to utilize credits for the investment that the Company had made in machinery and equipment in previous years to reduce taxes payable in Ohio. Furthermore, the Company had provided a valuation allowance for these tax credits based on, first, the uncertainty of the Company’s ability to realize the credits during the Company’s previous period of operating losses and, secondly, the uncertainty of utilization as the constitutionality of the credits in Ohio was challenged. The Company’s return to profitability resolved the first issue. The latter condition was resolved based upon a favorable U.S. Supreme Court ruling. As a result, the Company recorded a benefit in the tax provision of $1,488 representing the benefit related to tax credits in the State of Ohio during the second quarter of fiscal 2006.

NET INCOME. Net income for the second quarter of fiscal 2007 was $2,051, or $0.12 per share, diluted. Net income for the second quarter of fiscal 2006 was $7,353, or $0.45 per share, diluted.

Six Months Ended April 30, 2007 Compared to Six Months Ended April 30, 2006

REVENUES. Sales for the first six months of fiscal 2007 were $303,542, a decrease of $14,357, or 4.5%, from last year’s first six month sales of $317,899. For the first half of fiscal 2007, North American automotive and light truck production decreased by 5.4% compared to the first half of fiscal 2006, while production of traditional domestic manufacturers declined 9.6% compared to the first half of fiscal 2006. For the first six months of fiscal 2007, the Company’s sales reflect sales for several new vehicle programs that launched late in fiscal 2006 and early fiscal 2007, causing the Company’s sales decrease to be less than the overall industry car build decrease.

GROSS PROFIT. Gross profit for the first six months of fiscal 2007 was $27,164 compared to gross profit of $35,843 in the first half of fiscal 2006, a decrease of $8,679. Gross profit as a percentage of sales was 8.9% in the first half of fiscal 2007 compared to 11.3% in the same period a year ago.

For the first six months of fiscal 2007 gross profit was reduced as a result of lower sales volume compared to the prior year first six-month period. The effect of reduced sales on gross profit was approximately $4,300. Gross profit was also reduced by an increase in the material content of sales during the first half of fiscal 2007 compared to the first half of fiscal 2006 in the approximate amount of $7,300. Gross profit was adversely affected by increased material costs, including the effect of lower market prices for engineered scrap material during the first half of fiscal year 2007 compared to the first half of fiscal 2006. The effect of lower scrap prices in the first half of fiscal 2007 reduced gross profit by approximately $1,870. The negative effect on gross profit of reduced sales volume and increased material costs were offset partially by lower manufacturing expenses. Manufacturing expenses for the first six months of fiscal 2007 declined from the same period of the previous year by $5,107. Personnel and personnel related expenses decreased by approximately $3,500, including the effect of the freezing of the Company’s cash balance pension plan for non-bargaining employees and the reduction of personnel related to the announced closure of the Company’s Cleveland Stamping facility. In addition, manufacturing supplies, expenses and repair materials decreased by approximately $800 and depreciation expense decreased by approximately $830.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses were $16,923 or 5.6% of sales in the first six months of fiscal 2007 compared to $16,078, or 5.1% in the same period of the prior year. The increase in selling, general and administrative expenses of $845 resulted from the provision of a reserve of $2,000 for litigation decided against the Company. During the second quarter of fiscal 2007, the Company provided a reserve of $2,000 for this matter based upon management’s estimate of the probable outcome of the legal decisions possible in this case. Offsetting this legal reserve, the Company recorded a credit of $799, representing the difference between liabilities that the Company had accrued as payable to Valley City Steel, LLC and the payment of $261 that the Company paid to the bankruptcy estate of Valley City Steel, LLC as a result of the jury’s verdict. Selling, general and administrative expenses were further effected by lower depreciation expense of approximately $488 and lower personnel related expenses of $277

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that are attributable to the Company’s freezing of its cash balance pension plan for non-bargaining employees, and increased legal and professional fees of approximately $410.

OTHER. For the first six months of fiscal 2007, interest expense was $3,749, an increase of $754 from interest expense of $2,995 in the first six months of fiscal 2006. The increase in interest expense compared to the prior year six-month period resulted from a higher level of average borrowed funds and an increase in the interest rate. Borrowed funds averaged $106,663 during the first six months of fiscal 2007 and the weighted average interest rate was 6.88%. For the first six months of fiscal 2006, borrowed funds averaged $99,356 while the weighted average interest rate was 6.08%.

Other income was $345 for the first half of fiscal 2007, compared to $47 in the first half of fiscal 2006. The majority of the other income is the result of the Company’s liquidation of the assets of its rabbi trust that had been established to fund the Company’s obligation in connection with its employment agreement and the related supplemental executive retirement plan with the Company’s President and CEO.

In the first six months of fiscal 2007 the provision for income taxes was $3,235 on income before taxes of $6,768 for an effective tax rate of 47.8%. The provision for income taxes in the first half of fiscal 2006 was $4,911 on income before taxes of $16,839 for an effective tax rate of 29.2%. The effective tax rate for fiscal 2007 reflects the continued losses of the Company’s Mexican subsidiary for which no tax benefit can be recorded, and the effect of executive compensation beyond the amount deductible for tax purposes. The effective tax rate in fiscal 2006 was unusually low reflecting several factors including the gradual elimination of the tax on income in the state of Ohio, the estimated benefit of the domestic production activities deduction provided by the American Jobs Creation Act of 2004 and the ability of the Company to utilize credits for the investment that the Company had made in machinery and equipment in previous years to reduce taxes payable in Ohio. Furthermore, the Company had provided a valuation allowance for these tax credits based on, first, the uncertainty of the Company’s ability to realize the credits during the Company’s previous period of operating losses and, secondly, the uncertainty of utilization as the constitutionality of the credits in Ohio was challenged. The Company’s return to profitability resolved the first issue. The latter condition was resolved based upon a favorable U.S. Supreme Court ruling. As a result, the Company recorded a benefit in the tax provision of $1,488 representing the benefit related to the tax credits in the state of Ohio.

NET INCOME. Net income for the first six months of fiscal 2007 was $3,533, or $.21 per share, diluted. Net income for the first six months of fiscal 2006 was $11,928, or $.73 per share, diluted.