• institutional projects, such as schools, stadiums, hospitals and government buildings; and

• commercial projects, such as retail stores, offices, and recreational, distribution and manufacturing facilities.

Although certain of our products can be used in residential construction projects, we believe that less than 5% of our revenues are attributable to residential construction activity.
We use three segments to monitor gross profit by sales type: product sales, rental revenue, and used rental equipment sales. These sales are differentiated by their source and gross margin as a percentage of sales. Accordingly, this segmentation provides information for decision-making and resource allocation. Product sales represent sales of new products carried in inventories on the balance sheet. Cost of goods sold for product sales includes material, manufacturing labor, overhead costs, and freight. Rental revenues represent the leasing of the rental equipment and are recognized ratably over the lease term. Cost of goods sold for rental revenues includes depreciation of the rental equipment, maintenance of the rental equipment, and freight. Sales of used rental equipment represent sales of the rental equipment after a period of generating rental revenue. Cost of goods sold for sales of used rental equipment consists of the net book value of the rental equipment.

Results of Operations
The following table summarizes our results of operations as a percentage of net
sales for the periods indicated.

                                                                         Three fiscal months ended
                                                                   March 28, 2008        March 30, 2007
Product sales                                                             81.1 %                  81.0 %
Rental revenue                                                            14.2                    14.7
Used rental equipment sales                                                4.7                     4.3

Net sales                                                                100.0                   100.0


Product cost of sales                                                     75.3                    75.4
Rental cost of sales                                                      62.9                    55.5
Used rental equipment cost of sales                                       12.2                    26.4

Cost of sales                                                             70.6                    70.3


Product gross profit                                                      24.7                    24.6
Rental gross profit                                                       37.1                    44.5
Used rental equipment gross profit                                        87.8                    73.6

Gross profit                                                              29.4                    29.7

Selling, general and administrative expenses                              28.1                    26.1
Facility closing and severance expenses                                    0.7                     0.4
(Gain) loss on disposals of property, plant, and equipment                (0.5 )                   0.1

Income from operations                                                     1.1                     3.1
Interest expense                                                          13.1                    11.3
Interest income                                                           (0.1 )                  (0.1 )
Loss on extinguishment of long-term debt                                   6.5                       -
Other expense (income)                                                       -                     0.1

Loss before provision for income taxes                                   (18.4 )                  (8.2 )
Provision for income taxes                                                 0.1                       -

Net loss                                                                 (18.5 %)                 (8.2 %)

Comparison of Three Fiscal Months Ended March 28, 2008 and March 30, 2007
Net Sales
Net sales decreased $3.6 million, or 3.7%, to $95.4 million in the first quarter
of 2008 from $99.0 million in the first quarter of 2007. The following table
summarizes our net sales by segment:

                                           Three fiscal months ended
                                  March 28, 2008              March 30, 2007
                                                (In thousands)
                               Net Sales         %         Net Sales         %         % Change
Product sales                 $    77,303        81.1 %   $    80,176        81.0 %         (3.6 %)
Rental revenue                     13,580        14.2          14,573        14.7           (6.8 )
Used rental equipment sales         4,496         4.7           4,273         4.3            5.2

Net sales                     $    95,379       100.0 %   $    99,022       100.0 %         (3.7 %)

Product sales decreased $2.9 million, or 3.6%, to $77.3 million in the first quarter of 2008 from $80.2 million in the first quarter of 2007. Unit volume was lower due to fewer good weather days, especially in the Southeast and Midwest, which resulted in delayed construction starts. The lower unit volume was partially offset by sales price increases.

Rental revenue decreased $1.0 million, or 6.8%, to $13.6 million for the first quarter of 2008, compared to $14.6 million in the first quarter of 2007, also due to fewer good weather days, which resulted in delayed construction starts. Used rental equipment sales increased slightly to $4.5 million in the first quarter of 2008 from $4.3 million in the first quarter of 2007. Gross Profit
Gross profit of $28.1 million in the first three months of 2008 decreased 4.5% from $29.4 million in the first three months of 2007. Gross profit was 29.4% of sales in the first three months of 2008, decreasing from 29.7% in the first three months of 2007.
Product sales contributed $19.1 million of gross profit during the first quarter of 2008, a decrease from the $19.7 million in the first quarter of 2007. The decrease in product gross profit was due to $1.6 million of lower unit volume and $2.6 million of cost inflation, partially offset by $3.6 million of higher sales prices. As a percentage of product sales, gross profit in the first three months of 2008 increased slightly to 24.7% from 24.6% in the first three months of 2007.
Rental gross profit for the first quarter of 2008 was $5.0 million, as compared to $6.5 million in the first quarter of 2007, due primarily to the reduced rental revenue discussed above. Depreciation on rental equipment for the first quarter of 2008 was $4.2 million, as compared to $4.0 million in the same period of 2007. Rental gross profit before depreciation was $9.3 million in the quarter, or 68.4% of rental revenue, as compared to $10.5 million, or 71.8% of rental revenue reported in the first quarter of 2007. The decrease as a percent of rental revenue is due to the impact of fixed costs on lower rental revenues. Gross profit on sales of used rental equipment for the first quarter of 2008 was $4.0 million, or 87.8% of sales, as compared to $3.1 million, or 73.6% of sales, in the first quarter of 2007. Gross margin percentages fluctuate based on the mix and age of rental equipment sold and was higher in the first quarter of 2008 due to higher sales of fully depreciated used rental equipment. Operating Expenses
Selling, general, and administrative expenses increased to $26.8 million in the first quarter of 2008 from $25.9 million for the first quarter of 2007. The increase was due to increased headcount and salary increases of $0.4 million, increased depreciation expense of $0.3 million, and other net increases of $0.3 million.
Other Expenses
During the first quarter of 2008, we refinanced a portion of our long-term debt. We entered into a new $150 million revolving credit facility and issued a $100 million term loan. The proceeds of the term loan and an initial draw on the revolving credit facility were used to repay our $165 million Senior Second Secured Notes.
Interest expense was $12.5 million for the first quarter of 2008, comprised of $10.5 million of interest charges and $2.0 million of non-cash amortization of debt discount and financing costs. This compares to interest expense of $11.2 million for the first quarter of 2007, comprised of $9.7 million of interest charges and $1.5 million of non-cash amortization of debt discount and financing costs. The increase in interest charges was due to incurring interest on both the new term loan and the Senior Second Secured Notes for approximately a month. The increase in non-cash amortization of debt discount and financing costs was due to the debt discount and financing costs on the new term loan and revolving credit facility being amortized over the initial terms of the new facilities of approximately one year.

In conjunction with the refinancing, the Company recorded a loss on extinguishment of long-term debt, comprised of the following:

    ($ in millions)
    Prepayment premium on Senior Second Secured Notes                   $ 4.6
    Unamortized discount on Senior Second Secured Notes                   1.1
    Unamortized financing costs on Senior Second Secured Notes            0.2
    Unamortized financing costs on previous revolving credit facility     0.3

    Loss on extinguishment of long-term debt                            $ 6.2

Loss Before Income Taxes
Loss before income taxes in the first quarter of 2008 was $(17.6) million compared to $(8.1) million in the first quarter of 2007, due to the factors described above.
Provision for Income Taxes
The Company has recorded a non-cash valuation allowance to reduce its deferred tax asset related to net operating loss carryforwards to zero, as estimated levels of future taxable income are less than the amount needed to realize this asset. If such estimates change in the future, the valuation allowance will be decreased or increased appropriately, resulting in a non-cash increase or decrease to net income.
Net Loss
The net loss for the first quarter of 2008 was $(17.7) million, compared to $(8.2) million in the first quarter of 2007, due to the factors described above. Liquidity and Capital Resources
Historically, working capital borrowings under our revolving credit facility fluctuate with sales volume, such that our peak revolving credit borrowings are generally in the late second or early third quarter. Our key measure of liquidity and capital resources is the amount available under our revolving credit facility. As of March 28, 2008, we had $14.0 million available under our revolving credit facility, which we believe is adequate for our planned needs. Our capital uses relate primarily to capital expenditures and debt service. Our capital expenditures consist of additions to our rental equipment and additions to our property, plant, and equipment. Additions to rental equipment are based on expected product and geographic demand for the equipment. Property, plant, and equipment consist of manufacturing and distribution equipment and management information systems. We finance these capital expenditures with cash on hand, borrowings under our revolving credit facility, and with proceeds from sales of used rental equipment. The following table sets forth a summary of these capital events for the periods indicated.

                                                                       Three Fiscal Months Ended
                                                                    March 28,             March 30,
($ in thousands)                                                      2008                  2007
Additions to rental equipment                                     $       4,207         $       9,028
Additions to property, plant and equipment                                4,184                 5,036
Proceeds from sales of used rental equipment                             (6,421 )              (4,718 )
Proceeds from sales of property, plant and equipment                     (1,120 )                  (5 )

Net additions to rental equipment and property, plant, and
equipment                                                         $         850         $       9,341

We believe we can manage the capital requirements of our rental equipment, and thus our cash flow, through the careful monitoring of our rental equipment additions. Sales of used rental equipment can be adjusted to increase cash available for rental equipment additions, repayment of our revolving credit facility or other long-term debt, and other corporate purposes.

Historically, our primary sources of financing have been cash borrowings under our revolving credit facility and the issuance of long-term debt and equity. Net cash used in operating activities in the first three months of 2008 was $23.8 million, compared to $25.3 million in the first three months of 2007. This activity is comprised of the following:

                                                  Three Fiscal Months Ended
   ($ in millions)                          March 28, 2008         March 30, 2007
   Net loss                                $          (17.7 )     $           (8.2 )
   Non-cash adjustments                                10.4                    4.8

   Net loss after non-cash adjustments                 (7.3 )                 (3.4 )
   Changes in assets and liabilities                  (16.5 )                (21.9 )

   Net cash used in operating activities   $          (23.8 )     $          (25.3 )

Net loss after non-cash adjustments was $7.3 million for the first three months of 2008, as compared to $3.4 million in the first three months of 2007. The change was due to the higher net loss, partially offset by the loss on extinguishment of long-term debt, as discussed in the "Net Loss" and "Other Expenses" sections above.
Changes in assets and liabilities resulted in a $16.5 million use of cash in the first three months of 2008, as compared to $21.9 million in the first three months of 2007. The decrease in accounts receivable during the first three months of 2008 was a $3.2 million source of operating cash, an improvement from $1.1 million in the first quarter of 2007, due to the timing of sales and collections within the respective quarters. The decrease in accounts payable represented a smaller use of cash, of $0.7 million as compared to $3.1 million, due to the timing of purchases and vendor payments within the respective quarters.
Net cash used in investing activities was $0.9 million in the first quarter of 2008 compared to $9.3 million in the first quarter of 2007. Property, plant, and equipment additions decreased to $4.2 million in the first quarter of 2008 from $5.0 million in the first quarter of 2007, as fewer investments were needed. Proceeds from sales of property, plant, and equipment of $1.1 million in the first quarter of 2008 primarily related to the sale of a facility we previously vacated. Additions to rental equipment decreased to $4.2 million in the first quarter of 2008 as compared to $9.0 million in the first quarter of 2007 as the decline in rental revenues required less rental equipment. Proceeds on sales of used rental equipment increased to $6.4 million from $4.7 million due to the timing of cash collections of used rental equipment sales from the fourth quarter of the respective prior years.
During the three months ended March 28, 2008, we refinanced a portion of our long-term debt. We entered into a new $150.0 million revolving credit facility and issued a $100.0 million term loan, which was issued at a discount for net proceeds of $94.2 million. The proceeds of the term loan and an initial $88.7 million draw on the revolving credit facility were used to repay our $165.0 million Senior Second Secured Notes, including prepayment premium of $4.6 million, accrued interest of $9.8 million, and financing costs related to the new debt instruments of $3.4 million. For the three months ended March 28, 2008, our net borrowings on the new revolving line of credit facility and its predecessor were $102.5 million, and primarily related to the initial $88.7 million draw discussed above. This was comprised of gross borrowings of $134.6 million and gross repayments of $32.1 million.
Under the new revolving credit facility, availability of borrowings is limited to 85% of eligible accounts receivable and 60% of eligible inventories and rental equipment. At March 28, 2008, $126.9 million was available, of which $102.5 million was outstanding at a weighted average interest rate of 6.0%. Outstanding letters of credit were $10.3 million, resulting in available borrowings of $14.0 million. The new revolving credit facility expires in March 2009, but is automatically extended to March 2014 if we repay or refinance the Senior Subordinated Notes prior to the initial maturity of the new revolving credit facility. The new revolving credit facility is secured by substantially all assets of the Company.

As of March 28, 2008, our other long-term debt consisted of the following:

($ in thousands)
Senior Subordinated Notes, interest rate of 13.0%                           $  154,729
Debt discount on Senior Subordinated Notes                                      (2,582 )
Term loan, interest rate of 7.1%                                               100,000
Debt discount on term loan                                                      (5,391 )
Senior notes payable to seller of Safway, non-interest bearing,
accreted at 6.0% (secured) to 14.5% (unsecured)                                  6,316
Debentures previously held by Dayton Superior Capital Trust, interest
rate of 9.1%, due on demand                                                      1,035
Capital lease obligations                                                        1,060

Total long-term debt                                                           255,167
Less current maturities                                                       (102,849 )

Long-term portion                                                           $  152,318

The Senior Subordinated Notes mature in June 2009. The Senior Subordinated Notes were issued at a discount, which is being accreted to the face value using the effective interest method and is reflected as interest expense. The estimated fair value of the Senior Subordinated Notes was $136.2 million as of March 28, 2008.
The term loan was issued at a discount, which is being accreted to the face value using the effective interest method and reflected as interest expense. The term loan initially matures in March 2009, but is automatically extended to March 2014 if we repay or refinance the Senior Subordinated Notes prior to the initial maturity of the term loan. The term loan is subject to financial covenants for debt to adjusted EBITDA, as defined in the agreement, and interest coverage, and has a second security interest in substantially all assets of the Company. The term loan requires that we enter into an interest rate swap agreement prior to July 1, 2008 for at least $50 million of face amount of the loan.
At March 28, 2008, working capital (deficit) was $(118.3) million, compared to $62.0 million at December 31, 2007. The $180.3 million decrease was comprised of the following:
• $102.5 million increase in the revolving credit facility,

• $93.9 million increase in the current portion of long-term debt due to the term loan initially maturing in March 2009,

• $4.5 million decrease in accounts receivable due to the lower net sales in the first quarter of 2008 relative to the fourth quarter of 2007, and

• $0.7 million of other net items, offset by

• $12.2 million increase in inventories due to material cost inflation and higher quantities in anticipation of seasonally higher second quarter sales,

• $6.2 million decrease in accrued liabilities due to the payment of customer rebates and incentives, and

• $2.9 million decrease in accounts payable due to the timing of vendor payments.

We believe our liquidity and cash flows from operations are sufficient to fund the capital expenditures and rental equipment additions we have planned for at least the next twelve months. We believe we will be able to repay, refinance, or extend our Senior Subordinated notes prior to March 14, 2009 which, combined with our liquidity and cash flow, will allow us to meet our debt service requirements for the next 12 months. However, our ability to make scheduled payments of principal, or to pay the interest on, or to refinance, our indebtedness, or to fund planned capital expenditures and rental equipment additions will depend on our future performance, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations or that operating improvements will be realized on schedule or that future borrowings will be available to us under our revolving credit facility in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may from time to time seek to retire our outstanding debt through exchanges for equity securities, in open market purchases, in privately negotiated transactions, or otherwise. Any such repurchases or exchanges will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material. The new revolving credit facility and term loan expire in

March 2009 and the Senior Subordinated Notes mature in June 2009. We are evaluating refinancing alternatives, but we cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms, or at all. In the event we do not consummate this financing, our financial resources may be insufficient to satisfy our current debt obligations. Such circumstances may have a material adverse effect on our business, financial condition, and results of operations. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and reclassification of recorded asset amounts or amounts and reclassification of liabilities that might be necessary should we be deemed to be unable to continue as a going concern.
Commitments
There were no material changes to minimum future payments from December 31, 2007.
Seasonality
Our operations are seasonal in nature with approximately 55% of sales historically occurring in the second and third quarters. Working capital and borrowings fluctuate with the volume of our sales. Inflation
We may not be able to pass on the cost of commodity price increases to our customers. Steel, in its various forms, is our principal raw material, constituting approximately 23% of our product cost of sales in 2007. In the first quarter of 2008, our steel costs increased approximately 11% from December 2007. We expect overall steel costs to increase significantly during the balance of 2008. Additionally, we expect continued increases in energy costs, including natural gas and petroleum products, which will impact our overall operating costs in the form of higher raw material, utilities, and freight costs. We cannot assure you we will be able to pass these cost increases on to our customers.
Critical Accounting Policies
In preparing our condensed consolidated financial statements, we follow accounting principles generally accepted in the United States. These principles require us to make certain estimates and apply judgments that affect our financial position and results of operations. We continually review our accounting policies and financial information disclosures. On an ongoing basis, we evaluate our estimates, including those related to allowance for doubtful accounts and sales returns and allowances, net realizable value reserve for inventories, long-lived assets, valuation allowance for deferred tax assets, self-insurance reserves, environmental contingencies, and litigation. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Forward-Looking Statements
This Form 10-Q includes, and future filings by us on Form 10-K, Form 10-Q, and Form 8-K, and future oral and written statements by us and our management may include certain forward-looking statements, including (without limitation) statements with respect to anticipated future operating and financial performance, growth opportunities and growth rates, acquisition and divestitive opportunities and other similar forecasts and statements of expectation. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and "should," and variations of these words and similar expressions, are intended to identify these forward-looking statements. Forward-looking statements by our management and us are based on estimates, projections, beliefs and assumptions of management and are not guarantees of future performance. We disclaim any obligation to update or revise any forward-looking statement based on the occurrence of future events, the receipt of new information, or otherwise.
Actual future performance, outcomes and results may differ materially from those . . .