The following discussion of the Company's financial condition and results of operations should be read in conjunction with the description of the Company's business and properties contained in Items 1 and 2 of Part I and the Consolidated Financial Statements and Notes thereto, included elsewhere in this report.

Results of Operations: 2008 and 2007

Total revenues for the year ended December 31, 2008 were $72.9 million, compared to $71.8 million for the year ended December 31, 2007. Realized losses on the Company's marketable security portfolio of ($24.1) million resulted in a loss from continued operations of ($5.1) million or ($.60) per basic share. Income from discontinued operations, which primarily reflects the sale of properties from the Company's real estate portfolio, were $6.7 million, on a net of tax basis, resulting in net income of $1.6 million or $.19 per basic share for the year ended December 31, 2008. Net income for the year ended December 31, 2007 was $27.5 million or $3.32 per basic share which includes $10.0 million in gains on the sale of real estate, net of tax, and $5.7 million from the taking of one of the Company's New York City properties.

The ongoing weakness in the economy and the deteriorating credit market continue to impact the results of the Company's engineered products and hotel segments. These factors are expected to continue in 2009. The Company's strong balance sheet and diverse mix of businesses should allow the Company to weather this downturn.

Real Estate Operations

The Company's real estate operations consist of the real estate investment and
management and hotel operations segments. The operating results for these
segments are as follows:

                                                Year Ended                                             Year Ended
(In thousands)                              December 31, 2008                                      December 31, 2007
                             Real Estate       Hotel Operations        Total        Real Estate       Hotel Operations        Total
Revenues                    $      20,392     $           16,317     $  36,709     $      19,387     $           14,564     $  33,951
Mortgage interest expense             241                  1,874         2,115               247                    849         1,096
Depreciation expense                2,450                  1,431         3,881             1,829                  1,279         3,108
Other operating expenses            6,059                 11,992        18,051             5,567                 10,364        15,931
Operating income            $      11,642     $            1,020     $  12,662     $      11,744     $            2,072     $  13,816

Real Estate Investment and Management

Revenues from the real estate investment and management segment were $20.4 million for the year ended December 31, 2008, an increase of $1.0 million or 5.2% from $19.4 million in 2007, primarily as the result of additional revenues ($1.0 million) from two properties purchased in January 2008. In general, rental revenues from the Company's real estate properties do not fluctuate significantly due to the long-term nature of the Company's leases. However, future rental revenues could be affected by lease renewals, terminations and by the purchase or sale of additional properties.

Mortgage interest expense decreased $6,000 or 2.4% for the year ended December 31, 2008, compared to 2007. This decrease is a result of continuing mortgage amortization, partially offset by interest from a new mortgage obtained in connection with the purchase of a commercial property in July 2008. The mortgage ($500,000) bears interest at 6.73% per annum, is payable monthly based on a 25-year amortization and matures in July 2013. At December 31, 2008, the outstanding mortgage balance on the Company's real estate investment properties was just $4.1 million. Based on scheduled amortizations, including one mortgage maturing in April 2009, mortgage interest expense on existing obligations of the Company's real estate investment and management segment should continue to decline in 2009.

Depreciation expense associated with real properties held for rental increased $621,000 for the year ended December 31, 2008, compared to 2007, as the result of additions to real estate assets during the current and prior years. The Company purchased three properties for approximately $14.3 million in 2008 and incurred approximately $4.1 million and $457,000 in capital improvements during 2007 and 2008, respectively, adding $671,000 to 2008 depreciation expense. Unless the Company experiences significant expenditures for capital improvements, it is expected that depreciation expense on the Company's properties in 2009 will not increase considerably over that reported in 2008.

Other operating expenses associated with the management of real properties increased $492,000 or 8.8% for the year ended December 31, 2008, compared to such expenses incurred in 2007, primarily related to increases in personnel ($202,000) and professional ($197,000) expenses. Future operating expenses of the Company's real estate properties may vary as a result of property age, location and vacancies.

Hotel Operations

Hotel revenues were $16.3 million for the year ended December 31, 2008, an increase of $1.8 million or 12% from $14.6 million for the year ended December 31, 2007, primarily as the result of a full year of hotel revenues ($2.9 million) received as a result of the May 2007 acquisition of a hotel located in Utica, New York (the "Utica Hotel"). This increase is offset by the decline in revenues, especially in the fourth quarter of 2008, resulting from the overall weakness in the U.S. economy. Unless the economy dramatically improves, the Company expects lodging demand, and therefore its revenues, to continue to decline in 2009.

As a result of mortgages secured on two of the Company's hotels during 2007, mortgage interest expense in this segment increased $1.0 million for the year ended December 31, 2008, compared to that reported in 2007. Without refinancings or additional borrowings, mortgage interest expense of the Company's hotel operations will decline with scheduled principal reductions.

Depreciation expense associated with the Company's hotel operations increased $152,000 for the year ended December 31, 2008, compared to 2007, primarily attributable to additional depreciation expense ($267,000) related to the Utica Hotel acquired in May 2007. This increase is offset by a reduction in depreciation expense ($139,000) at one of the Company's hotels associated with certain improvements becoming fully depreciated in the current year. As a result of renovations and improvements currently occurring at two of the Company's hotels, depreciation expense for 2009 should increase slightly over that reported in 2008.

Other operating expenses related to the management of the Company's hotels increased $1.6 million to $12.0 million for the year ended December 31, 2008, compared to $10.4 million in 2007, primarily related to the change in the composition of hotels operated by the Company ($1.7 million), including the addition of the Utica property, noted above.

The ongoing weakness in the economy and the deteriorating credit market continue to impact the results of the Company's hotel operations and is expected to continue to impact this segment throughout 2009. As the global financial crisis has broadened and intensified, other sectors of the global economy have been adversely impacted and a severe global recession of uncertain length now appears likely. As the hotel business is dependent upon consumer and business spending, the Company's hotel operations segment is expected to face an extremely challenging 2009 because of these economic conditions. The Company is working to streamline operations, control expenses and maximize cash flow from operations. The extent to which management will be successful in these efforts is uncertain.

Engineered Products

The operating results of the Company's engineered products segment are as
follows:

(In thousands)                                                      Year Ended December 31,
                                                                     2008              2007
Net
sales                                                            $     36,212       $   37,820
Cost of
sales                                                                  28,530           28,868
Selling, general and administrative
expenses                                                                7,418            6,869
Operating
income                                                           $        264       $    2,083

Net sales of the engineered products segment decreased $1.6 million or 4.3% for the year ended December 31, 2008, to $36.2 million, down from $37.8 million in 2007 due to a decrease in demand for the Company's automotive product line. This decrease was partially offset by increases in demand for the Company's engineered products and, to a lesser extent, the transformer product line in the first half of the year. Each of these product lines has experienced significantly reduced demand in the fourth quarter of 2008, which is continuing in 2009. The global economy has entered a period of weak economic growth, led by the recession in the United States and followed by declines in other major markets around the world. Uncertainty over the course of the economy, and hence, the strength of the markets into which the engineered products segment sells its products, both in the United States and around the world, have caused a continuing decline in sales. As a result, the Company expects 2009 sales of its engineered products segment to be significantly less than such sales in 2008.

Cost of sales as a percentage of net sales increased 2.5% for the year ended December 31, 2008, compared to 2007. This increase is primarily related to an increase in payroll and payroll related expenses (1.5% as a percentage of net sales) which primarily include certain salaried positions vacant during 2007. The increase in costs of sales as a percentage of net sales was also effected by an increase in the cost of raw materials (0.7% as a percentage of net sales), primarily copper and steel components, and other fixed operating costs (0.4% as a percentage of net sales) including utilities. As a result of the economic recession and its effects on net sales, as noted above, the Company is attempting to reduce costs which include, among other things, the reduction of certain salaried positions and the cutback of direct labor hours. The lower net sales and production levels expected in 2009 will lead to lower margins as fixed overhead will be absorbed over less items produced.

Selling, general and administrative expenses of the engineered products segment increased $549,000 or 8.0% for the year ended December 31, 2008, compared to 2007. The increase was primarily related to increases in payroll and payroll related expenses ($378,000) associated with certain salaried positions which were vacant during 2007, and the write-off from the uncertain collectibility of customer accounts ($153,000), partially offset by a decrease in professional fees ($201,000). During the fourth quarter of 2008 and the start of 2009, the Company reduced certain salaried positions, including those vacant in 2007, and is continuously working to streamline its operations and control expenses.

Depending on the length and severity of the economic recession, future operating results of the engineered products segment could be adversely impacted.

General and Administrative Expenses

General and administrative expenses not associated with the manufacturing operations increased $503,000 or 18.1% for the year ended December 31, 2008, compared to such expenses incurred in 2007, primarily related to non-recurring transactions ($328,000) in 2007.

Other Income and Expense, Net

Other income and expense, net was ($16.7) million in 2008 as compared to $13.2 million in 2007. These amounts include realized losses on the Company's marketable security portfolio of ($24.1) million in 2008, and ($402,000) in 2007. A litigation award received from a property condemnation of $5.2 million resulted in more income recognized in 2007 along with $2.3 million in additional interest and dividends generated on the Company's cash and marketable security portfolios. These fluctuations were offset by $1.0 million in additional realized and unrealized gains on derivative instruments recognized in 2008.

Income Taxes

In 2008, the Company's effective tax benefit from continuing operations was (28.5%). In 2007, the effective tax rate from continuing operations was 33.9%. These amounts differ from statutorily enacted rates as a result of income or losses in certain state jurisdictions which are not offsettable. The amount of property gains in a given year, reported net of tax at statuary rates, as discontinued operations, can also alter the effective tax rate from continuing operations reported by the Company.

Discontinued Operations

Income from operations on properties sold and accounted for as discontinued operations was $113,000 and $118,000, on a net of tax basis, for the years ended December 31, 2008 and 2007, respectively. Prior year amounts have been reclassified to reflect results of operations of real properties disposed of during 2008 and 2007, as discontinued operations.

During 2008, the Company divested itself of one of its shopping centers and retail outlets which had a net book value of $1,537,000. The aggregate proceeds from this transaction were $12.5 million resulting in a gain of $6.6 million, on a net of tax basis.

During 2007, the Company divested itself of five commercial properties and two other properties which had a net book value of $1.2 million. The aggregate proceeds from these transactions were $17.9 million resulting in a gain of $10.0 million, on a net of tax basis.

Liquidity and Capital Resources

Net cash provided by operating activities was $11.3 million for the year ended December 31, 2008, compared to $14.5 million for 2007. The decrease in operating cash flows results principally from decreases in operating income before depreciation ($2.7 million) and interest and dividend income ($2.3 million), partially offset by the cash effect of current and deferred income taxes ($2.1 million). The losses on marketable securities realized in the second half of 2008 resulted in federal income tax refunds of $4.2 million, which the Company expects to receive in 2009.

In 2008, net cash used in investing activities was $369,000. This compares to $26.2 million of net cash provided by investing activities in 2007. The timing of the purchase or sale of available-for-sale securities ($48.4 million) along with a litigation award received from a property condemnation ($5.2 million) yielded additional cash from investing activities in 2007. These were offset by additional proceeds received from the sale of real estate assets in 2008 ($24.6 million), including those deferred in connection with tax deferred exchanges in 2007 and lower uses of cash from the acquisition of/additions to real estate assets ($2.8 million) in the current year.

In 2008, the Company used $1.8 million to fund its financing activities. In 2007, the Company's financing activities generated $11.6 million in cash. This decrease primarily results from additional proceeds from mortgages obtained during 2007 in excess of that obtained during 2008 ($19.0 million) and additional tax benefits related to the exercise of stock options ($1.2 million) recorded in the prior year. These were offset by additional cash flows from the exercise of stock options ($4.2 million) and lower purchases of the Company's common stock ($2.9 million) during the current year.

Previous purchases of the Company's Common Stock have reduced the Company's additional paid-in capital to zero and have also reduced retained earnings by amounts in excess of par value. Any future purchases in excess of par value will also reduce retained earnings. Repurchases of the Company's Common Stock may be made from time to time in the open market at prevailing market prices and may be made in privately negotiated transactions, subject to available resources. Future proceeds from the issuance of Common Stock in excess of par value will be credited to retained earnings until such time that previously recorded reductions have been recovered.

At December 31, 2008, the Company's cash and marketable securities were $147.3 million and working capital was $153.9 million, compared to cash and marketable securities of $156.2 million and working capital of $172.5 million at December 31, 2007. Included in the 2008 results are ($24.1) million in realized losses on the Company's marketable security portfolio. In addition, ($8.3) million in unrealized losses are recorded, net of tax, in Accumulated Other Comprehensive Loss in the accompanying Consolidated Balance Sheet at December 31, 2008. Management does not believe that the unrealized losses are other-than-temporary given recent market conditions and the Company's ability to hold such securities in order to allow sufficient time for recovery, however, continuing market declines may cause this position to be reexamined.

While there has been a decline in the value of real estate properties in the United States, the recession could cause real estate prices to drop even further. Management has limited acquisitions to those select properties that meet the Company's stringent financial requirements. Management believes that opportunities to acquire additional properties at favorable prices may soon be available and the Company's available working capital provides a considerable advantage to fund acquisitions and grow its portfolio, if and when attractive long-term opportunities become available. The tightened credit markets however, could limit the Company's the ability to leverage future acquisitions.

The equity method of accounting is used for investments in 20% to 50% owned joint ventures in which the Company has the ability to exercise significant influence, but not control. These investments are recorded initially at cost and subsequently adjusted for equity in earnings and cash contributions and distributions. The debt of the joint venture in which the Company currently has an ownership interest is a non-recourse obligation and is collateralized by the entity's real property. The Company believes that the value of the underlying property and its operating cash flows are sufficient to satisfy its obligations. The Company is not obligated for the debts of the joint venture, but could decide to satisfy them in order to protect its investment. In such event, the Company's capital resources and financial condition would be reduced and, in certain instances, the carrying value of the Company's investment and its results of operations would be negatively impacted.

The cash needs of the Company have been satisfied from funds generated by current operations. In addition, the Company received additional financing from mortgages obtained on two of its hotels in 2007. It is expected that future operational cash needs will also be satisfied from existing cash balances, marketable securities, ongoing operations or borrowings. The primary source of capital to fund additional real estate acquisitions and to make additional high-yield mortgage loans may come from existing funds, the sale, financing and refinancing of the Company's properties and from third party mortgages and purchase money notes obtained in connection with specific acquisitions.

In addition to the acquisition of properties for consideration consisting of cash and mortgage financing proceeds, the Company may acquire real properties in exchange for the issuance of the Company's equity securities. The Company may also finance acquisitions of other companies in the future with borrowings from institutional lenders and/or the public or private offerings of debt or equity securities. The Company currently has no agreements, commitments or understandings with respect to the acquisition of other companies or the acquisition of real properties in exchange for equity or debt securities.

Funds of the Company in excess of those needed for working capital, purchasing real estate and arranging financing for real estate acquisitions are invested by the Company in corporate equity securities, corporate notes, certificates of deposit, government securities and other financial instruments. Although these excess funds are invested in investment grade securities, they are subject to significant fluctuations in fair value due to the volatility of the stock market and changes in general economic conditions. The realized losses incurred during the second half of 2008, as noted above, resulted from the sudden decline in the stock market and collapse of certain financial institutions in which the Company held an interest. Changes in U.S. interest rates affect the interest earned on the Company's cash and cash equivalent balances and other interest bearing investments. Given the level of cash and other interest bearing investments held by the Company, declines in U.S. interest rates have adversely impacted the Company's earnings in 2008.

In strategies designed to hedge overall market risk, the Company may sell common stock short or participate in put and/or call options. These instruments do not qualify for hedge accounting and therefore changes in such derivatives' fair value are recognized in earnings. These derivatives are recorded as a component of accounts payable and accrued liabilities in the Consolidated Balance Sheets. In 2008, the Company recognized $1.4 million in net realized and unrealized gains on derivative instruments.

The Company sells its engineered products to many customers throughout the world. Historically, a small number of customers have accounted for significant portions of these sales. For the year ended December 31, 2008, sales by the engineered products segment to General Motors, its largest customer, accounted for 10.8% of the segment's sales. Since our engineered products segment accounted for 49.7% of our consolidated revenues in 2008, the loss of General Motors as a customer, or a significant decline in sales to them, would adversely affect the Company's revenues, cash flows and results of operations. Automakers and their suppliers globally have experienced significant difficulties from a weakened economy and tightening credit markets. The bankruptcy filing of any of the major automotive companies could lead to similar filings by suppliers to the automotive industry, many of whom are customers of the Company, which could adversely impact the engineered products segment. The nature of that impact could not only be a reduction in future sales, but also a loss associated with the potential inability to collect all outstanding accounts receivables, which could negatively impact the Company's results of operations and cash flows.

The Company manufactures its products in the United States and Mexico and sells its products in those markets as well as Europe, South America and Asia. As a result, the Company's operating results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which the Company distributes its products. Most of the Company's sales are denominated in U.S. dollars. For the years ended December 31, 2008 and 2007, 7.9% and 8.2% of the net sales of the Company's engineered products segment were denominated in Euros, respectively. As such, a portion of the Company's receivables are exposed to fluctuations with the U.S. dollar. However, the Company does not believe this risk to be material to its overall financial position as the Company's historical results have not been significantly impacted by foreign exchange gains or losses. Accordingly, the Company has not entered into forward exchange contracts to hedge this exposure. If such exposure were to increase in the future, the Company may reexamine this practice to minimize the associated risks.

The growing weakness in the economy, exacerbated by recent credit market turmoil, together with higher year-over-year raw material, energy, freight and other costs, has pressured the results of the Company's engineered products and hotel segments. These factors are expected to continue to impact the Company in 2009. The Company is working to further streamline operations, control expenses and maximize cash flow from operations. While the depth and duration of the current negative economic environment and its impact on the Company are uncertain, management believes that the Company's strong balance sheet together with the significant cash flow generated from its core real estate portfolio, should allow the Company to weather this downturn.

In the general course of its operations, the Company has from time to time restructured the manner in which it holds its subsidiaries and the underlying assets of its subsidiaries. In 2008, a restructuring of the Company's engineered products segment took place. Although there is no effect on the Company's consolidated financial results or its financial position, certain assets of Metex Mfg. Corporation were transferred to new wholly-owned subsidiaries of the Company.

The plan assets of the Company's defined benefit pension plan are valued at fair value using quoted market prices. Investments, in general, are subject to various risks, including credit, interest and overall market volatility. During 2008, the equity markets saw a significant decline in value. As such, the fair value of plan assets decreased significantly during the year. The funded status of the plan decreased by $3.7 million from December 31, 2007, due in large part to the decrease in the fair value of plan assets. This affected the amounts reported in the Consolidated Balance Sheet at December 31, 2008. It also contributes to an expected increase in net periodic pension expense in 2009. If the equity and bond markets continue to decline, the funded status of the plan could continue to be materially affected. This could result in higher net periodic pension expense, as well as the need for additional contributions to fund benefits, in the future.

The Company has undertaken the completion of environmental studies and/or remedial action at the Company's two New Jersey facilities and has recorded a liability for the estimated investigation, remediation and administrative costs associated therewith. See "Environmental Regulations" in Item 1 of Part I and Note 17, "Commitments and Contingencies" of Notes to Consolidated Financial Statements for further discussion on this matter.

The Company is subject to various other litigation, legal, regulatory and tax matters that arise in the ordinary course of business activities. When management believes it is probable that liabilities have been incurred and such amounts are reasonably estimable, the Company provides for amounts that include judgments and penalties that may be assessed. These liabilities are usually included in accounts payable and accrued liabilities or other long-term liabilities in the Consolidated Financial Statements, depending on the anticipated payment date. Based on the facts presently available, the Company does not believe that the disposition of matters that are pending or asserted will have a material adverse effect on the Company's consolidated financial position or results of operations. However, new or additional facts or an adverse judgment by a court, arbitrator or a settlement could adversely impact the Company's results of operations in any given period.

Related Party Transactions

The Company has a 50% interest in an unconsolidated limited liability . . .